It’s pretty simple: Your regular guests are motivated to earn points for their purchases and to get transparent communication from you about what it takes to redeem those points. It’s a lesson many major brands have learned and are now adapting to accommodate. Skift Table reports that Starbucks, Chipotle, Pizza Hut and TGI Friday’s are just a few of the brands that have implemented new points-based loyalty programs in recent months, and to positive reviews. Some of the results have been dramatic. The report said that Punchh, a digital marketing company that helps a range of restaurants with loyalty program development, helped TGI Friday’s UK generate a 66 percent increase in revenue from loyalty program members and a 51 percent increase in new unique guest visits in the first four weeks of launching a new loyalty program in July. According to Mobile Marketing, the number of users referred by the app who made a verified visit to TGI Friday’s UK skyrocketed 300 percent in that same timeframe. The new loyalty program stands out not for its bells and whistles but for its transparency. While it started in 2015 (also with Punchh) as a “scratch, match and win” game designed to generate probability-based rewards, the new program has a spending-based system of points or “stripes” to help customers see the path they need to take to earn rewards.
The foodservice delivery industry seems to be evolving by the day. If you’re adapting your operation for more efficient delivery or thinking about offering it as a new option, take note of how third-party delivery companies are changing the market. Bloomberg reports that Uber has a pilot program underway in Paris that rents commercial kitchen space to restaurants selling food via the Uber Eats app. While the company has not commented publicly about this yet, it raises questions about how such developments could change the industry, perhaps controlling the choice consumers have when searching for a certain kind of restaurant, for example, or giving third-party providers a greater say in the branding of a restaurant business. Uber isn’t alone in this either: Grubhub, Door Dash and others have been investing in ghost kitchens in recent months. Postmates is adding yet another wrinkle to delivery by launching a new app, Postmates Party, to select cities that allows consumers to pool their orders and have them picked up and delivered (for free) by one courier.
The California Consumer Privacy Act (CCPA) could have nationwide implications for how restaurants manage their data, protect consumer privacy and market their business. The National Restaurant Association hosted a webinar recently with Helen Goff Foster, a partner in the Technology + Privacy & Security for Davis Wright Tremaine, who reviewed the implications of the law, which is set to go into effect next year and could likely set similar legislation in motion in other states. The act will impact how businesses manage the consumer data they collect and the loyalty programs they operate. Unlike GDPR, which is about having consumers opt in to providing personal information, CCPA is about allowing them to opt out. In broad terms, for a wide swath of businesses, the law requires businesses to let consumers access the personal information you track, and gives them the right to delete information, and to opt out of the sale of that information. It also requires you to give consumers two methods of contacting you about it (including an 800 number). Businesses must therefore be able to retrieve consumer information across its affiliates, business units, product lines, etc. The law is intended to prevent businesses from providing discounted service or price to certain customers but not others (which clearly creates some hazy territory for businesses operating loyalty programs). There are fines in the thousands of dollars for violating the law and businesses could also be exposed to a private right of legal action by consumers against the business and its affiliates. Franchises could be especially vulnerable because they could bear legal risk but aren’t able to dictate privacy policies of their parent company. Foster advised that the best thing businesses can do now is identify where their consumer information is and how to access it. You’ll need to determine how to provide opt-outs for most of your consumer data and assess the ability of your vendors to do so as well, so update (or establish) your information security program. For more information about the law’s potential effects on restaurants, access Foster’s webinar and Q&A here.
The real power may lie not with restaurants but with the delivery apps and food delivery companies that help them get their food to consumers. That’s the implication of two recent reports in the Wall Street Journal, which indicate that these companies are poised to move away from traditional introductory offers and toward subscription-model services designed to entice consumers into becoming habitual “superusers.” At a time when millennial consumers are believed to lack loyalty, delivery providers have noticed that offering a one-time discount won’t translate to follow-up business. How does your delivery provider entice customers to return regularly? DoorDash, one provider offering a subscription program, says it has more than 30,000 users signing up each week for their service. It now leads the online food delivery market in total consumer spending.
At a time when Instagram is helping restaurant menu items go viral and having a well-curated social media presence is billed as a must for a growing business, it can be easy to overlook the power of email. But the numbers tell an important story: According to research from the Direct Marketing Association and Demand Metric, the return on investment for email marketing is 122 percent compared to just 28 percent for social media (other marketing channels rank similarly low). Email carries a number of benefits. When you pour your marketing dollars and ideas into your email list, you retain control of what happens next. You’re not at the mercy of changes to a social media network’s algorithm and you stand a better chance of reaching your most loyal guests directly. Your email subject line has the power to prompt the recipient’s action at the time you send it — you’re not competing with content on a person’s social media feed or having to wait until people visit their account. As The Rail suggests, you can use your data to deliver a more customized experience via email, sending messages when you know your list is most apt to open them and with a mix of images, video and text depending on what you’d like to promote. There are also ample email tools to target guests with not just birthday promotions but also deals that consider their personal preferences and ordering habits. OptinMonster suggests using your list for such tasks as nurturing your loyalty program and spelling out its benefits, winning back guests who haven’t visited in a while, or following up with people who made a Groupon deal or otherwise expressed interest in your restaurant but haven’t visited yet.
When food is prepared and waiting to be eaten by a hungry consumer, every minute can impact the quality of the meal. Now that so many operators are embracing consumer demand for delivery and are seeking to stand out in a growing crowd of off-premise dining options, the next push is to make that delivery as fast and seamless as possible. For a number of major brands, that means delivering in less than 30 minutes and striving to shave additional time off of that rate. In addition to restaurants adding pick-up shelves for delivery drivers collecting orders and opening delivery-only kitchens in locations with a critical mass of customers, Skift Table reports that some brands are introducing prepaid delivery for third-party couriers and retrofitting vehicles to become mobile kitchens that can cook a pizza on the go. (Pizza Hut, for one, is testing a robot-powered pizza kitchen that sits in the bed of a modified Toyota Tundra.) How can you shave minutes off of your delivery?
Are you among the many operators trying to figure out how to make delivery profitable? At a time when off-premise sales account for 38 percent of restaurant sales, according to Technomic, delivery has become a must for restaurants, even when the margins aren’t necessarily making the service profitable for those brands. Fortunately, new models are beginning to make the numbers work out. Recent Technomic forecasts have predicted that “subscription models that eliminate per-delivery fees in favor of a flat-rate subscription will emerge to present a clearer value proposition to customers.” The Spoon reports that a number of third-party delivery providers have come up with palatable offers for restaurants and consumers alike: DoorDash’s DashPass offers a monthly subscription of $9.99 for delivery of orders priced $15 or higher from a selection of restaurants, and Postmates has a similar offer. In the UK, Deliveroo is offering a £7.99 per month subscription for orders of any amount, and Uber Eats is reported to be testing a loyalty program that could eliminate delivery fees — if the experiment works there, it is likely to make its way across the pond eventually. Even operators who aren’t opting for subscription models are finding ways to make delivery profitable. In fact, delivery may be helping Chipotle make a comeback. Skift Table reports that delivery sales climbed 13 times in the fourth quarter of 2018 as compared to the same quarter of the previous year. Chipotle’s CFO credits a couple of factors for the success: the creation of a separate, digital food assembly line for off-premise orders, which enables the restaurant to process a greater number of orders, as well as a delivery-friendly menu (burritos and taco bowls are good travelers).
At a time when many operators are looking to scale down their restaurant footprints to accommodate service model changes and stay profitable, every square inch of food preparation space counts. At the recent NAFEM, the show hosted by the North American Association of Food Equipment Manufacturers of Chicago, the theme was about helping operators do more with less, using tools ranging from multifunctional prep stations on wheels to compact, high-efficiency ovens to electric bakers with interchangeable molds for accommodating a wide range of snack foods. Nation’s Restaurant News reports that a highlight of the show was a collaboration between the equipment company Vulcan and the quick-service seafood restaurant Captain D’s. The restaurant had challenged Vulcan to devise a more efficient fryer, and the result was a smaller fryer that can be mounted on a freezer base and allows a worker to complete a task while standing in place. In stores currently using the fryers, fry times decreased 30 percent and the stores saved $10,000 annually. Where is there an opportunity to increase the efficiency of your kitchen?
Food safety transparency is here — whether foodservice operators want to be open about their hygiene records or not. HDScores, the tech firm behind Yelp’s restaurant hygiene data, is now offering an app that allows consumers to look up extensive health information for restaurants and coffee shops in many parts of the U.S. Skift Table reports that the app (which costs $1.99 per month) allows consumers to access a restaurant’s local health department score, a historical record of past scores and violations, and a health code score determined by HDScores. While not everyone would be willing to pay for quick access to this information, those with severe food allergies or who have contracted foodborne illness in the past very well might.
The time to be nimble and adaptable with your food safety program is now: This year, Millennials are expected to account for the largest segment of the population, according to Pew research. As a result, their preferences — for convenience, technology, local foods and global flavors — are forcing the restaurant industry to evolve rapidly. Such rapid change could test your food safety program, which needs to be able to accommodate a steady stream of new ingredients and preparation methods (along with the tech tools that can help you monitor them). A Food Safety Magazine report about these challenges highlights such millennial-friendly trends as growing produce, raising animals for food, brewing beer, or offering fermented or cold-pressed beverages — all of which can test a food safety program. Has your program adapted to these sorts of menu trends?
Delivery has long been more about convenience than taste — it’s hard to make a delivered meal tastier than one served right out of the kitchen, right? Well, that may be changing as operators think more scientifically about food preparation and delivery. The Spoon reports that the fast-casual brand Dig Inn just piloted a delivery-only virtual kitchen called Room Service that rethinks food preparation for delivered foods. In a restaurant, for example, Dig Inn cooks salmon to medium-rare at 115˚F and then serves it immediately. Salmon ordered for delivery via Room Service, however, is plated rare at 105˚F, then paired with a hot potato puree that travels well. Along the route, the puree warms the salmon so the transit time improves the quality of the item when served. It’s food for thought for restaurant operators offering delivery. As ghost kitchens become more prevalent and improve upon the methods long used for delivery, how well do your food preparation plan and food safety program adapt?
A new computer model stands to make the identification of foodborne illness sources more accurate than traditional methods and significantly faster too — in fact, close to real time. That’s according to Harvard University’s School of Public Health, which co-led research with Google on a computer model that uses machine learning and aggregated search and location data from logged-in Google users. The model classifies Google searches indicating foodborne illness (e.g. “stomach cramps”), then connects those searches with de-identified and aggregated location history data from users who have saved it. That helps the model identify restaurants that people who searched for the terms have visited recently. A test of the model found that the rate of unsafe restaurants it detected was 52.1 percent, compared to 39.4 percent for inspections initiated by a complaint-based system.
Do you know how to determine your inventory’s magic number? If you can find your optimal inventory level it will help you set your ideal food cost percentage, all while helping you minimize waste and decrease the frequency of selling out of your most profitable menu items. Upserve suggests operators use this formula to determine how much they should be spending on inventory each day: Average monthly food sales x food cost percentage / days in the month.
Delivery isn’t just for Friday-night dinner anymore. As restaurants accommodate consumer demand for off-premise dining options, they are experimenting with non-traditional day parts and occasions to boost the benefits of delivery to their bottom line. Three cases in point: Panera, Cinnabon and Applebee’s. Restaurant Business reports that Panera, one of the rare large brands that uses its own employees to deliver meals to customers, is expanding its small-delivery service to include breakfast (allowing it to better compete with McDonald’s and Starbucks, which offer delivery via third parties). Cinnabon and Applebee’s are venturing into occasion-based delivery, with Cinnabon adding gift boxes containing different-sized orders of its signature cinnamon rolls. Applebee’s, on the heels of Taco Bell offering delivery of its 12-taco party packs for the holiday party season, is offering delivery of catering packages and “Monday Night Football” food packages designed for groups. If single-meal delivery during your Friday dinner rush doesn’t make financial sense for you, what other delivery options might?
Data can unlock valuable information about your guests, of course. Now Uber Eats is demonstrating that data can also reveal demand for restaurants that don’t yet exist (but could, with a little help). Uber Eats is currently the fastest-growing food delivery app, serving 70 percent of the U.S. Much of that growth is due to the development of virtual restaurants — brick-and-mortar restaurants operating one or more restaurants that deliver food via Uber Eats and exist only on that platform. For example, Eater reports that the Dallas sushi chain SushiYaa, which operates five brick-and-mortar locations, houses about two dozen other virtual restaurants — all with their own separate menus that consumers can access on the Uber Eats platform. Uber Eats actually approached SushiYaa about the opportunity more than a year ago and suggested they start a virtual restaurant to meet rising consumer demand for poke. Uber Eats data indicated demand for the food was increasing and SushiYaa had the necessary ingredients for it already on hand. All that was required of the restaurant was a business name, menu and logo. Uber Eats then provided the tablet used for processing orders and sent a photographer to take photos of menu items. The process took less than two weeks to take fruition and has been a win for the restaurant, which can now use its existing space and labor force to serve a much larger volume of business.
Know the signs of an unsafe journey
Is meat, fish or poultry on your menu? Those items have likely taken a multi-step journey to get there. While you have to rely on others in your supply chain to uphold food safety practices along the route, you can find clues about it when inspecting shipments. Restaurant Owner & Manager suggests these red flags that a shipment should be rejected: cartons that aren’t intact, dirty wrappers, colored spots on the item (purple, white, brown or green), strange odors (including an ammonia smell to fish), flesh with a soft appearance or that leaves a finger imprint when you press on it, fish eyes with a sunken-in appearance, and open shells on fresh shellfish.
When your food supplies arrive, do you have time to inspect each delivery? If not, you could be allowing food into your operation that you would otherwise reject, increasing your chances of spreading harmful pathogens. To ensure you’re allowing only thoroughly inspected shipments into your facility, Statefoodsafety.com suggests scheduling shipments to arrive at different times and not at peak hours when you may feel pressed to rush through an inspection.
Expecting a sales slowdown in the first weeks of the New Year? Use it as a time to set yourself up for success later in the year and to test out some new ideas. To bring in traffic despite the cold temperatures, OpenTable offers some suggestions: If you’re looking to launch or revamp your email newsletter or website, now is a good time to get the word out about special promotions, events and specials — and make sure all of the basic information on your website and other public-facing materials is up to date. You could also do something a little different with your menu: add some hot beverages to your offering, or if you have outdoor space, fully embrace the cold by turning your patio into a winter wonderland with string lights, make-your-own s’mores and warm blankets. If your city holds a Restaurant Week, join in to help attract dining-room traffic, but also focus on building your delivery business for customers less eager to brave the elements.
Customers who engage with businesses on social media spend 20 to 40 percent more money on those businesses than on others, according to research from Bain & Company. In your efforts to reel in those customers, remember to focus on the relationship instead of the sale. To avoid turning followers off by being too promotional, focus on making 80 percent of your content about topics that will spark conversation and just 20 percent on promoting new offers (though keep your content focused on topics related to your business). It helps if your brand has a distinct voice so that anyone on your team can post content and come across consistently. While it can be tempting to automate responses or use a selection of canned responses, use this approach sparingly — it can backfire if followers see through it.
Seize your digital domain
What’s your digital game plan? Your digital strategy can help you elevate your brand far beyond the walls of your restaurant by enhancing your connections with existing guests and helping you attract new ones. What’s more, the restaurant brands that develop a digital strategy and support it with the infrastructure it needs are likely to open up a wide lead over competitors in the months ahead — while those that don’t are likely to see their guest engagement suffer. (For example, two brands with robust digital strategies, Domino’s and Panera, currently receive a large portion of their orders via digital — 60 percent and 25 percent, respectively.) That’s according to research shared at the recent Foodservice Technology Conference Trade Show in Orlando. To put the industry in perspective when it comes to digital, restaurants leading the pack in this area are spending 30 to 50 percent (and sometimes much more) of their marketing budgets on it. Of the digital tools restaurants are using to engage customers and generate data, the most important ones to focus on are the mobile app, loyalty program, online ordering capability and delivery strategy. It pays to play offense with digital as well, with restaurants actively using digital seeing 5 percent annual growth over the previous five-year period as opposed to 2 percent annual growth for brands using digital more defensively. That is making it important for restaurants to invest in technology platforms, hardware and software to support their digital strategy, though the proliferation of cloud-based services is helping to bring the overall costs of investment down. Just make sure your strategy considers the needs of your front-of-house and back-of-house operations, all while helping you keep your guests engaged.
Stay tuned for food delivery safety standards
At a time when third-party delivery is evolving in futuristic ways — like delivery by robot, or, if Uber’s three-year plans play out, by drone — it can be easy to neglect the most important elements of a delivered meal: food that tastes good and is safe to eat following its journey. The National Restaurant Association is taking steps to change that. It is assembling a group of food delivery services and restaurants to develop a code of best practices for keeping food safe during its delivery to the customer. Watch this space for more information when the practices are released.
Is your off-premise strategy on the mark?
Off-premise dining is on the rise — 86 percent of consumers are using off-premise services at least monthly, while one-third of consumers are using them more frequently than they did a year ago, according to Technomic. As the demand for off-premise dining climbs, it will have impacts across your business well beyond your choice of a delivery provider. For example, it is likely to affect the mix of items you offer on your menu, the customers you target, how you design your restaurant, how you package your food and how you develop your loyalty program. Restaurant Business suggests offering meal bundles with entrees, sides and desserts for busy families looking for easy and affordable options — create some pre-set or customizeable options so the customer can avoid ordering items a la carte. Since younger consumers are big supporters of off-premise dining (Technomic’s Takeout & Off-Premise report found that nearly half of 18- to 34-year-olds are ordering food to go more often than they did three years ago), consider offering some lighter, nutritious, unprocessed options that appeal to health-conscious people on the go. Your restaurant design should streamline the process of picking up food for customers and delivery drivers, and evolve with the idea that an increasing share of your business will be from off-premise sales. Choose packaging that ensures each item gets to the consumer in good condition — fries, for example, should not be in packaging that traps steam. Offer discounts or free items when customers bring in friends, visit on their birthday, or spend a certain amount of money with you. This is all to say that while your off-premise strategy impacts more than just these areas, it’s important to trace it through each step of your business. You may understand what your customers like, but your front of house and back of house (and the technology supporting them) need to be ready to deliver it.
Beef up your burger menu
Who doesn’t love a burger? There are appealing options for carnivores and vegetarians alike, and while you can’t go wrong with a classic version on your menu, there is ample room for innovation too. If you want to bring some creativity to your burger selection, try some on-trend tweaks. Restaurant Business suggests swapping out the traditional cheddar for options like Gruyere, mozzarella, Muenster or goat cheese, which have all risen in popularity on menus according to Technomic. Liven up your condiments with ethnic sauces like Sriracha, sweet chili or poblano (and take it further by creating burgers themed to a particular global cuisine). Finally, substitute a premium roll like a pretzel bun or brioche for the standard roll — it will help your burger stand out on the menu and also justify a higher price point.
What’s your challenge? Whether you need help developing recipes and concepts, analyzing food costs, fine-tuning purchasing, planning a marketing campaign or managing another aspect of your business, we can provide guidance tailored to your needs. Contact Team Four at firstname.lastname@example.org or 888-891-3103 for more information.
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Food For Thought And Profit is brought to you by Team Four Foodservice/Value 4. We offer the latest foodservice trends, news, safety, and technological advances in the industry. We are an outsourced purchasing and logistics company that provides comprehensive supply chain solutions to our customers. Our executive team has many years of foodservice experience and we bring that experience to work for you. We have expertise in all areas of the foodservice sector.