Across industries in the U.S., labor productivity has effectively doubled over the past 30 years, according to recent data from the Bureau of Labor Statistics. However, the foodservice industry has been among the slowest to grow, at about 80 percent below the national average and ranking just below the post office and just above the mining industry in productivity. The food and beverage strategy firm Aaron Allen & Associates points to one culprit holding the industry’s productivity back: restaurants’ slow adoption of new technologies. The company says the next five years will be more disruptive to foodservice operators than the past 50 years have been, and slow adopters of technology are likely to be left behind. Specifically, technology is making the restaurant experience more and more frictionless for customers and operators alike: Once a consumer gets used to ordering his favorite take-away meal with merely a couple of taps on his phone, then automatically earning loyalty points redeemable for this item at the times of the week when he craves it most, he won’t want to give up that experience. Similarly, once an operator is using tech to monitor everything from the most popular menu items to the functionality of appliances, she has time to focus on providing better customer service, connecting with staff or even scaling up the business. While these updates can be difficult to transition to for an older operation used to managing business more conventionally, restaurant startups are launching with this technology already embedded into their business models ― and it’s giving them a clear advantage when competing with more established brands.
Food packaging technology is evolving so fast that it’s making plastic cutlery seem almost quaint. A startup called Planeteer LLC, for example, has taken on the challenge of packaging waste and developed a variety of cutlery that isn’t merely compostable but also edible. The company has created a spoon that it promises will hold its shape for 25 minutes in hot soup and 50 minutes in a cold dessert, The Spoon reports. Planeteer cofounder Dinesh Tadepalli said it is vegan, all-natural, rich in protein and composts in days if not consumed. The company will be presenting its product at the Smart Kitchen Summit’s Future Food Competition in October.
At Winsight’s September FSTEC conference, where restaurant operators gathered to hear about up-and-coming developments in technology, voice recognition showed special potential as a tech tool to watch – particularly for its back-of-house functions. Consumers are becoming more comfortable with voice recognition as an everyday convenience – emarketer predicts that more than one-third of the U.S. population will use a voice assistant monthly this year, up 9.5 percent from 2018. That has paved the way for voice recognition becoming more common as a means of enabling consumers to place orders more efficiently from home and on the road (note McDonald’s new purchase of Apprente, a startup building technology to automate voice ordering in multiple languages, which McDonald’s could implement in its drive thru, mobile and kiosk ordering). Voice recognition’s applications beyond ordering have been slower to develop, but that is now changing, according to Restaurant Business. Presenters at FSTEC identified such uses of voice recognition technology as providing food preparation instructions for kitchen staff who aren’t able to leave their stations to look at a recipe or search for directions on a computer screen. Chowly CEO Sterling Douglass said while there is still a long way for restaurants to go when using voice recognition at the back of the house for this purpose, those that are using it with human backup are already seeing 50 percent reductions in cost. For operators looking for additional ways to operate with smaller teams or otherwise cut labor costs, voice recognition could be an additional tool in their toolbox.
The ownership of consumer data has long been a stumbling block for operators considering the hiring of third-party delivery providers, but increasingly, competition in the industry is making it possible for restaurant brands to cherry-pick the options they want from providers. There are several recent cases in point: GrubHub won Shake Shack’s business nationwide by offering to share customer data. Panera has made it possible for customers to place orders via Uber Eats, DoorDash or GrubHub and then have food delivered by its in-house team. Most recently, Chowly did just the opposite. The company said its system now allows restaurant operators to accept orders through its website or app, then farm them out for delivery via DoorDash. It’s an additional sign that for brands eager to make food delivery work, there may be wiggle room when negotiating contracts with vendors.
Across the restaurant industry right now, profits range from 0 to 15 percent, according to Toast, and profits between 3 and 5 percent are most common. That doesn’t leave much wiggle room for making errors or adapting to industry changes such as the rising demand for off-premise dining. Operators have to be continuously creative when it comes to finding and mining sources of revenue, whether from new products, services or partnerships. (Note the current fervor around restaurant brands partnering with Beyond Meat, with Subway and Hardee’s being just two of the latest companies to tap into the meat substitute’s popularity.) Restaurant Nuts suggests operators consider options such as joint ventures – for example, partnerships with grocery stores to sell your products can help you promote a special offering while lowering your sales and marketing expenses. Or, as All Food Business suggests, you can partner with a corporation to offer expense accounts, business dinners, client programs or events that can generate income. You can align with a business or charity whose mission complements yours if it helps you to expand your audience, offer a special event you wouldn’t be able to offer on your own, or tap into resources (such as technology or delivery capabilities) that benefit both parties. Within your business, building out a catering menu can help you make the most of your food costs (and minimize waste) while serving lucrative off-premise and corporate customers. Depending on your business, there may also be opportunity to offer retail products like clothing or take-home versions of signature sauces that your restaurant is known for.
Want to win over customers? It’s not about having mouth-watering new specials or transforming your marketing strategy. It’s all about your operations. (At least that seems to be the trend based on recent performance results of a number of major brands.) As reported in Restaurant Business, brands including Dunkin’, McDonald’s, Starbucks and Wendy’s have prioritized operational changes over menu innovation in recent months. Wendy’s has focused on eliminating tasks and training employees to improve speed of service. McDonald’s continues to experiment with automation and has held competitions to find ways to serve guests faster. Dunkin’ has streamlined its menu and changed the layout of stores to improve flow of operations. As for Starbucks, third-quarter same-store sales increased 7 percent and store traffic increased 3 percent, due to what the company says is its focus on simplification – reducing the tasks that need to be completed in-house and shifting employees’ focus to guests. How can you simplify your operation – both with and without technology – to deliver better service?
If you feel like the rising costs of ingredients, labor and transport give you no choice but to raise prices at your restaurant, you might take comfort in knowing that across the country, brands are following through and raising prices -- and customers (so far) aren’t blinking. As the Wall Street Journal reported recently, Chipotle, which raised prices last year, experienced a 10 percent rise in sales largely as a result of bigger orders. Mondelez and McDonald’s have been experiencing similar results after boosting prices. While talk of a recession looms, U.S. consumer confidence is still at near-record highs since the recession, according to the Conference Board. If you need to raise prices in the coming months, find ways to make consumers feel it’s worth their while to pay you a visit. Link your price increases to discounts and other promotions, particularly for your most loyal guests. As Psychology Today reports, those deals tend lead to greater overall spending – an item regularly sold at a stable, discounted price will seem more valuable and worthwhile when the price is raised and a generous coupon is offered to offset it. Be strategic about the promotions you offer. As Toast advises, for a promotion to be most successful for your business, you should take time to understand your target customers and tailor promotions to what motivates them; address the business operational challenges you face (and which your point-of-sale system – not your gut -- will best help you identify); tap into local media, which can broaden awareness and interest well beyond the time frame of your promotion; and know your margins so you can bundle items that will lead guests to try higher-margin items on your menu (i.e. offering free fries with every milkshake purchase is better than simply giving away fries).
Long a trend setter in the delivery space, Domino’s is now going national with its use of e-bikes to boost delivery efficiency, according to a QSR Magazine report. The brand, which announced a partnership with e-bike company Rad Power Bikes recently, had been testing electric bikes in markets including Miami, New York and Houston and saw improvements in delivery and service as a result. As third-party aggregators vie for restaurant delivery customers, Domino’s has sustained its use of an in-house delivery team. While that can be a financially beneficial move for a large brand, the introduction of delivery via the Rad Power e-bikes, which have integrated motors that assist with pedaling up to speeds of 20 miles per hour, may enhance that efficiency further. Domino’s reports that there have been labor benefits from being able to hire candidates who don’t have a driver’s license but can use a bike, as well as team satisfaction benefits from workers who had been delivering via bike and can now get an extra boost when pedaling up hills with the help of a motor.
Consumers like a limited-time offer: Whether it has to do with short attention spans or a desire for something new and different, there has been a 64 percent spike in LTOs in the past five years, according to Technomic. Their research also found that a majority of female consumers and millennials are drawn to innovative dishes, new flavors and menu launches when they choose a restaurant, and 30 percent of quick-service customers would visit a restaurant they wouldn’t normally visit if it meant taking advantage of a unique LTO. Restaurant Business advises operators to consider several factors when developing an LTO to attract guests. First, set a goal you’re hoping to achieve and design your LTO around it. (An LTO that will bring in guests for several weeks or months will need to have broader, more mainstream appeal than an LTO designed to generate a lot of buzz for a short time.) Second, consider your demographics and let your data guide your decisions. Preferences will vary across generations and genders, so consider everything from your LTO’s ingredients to its portability when anticipating how guests are likely to perceive your offer. Finally, use language that describes the sensory experience of eating what you’re selling (e.g. think “crunchy” vs. “breaded”) and promote the health-conscious aspects of your LTO. Words like “fresh,” “local” and “made from scratch” tend to score especially well with consumers.
Facial recognition technology has become a trend to watch in restaurants this year. While it may sound Orwellian, its potential for streamlining the payment process and loyalty programs is difficult for restaurants to ignore. A number of quick-service restaurants around the country have begun using biometric facial recognition to profile each customer’s order history, demographics and loyalty points. The technology appears to be best suited for the quick-service space at the moment but as rollouts occur across categories, note the effects (positive and negative) it has on customer experience.
Is your restaurant known for its local flavor? Do you (or could you) offer a creative dining experience or other event that could become a memorable part of a person’s vacation or business trip? Consider who may be passing through town in search of a good meal. Skift Research found that 43 percent of tourists plan their travel with food as the main purpose. Tourists and business travelers are often looking for an authentic, local dining experience — and then posting about it to their friends online. Local Airbnb hosts, hotel companies, delivery providers and other complementary businesses can be helpful partners who can connect you with potential customers. Consider DoorDash’s new partnership with Wyndham Hotels & Resorts, which allows guests at its 3,700 U.S. hotel properties to bypass room service and get restaurant delivery for free from DoorDash member restaurants. (InterContinental Hotel Group already has a similar relationship with OpenTable and GrubHub, while Resy also works in partnership with Airbnb, allowing guests to make in-app reservations at a curated selection of restaurants in a number of cities.) But even without formal partnerships you can get the word out to people visiting your area. At the very least, get to know the travel bloggers who cover your region so you’re on their radar when they suggest local dining options.
Do you know your business case for managing food waste? According to a recent report from the World Research Institute and the Waste and Resources Action Programme, restaurants can earn $7 for every dollar they spend on food waste management. AgFunder reports that the research behind the study assessed the food waste management practices of more than 100 restaurants in 12 countries, including restaurants ranging from international quick-service brands to upscale, sit-down restaurants. The participating restaurants tried a “target, measure, act” approach to food waste, which involved measuring the food being wasted to identify the biggest pain points, then engaging staff, reassessing inventory and purchasing practices, reducing overproduction and repurposing excess food. Participating restaurants reduced food waste by 26 percent on average, and more than 75 percent of the restaurants had earned back the investment they made to cut food waste in the first year alone.
Build a culture of positive customer experiences
Do you have a culture of customer service? It’s not something you can achieve in a one-day training seminar. Justin McGurgin, who has spent 30 years in hospitality and currently runs Zealifi, a company that coaches operators about how to build a culture that provides positive, memorable experiences for guests, spends most of his time working with leaders, not staff. In a podcast on Profitable Hospitality, he said staff are simply a reflection of the leadership they’re getting (or not getting). One-off training seminars are little more than a band-aid fix, motivating your team only as long as your trainer is in the building. So what does McGurgin suggest instead? In year-long training modules he conducts with operators, McGurgin typically spends the full 12 months with the organization’s leaders – junior team members join in for just five months across that time frame. When working with leaders, he focuses on engagement and empowerment. Do you build connections with your team by saying hello when they walk in the door? Scheduling one-on-one meetings with them in addition to group meetings? Acknowledging their accomplishments with a personal note and in group meetings, emails or texts? When something goes wrong, have you empowered staff to handle it, instead of having them come to you for guidance when a customer complains? When you can answer “yes” to those questions, you have the makings of a strong culture. That has important benefits: You’ll be able to attract more stars to your team (and have a better chance of enticing them to stay), you’ll have a team that won’t tolerate weak links (so you won’t be the only one managing quality control) and you’ll have more time to focus on firing up the creativity at the top of your organization, so you can ensure you continue to bring customers through the door.
Where to innovate first? Try your back office.
“Today’s delights are tomorrow’s expectations,” according to the Culinary Institute of America’s Tim Ryan, who spoke at the recent Restaurant Leadership Conference. It’s true of your food, service and technology. If you’re unsure of where to innovate across your operation, automating your back office is a good place to begin, according to Alister & Paine, a magazine for company executives. As the nucleus of your operation, running it smoothly can help you manage your scale and achieve goals with less effort. If you’re comfortably paying vendors by check, for example, the number of checks you need to write each month can escalate quickly (and become a chore) when you invest in marketing, increase your customer volume or hire additional employees. Electronic payments can help you accomplish more tasks more quickly and with less effort. Vendors are increasingly expecting shorter payment terms, so providing payment with the click of a mouse can help you keep valued suppliers and stay a step ahead of competitors. And if your competitors are automating their back office, it will quickly become compulsory – not just nice to have. That said, what works for your competition won’t necessarily work for you. FSR Magazine recommends you audit your operation to identify process improvements you can make to enhance any automation you introduce. That could mean synching different processes or software programs, identifying ways to ensure all invoices are processed correctly, or using a special barcode on invoices if it helps you save money on each invoice. Consider outsourcing your accounts payable if you find your back-office work is taking attention away from providing great food and service. When outsourcing gives you access to a dedicated customer management team that handles your invoices and vendor requests, for example, it can help you gain some visibility and control over your finances while freeing up time for focusing on other parts of your operation.
What’s the next kale?
What is it about kale that made it skyrocket in popularity and become consumers’ favorite superfood? According to Nielsen data, frozen breakfast entrees featuring kale experienced a whopping 391 percent growth in sales between 2016 and 2017. David Sax, who wrote The Tastemakers, said it comes down to three traits: versatility, availability and cultural significance. As Food Dive reports, kale can be eaten raw or cooked, has a long growing season in a range of climates and has become a symbol of health, which in combination made it a must-have on menus and consumers’ dinner tables. The ubiquity of food images and experiences on social media can help foodservice operators predict the next foods and beverages poised for a big break. Food industry analysts say drinking vinegars could be the next big thing to go mainstream. While they’re appearing on menus as kombucha or alcoholic mixers, there’s plenty of room for them to grow.
It is really organic? Buyer beware.
Food labels can mean the difference between winning new customers and losing the ones you have. A recent Washington Post report detailed the story of a 36 million-pound shipment of soybeans that originated in the Ukraine, passed through Turkey, was fumigated with pesticide like regular soybeans, priced like regular soybeans, then labeled “USDA organic” and increased significantly in price upon arrival in the U.S. That shipment, along with two other grain shipments that passed through Turkey and subsequently sparked questions about organic labeling, demonstrate weakness in current U.S. standards determining what commodities are organic. (Approximately half of organic commodities, including corn, soybeans and coffee, come from outside the U.S.) The Post report says although organic food imports from Turkey, China and other countries have invited increased scrutiny, gauging the level of fraud in imported organics is difficult because organic companies have little incentive to announce their suspicions about suppliers.
Swap out the sugar
The message is finally taking hold around the globe: Cut the sugar. Food Quality & Safety reports that sugar sales may grow at their slowest pace this year and next as consumption drops in developed countries. Many such countries have proposed or implemented taxes on sweetened beverages, have banned vending machines in schools and introduced warning labels on high-sugar foods, among other measures. The analyst group Platts Kingsman forecasts sugar consumption to increase just 1 percent, half of the annual growth it has experienced in the past decade. While some countries are accommodating consumers’ cravings for sweet foods by using sugar stand-ins like high-fructose corn syrup, many foodservice operations are reformulating products to decrease the amount of sweeteners overall. Now is the time to consider creative ways to bring sweetness (but not added sugar) to your menu.
Facebook brings (some) restaurants one step closer to customers
Soon, it may not be sufficient to simply have a restaurant page on Facebook – your neighborhood restaurants might be accessible directly from Facebook users’ homepages. Facebook recently made it possible to order food directly from its app menu on the main login page. It allows users to find a restaurant list, review the menu, include a tip and pay for the meal without having to navigate away from their Facebook page. The Next Web reports that on the app menu on the left-hand side of the Facebook home page, a new hamburger icon links to local restaurants that deliver (it currently includes just restaurants using Delivery.com or Slice). While the functionality isn’t universally available yet, look for it to expand and give some restaurants first dibs on hungry customers.
What makes for a professional-looking post? Here’s a cheat sheet.
Social media is a must for any foodservice operation – unfortunately, having a professional presence on Facebook, Twitter, Pinterest, LinkedIn, Instagram or other networks requires you to meet different standards for the photos and logos you post. To help, Louise Myers Visual Social Media, which advises companies about using graphics, photos and other images effectively on social media, provided a cheat sheet to help you navigate the requirements of various sites and the recent updates that could alter what you can post. Visit http://louisem.com/2852/social-media-cheat-sheet-sizes for a handy chart you can reference when posting images to a variety of networks.
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