Digital ordering and delivery have grown 300 percent faster than dine-in traffic since 2014, according to Upserve. Thinking of isolating production lines in your restaurant to better accommodate off-premise traffic? Chili’s is seeing the value of it. The brand changed its kitchen structure to allow for better production-line preparation of menu items, and pared down its menu to include more profitable items. It has generated consecutive quarters of double-digit off-premise sales increases as a result. As restaurant operators contemplate how to adjust their business model to accommodate off-premise sales, companies continue to spring up to offer solutions. While ghost kitchens and cloud kitchens have made headlines, alternatives to those alternative spaces are becoming available. One example is KitchenPodular, a new company that develops modular, portable kitchen kits that contain electrical and plumbing, sinks, a walk-in cooler, and a ventilation hood and offer the option of a drive-through or walk-up window — operators supply their own oven and stove. The kit (each costs an average of $150,000 and ranges from 206 to 430 square feet in size) can be set up in a restaurant’s existing parking lot, on the outskirts of a city as part of a hub-and-spoke structure, or placed in another preferred location. KitchenPodular CEO Mike Manion, who was featured on a recent episode of The Takeout, Delivery and Catering Show, said these kits can provide restaurant with a turnkey solution for isolating production lines and churning out food to different customer bases more effectively. While they may not be for everyone — as The Spoon points out, they’re still facilities that need to be managed and staffed, and they don’t offer any shared labor for cleaning and dishwashing that one might find in a cloud kitchen — it’s another option to consider if you’re looking for a way to adapt on an ongoing basis to new streams of traffic.
It may still sound futuristic, but as artificial intelligence (AI) applications appear in the restaurant industry, you will want to ensure your technology can adapt to enable them. As DineEngine reports, there are a number of AI-enabled enhancements making it possible for operators to improve sales and customer relations. Are there hiccups in your ordering process? A chatbot or virtual assistant can lead someone through placing an order, suggest food based on the person’s preferences and never forget to upsell profitable additions. They can also handle customer inquiries and orders at any time of day or night, so instead of a staff member taking time to discuss a catering order during your dinner rush, your chatbot can iron out the details overnight.
The popular guidance on offering restaurant delivery can sound a bit counterintuitive: Find a way to make delivery work, despite the economic challenges it can create, or lose relevance with consumers. A new report in the Washington Post emphasized that point, indicating that the most recent industry earnings calls demonstrated the dramatic impact (positive and negative) of digital ordering and delivery on restaurants. Domino’s, for one, indicated that despite strong sales growth, it felt pressured by the “aggressive marketing of third-party aggregators.” Delivery is also having a big effect on Chipotle, which saw digital sales skyrocket more than 100 percent from the same period last year following a delivery promotion. The demand for digital ordering and delivery is clear. But as third-party delivery companies vie for business with enticing offers, how can you make delivery work for you financially? Consider raising your prices. If recent operator experiences are any indication, the extra cost won’t deter customers who value convenience. A report in Restaurant Business said when Habit Burger launched delivery last year, it increased the cost of delivery orders by 25 percent. Initially, third-party delivery companies were against this move, fearing pushback from consumers. But that has not occurred and delivery companies have softened to the idea. As you flex your business to accommodate more delivery orders, you may be surprised at consumer flexibility on price.
If you’re currently adjusting your approach to managing labor challenges, repetitive kitchen tasks or the overall experience you provide guests, a number of tech companies are working on solutions to help. At the recent food robotics summit ArticulATE, leaders of these companies sounded off on what’s in the pipeline, and as SmartBrief reports, a key theme of discussion was finding ways for technology to blend seamlessly with human employees and guests, while freeing up employees for more creative tasks. The formula isn’t the same for every restaurant. While there is technology available that can automate burger flipping and fryer operation (Miso Robotics), baking bread (Wilkinson Baking Company, among others), serving guests (Bear Robotics) and delivering food, finding the right kind of automation for your business is about understanding what is best for developing your employees and serving guests. As the CEO of Creator, the restaurant in San Francisco that uses robots to make the perfect burger but has not automated the taking of orders, said: “Our goal is not to be the world’s most automated restaurant, our goal is not to have as few people as possible -- the goal is to have the best experience possible.”
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.
When you need to revamp your strategy
Any restaurant can experience peaks and valleys in sales – so how do you know when you need to rethink your restaurant’s strategy? In a recent Toast blog, restaurant coach Donald Burns identified a couple of key areas to consider: First, does your restaurant plan need adjustment? Consider how your guests see your brand, how that compares with how you see your brand, and how you might need to reposition your brand in your market. Also ask yourself if your product mix is right – review your sales reports to determine what is selling (not what you want to be selling). Second, do you need to replace staff? Perhaps you have a culture that doesn’t attract top talent, or you made bad hires and kept them. Address snags in these areas – and in any other areas that keep you awake at night – to set your business on a positive course.
Gift card give and take
Last year, 90 percent of consumers either purchased or received gift cards, First Data Corp. reports. To stand out from the crowd of retailers offering them, it’s important to get creative. Restaurant Hospitality recommends you offer foods rewards instead of monetary ones – or let the person buying the card get a piece of the reward too. Saladworks in Conshohocken, Penn., for example, offers a free salad with a gift card purchase instead of a cash reward. Other brands offer menu items or cash bonuses that correspond with different gift card price thresholds. Try to use your restaurant’s personality to help make the sale, like Chicago-based Portillo’s, where employees in the drive-through are known to dangle gift cards from their hats – the tactic helps the brand sell more than half of its gift cards for the year.
Growing pains for operators who don’t accept tips
For restaurant operators that have gone the no-tipping route, running a business has become like assembling a jigsaw puzzle – or, says one director of operations, like opening a new restaurant. In a New York Times report about restaurants that have made the switch, the businesses have tried different strategies to adjust to the tip-free model: adding bulk to a plate to better justify a higher charge, adding a smaller cut of meat to the menu to balance a larger and more expensive one, limiting some organic produce, working with a smaller kitchen crew, and buying ingredients in bulk and in partnership with other restaurants to save on expenses. Expect more adjustments to come as operators test their pain points – and those of their guests – when it comes to adjusting menu items, prices and staff.
Back to basics for Chipotle
While Chipotle would surely like to say good bye to 2016, the brand’s challenges this year provide a valuable list of lessons for the rest of the industry. The Chicago Tribune reports that its efforts to win guests back following its brief wave of contamination incidents have fallen flat, with sales down 22 percent in the most recent quarter. While Chipotle has tried overhauling food safety measures, adding chorizo to the menu, launching a summer rewards program and offering free kids’ meals, it now seems to be running into trouble on such customer service no-nos as long lines, messy dining rooms and drink stations, and missing ingredients. Now it sounds like the brand is refocusing on the basics that made it a darling of the industry in the hopes that guests will return.
Automation spreads from coast to coast
Eatsa, the eatery that offers quinoa bowls from a high-tech dispensary with minimal human involvement, now has a New York restaurant to match its west-coast outlet. Guests order food from tablets in the restaurant or via smartphone app and pick up their food from electronic cubbies. While humans do work at Eatsa, they’re limited in number, working behind the scenes making food and standing out front to answer guest questions. Eater reports the model helps the brand cut costs and customize orders too – Eatsa owner Scott Drummond hopes to bring the cost of a quinoa bowl from $7 down to $5 and further develop its technology to offer custom bowls to guests based on their past orders.
The bar menu gets reinvented
Seventy percent of people between the ages of 21 and 34 purchase alcoholic beverages away from home at least once a week, reports Technomic and Beverage Marketing Corp.’s new On-Premise Intelligence report. That’s compared to just 48 percent for everyone older than those in that bracket. To capitalize on younger consumers, the report predicts we’ll see more alcohol popping up on menus at limited-service restaurants – Taco Bell and Starbucks are already cashing in on this idea. These consumers like to branch out and try new flavors, so bars targeting the demographic will offer a broader variety of alcohol categories, brands and styles, limited-time drink specials that rotate through the menu, and craft beer made on site.
Restaurant industry flexes to accommodate the independent worker
More cafes and restaurants are finding ways to embrace the 35 percent of the workforce who work independently. Eater recently reported on some newer approaches for appealing to these guests, such as cafes charging guests a $6 flat fee for their first hour spent onsite, then five cents each hour thereafter, which grants each person a workspace and unlimited coffee, tea and snacks. Others offer hybrid hospitality/workspace for monthly fees ranging from $95 to $220. In cities with bustling happy hour and evening business but non-existent lunch business, restaurants are offering space to independent workers during the day when they purchase either a monthly or day pass.
Protect your dry goods storage
Start your new year with a food supply that meets safety standards. Food Safety magazine shared some simple rules for making sure your dry goods are stored safely: Rotate your food – the first item in should be the first out. Keep your storerooms dry, well ventilated and cool (between 50 and 70˚F), with humidity of 15 percent or less. Avoid storing food in direct sunlight. Store food at least six inches from the floor and at least 18 inches from walls to minimize the development of condensation and ease cleaning and vermin control. Keep doors and windows sealed and shut whenever possible to prevent the entry of rodents, insects or birds. Finally, have adequate space to accommodate what you store. Use this equation to help determine if you have sufficient space: Required storage area (sq. ft.)= (Volume per meal x number of meals between deliveries)/(Average height x fraction of usable storeroom floor area).
A purple blow torch promises safer food
A major food safety innovation on the horizon could help restaurants prevent norovirus. Food Safety News reports that cold plasma treatment, also known as a purple blow torch, kills 99.9 percent of norovirus on blueberries without harming the fruit. The researchers report that the method has the potential to extend shelf life by slowing spoilage rates. While they say there is further research needed before the cold plasma method is available commercially, they expect the technology to be accessible and affordable for the food industry to use. Food Dive reports that when that occurs, it could revolutionize the industry, benefiting the security of meats, poultry and produce.
Do you have the right point-of-sale system for you?
Are you using a retail point-of-sale system at your restaurant? Toast outlined why even if it offers you the basics, it’s likely holding you back. A system designed for restaurants will offer you table management, online ordering (without having to pay a third-party ordering site), and analytics that will help you see what sold best that day, how you can create sales forecasts and which server generates the best tips. It will help you develop a reliable customer database that tracks who your most loyal guests are, what they love about you, and what they order -- information you can use to deliver communications and promotions that resonate with them. Finally, it offers efficiency by helping you integrate your inventory, sales, employee scheduling, loyalty program and customer database. Does your current system offer these tools?
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