It’s a question more restaurant operators are asking this year, as the cost of third-party delivery has increased beyond consumers’ and operators’ comfort zones. According to the National Restaurant Association’s annual State of the Industry report, an average of 13 percent of restaurants have stopped using third-party delivery services – even though delivery continues to be in demand by consumers. The trend was especially apparent outside of the quick-service category. While only 7 percent of quick-service restaurants severed their ties with third-party delivery companies, 17 percent of fine dining and coffee and snack businesses did so. The research found that instead of forgoing delivery altogether, most restaurants are taking the function in-house. The move can give operators greater control over food quality and safety, speed of delivery, as well as a larger share of profits. But it does require some planning and resource management. If you’re considering it, determine what geographic areas you want to serve and during what hours, how many staff you will need to support the effort, how they must be trained on everything from technology to off-premise food safety, and how you will mitigate your business liability if problems were to arise in the course of a delivery. What technology and tools could support you? Could a delivery management platform help? Test your service over a set period and track what went well and what needs to be improved. Also think about if and how you will promote this offering to guests – and if and how you want to use it to convert more orders to carry-out. In any case, collect data on how your delivery is going – both with regard to delivery times and reactions from customers. In a recent Restaurant Dive report about trends shaping the restaurant industry, Darcy Kurtz, CMO at BentoBox, weighed in about how food inflation is making menus smaller – and driving chefs to be more inventive and flexible with the menus they plan in an effort to operate efficiently. She said she doesn’t expect smaller menus to dampen people’s excitement about dining out, because “the [restaurant] discovery process is becoming more visual. It’s becoming more experience-oriented … that will offset any decline [in interest] because the menu isn’t quite as big as it used to be.” The times seem to be changing the definition of restaurants – and it’s becoming less about the food. Granted, it’s hard for a restaurant with poorly conceived food to survive, but the experience a restaurant offers is increasingly the secret sauce it needs to thrive. And the delivery of that experience is evolving too. As Food Digital reported recently, restaurants are becoming community hubs in new ways – perhaps applying some lessons learned from the pandemic. As they think beyond food, they are increasingly opening themselves up as spaces for events, workshops, community meetings and other gatherings – that also happen to offer food. How might you open your restaurant’s doors and reinvent it as a gathering place in an effort to build your brand and business? Most restaurant operators across categories are collecting a lot more data these days from a range of sources – whether it be from their POS system, loyalty program, digital ordering platforms, inventory system, labor management platform or some combination of the above. But when it comes to translating this information into actionable steps to grow sales, traffic and profits, a majority of operators still aren’t making the connection. New market research from Nation’s Restaurant News Intelligence found that 70 percent of operators wonder if they are optimizing the guest data they currently collect. This may be because inadequate data is being collected, or because the data is stuck in silos and isn’t easily or automatically combined to allow operators to extract actionable insights. Sound familiar? Using a data analytics platform – Keboola and Zoho are just two examples of companies in the market – can help you pull data from across your business and convert the information into proactive steps that can help you drive better results. Since your POS is the nerve center of your business, your POS provider may also be able to help you find ways to get your systems to talk to each other and minimize manual effort on your part. A March survey of U.S. restaurant guests had some revealing findings. Revenue Management Solutions, which surveyed 800 restaurant guests about their dining habits, found that higher-income households and families with children were driving decreases in traffic across all restaurant segments. The share of higher-income households (those earning more than $99,000 annually) that reported spending more of their disposable income on restaurants dropped significantly – 73 percent in the fourth quarter of 2022 as compared to 37 percent in the first quarter of this year. A Modern Restaurant Management report about the survey points to inflation being the likely cause of the change – and it’s also generating a shift in habits, with more guests willing to collect restaurant food in person than pay extra for delivery. If this is your experience, consider it an opportunity to elevate your in-person marketing efforts. How can you bring your brand front of mind for guests in ways not available to you if you were sending the same order through a third-party delivery company? Could you provide special last-minute offers to those collecting their meals? Extra loyalty points? Suggest additional items to complement an order? Then consider how smooth you make the collection process, whether through lower-tech means like easy curbside pickup or dedicated parking, or higher-tech means like geofencing to ensure a person’s order is hot and ready to go as soon as they arrive. Developing and renovating restaurants with an eye toward using energy wisely has been a growing trend in recent months – whether it be the installation of electric vehicle charging stations at select Subway sandwich shops or Chipotle’s recent announcement about developing all-electric restaurants that run on renewable energy only. In the latter example, the company is making such changes as installing solar panels, heat pump water heaters and shading built into the façades of their restaurants to reduce the need for air conditioning, as well as cooking with electricity instead of gas – a big departure for a lot of restaurants. These sorts of changes can attract positive attention from guests and investors alike – particularly as companies are having to make commitments about their Environmental, Social and Governance (ESG) standards. But while changes like those mentioned above generate media attention and positive public interest, slashing energy costs and having a positive story to tell about your efforts doesn’t require a massive investment or sweeping changes that are immediately recognized by guests. It calls for understanding the biggest draws on your energy and identifying adaptations, big or small. Even in the case of Chipotle, the restaurants will be generating the biggest reductions in their carbon footprint as a result of newly designed exhaust hoods over their grills – not the most exciting change among others they are making, but still an effective one. Where are your restaurant’s biggest energy draws? Battling rising costs has been a challenge for restaurant operators across categories this year. According to the National Restaurant Association’s 2023 State of the Restaurant Industry report, operators have tried everything from adjusting operating hours and staffing levels to increasing menu prices and swapping out menu items altogether to manage these increases. One additional area of your operation where expenses are lurking is in energy and there are a number of steps you may be able to take to manage costs here in ways that guests don’t even see. While some (though not all) require a significant up-front investment, longer-term savings should outweigh these costs. For example, there are opportunities to cut costs by swapping in energy-efficient ovens, dishwashers, refrigerators and other equipment that can significantly reduce your energy costs over time. On a smaller scale, turn off equipment like ovens and lighting when not in use, or use timers and sensors to power down these items when they aren’t needed. Maintain your equipment regularly to make sure it’s operating efficiently — cleaning air filters and replacing worn-out parts can prolong the life of your equipment and ensure you’re reaping the most savings from it. Use a programmable thermostat to set controls for different times of day or areas of your operation. Also rethink light — make use of natural light where possible and use LED lighting elsewhere. It’s another energy saver and lasts longer than alternatives. Finally, consider low-flow faucets and toilets to cut water bills. Inflation has changed the job market, bringing many workers back into it after they had retired, or offering flexible roles for others who shifted gears during the pandemic or left jobs for other reasons. Restaurants are hiring more of them — and are poised to continue to do so: According to data from the U.S Department of Labor, average hourly earnings increased 5 percent in retail jobs and 7.5 percent in restaurants and bars over the past year, as compared to just 4.6 percent in other industries. In quick-service restaurants alone, the share of job candidates aged 30 and older climbed from 4 percent in 2021 to 7 percent at the end of last year. If you’re looking to take on more staff, or even just diversify the candidates you attract, focus on your company culture in your outreach. Share stories about your team, promote your mission and values, and showcase your community involvement and commitment. Partner with community organizations and local colleges with continuing education programs to promote open positions. On social media, think local. For example, many local Facebook groups permit small businesses to promote themselves one day of the week — there many be potential candidates watching in places like this. Chip away at avoidable overhead costs Though the cost of food and labor tend to make the most headlines when it comes to current industry challenges, those aren’t the only budget line items on the minds of restaurant operators right now. According to the National Restaurant Association’s 2023 State of the Industry Report, a commanding majority of respondents are spending much more on overhead costs – including those for insurance, utilities, licenses and other items a restaurant needs to run – than they were a few years ago. While some costs are out of an operator’s control, there are a number of expenses that can be minimized with some planning. Consider insurance, for one. In addition to simply shopping around for the best quote, you can take steps to position your business for a better deal. While insurance prices are increasing across the board, insurers will provide better terms to a risk-aware business. Demonstrate your sound risk management by ensuring your fire alarm, sprinkler system and security cameras are up to date and functioning well. Document your staff’s safety training and provide evidence of your strong (or improved) accident record. If you do have a solid safety history, consider increasing your deductibles so you pay lower premiums each month. If your business has made major changes to its physical premises or how it operates, make sure you update your policies to account for those adjustments so you can avoid gaps in your coverage. Finally, if you’re in the market for several types of insurance, such as liability, property and cyber protection, for example, look for a provider who can offer a bundled package that can save you money – and ensure they have a solid record on claims payment. |
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