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.
Even small commodity fluctuations can have a substantial impact on restaurants. Take Chipotle, one among thousands of restaurant brands where guests expect to find avocados. Aaron Allen & Associates reported that in 2017, surging demand for avocados, paired with smaller crops in Mexico and California, had analysts predicting that every 10-percentage-point increase in avocado prices would lower Chipotle’s earnings-per-share by 30 cents on an annual basis. And that was for just one ingredient. Developing a plan to track global shortages and surpluses can help you avoid similar scenarios. Restaurant Nuts recommends several strategies: When you plan promotions to bring people in, make sure the items you promote are those whose ingredients are more widely available and profitable. During periods when producer costs are stable, anticipate times when they may fluctuate and build in incremental price increases early so you can maximize your profitability and avoid shocking guests with price surges. Cost out your menu. Add items that don’t use volatile commodities, and for popular but less profitable items, identify areas where you can easily make substitutions. Mine your data so you understand your most popular menu items and pairings, then design your menu and promotions so you direct guests to those items. Securing long-term contracts with suppliers can help you weather potential market fluctuations. Where this isn’t possible, you can always tell your guests about the challenge (without overusing this tactic). If a major hurricane wipes out a crop of an important ingredient you feature on your menu, for instance, guests are likely to understand if you’re transparent about why that ingredient is temporarily unavailable — and what appealing item you’re offering in its place.
In the first quarter of this year, 46 percent of consumers who ordered Uber Eats in the U.S. also ordered from one of its competitors, according to the data research firm Second Measure. That’s despite these companies offering incentives to keep customers coming back. As a result, Vox reports, third-party delivery companies are currently engaged in a price race to the bottom. But before long, these companies won’t be able to continue their streak of losses and will need to charge higher prices. Their relationships with partner restaurants and customers will be all the more critical. As vendors risk getting weeded out, restaurants may wield some leverage.
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.
New research from the National Restaurant Association found that delivery, drive-thru and takeout food are on track to comprise 63 percent of restaurant sales this year – and many industry insiders see off-premise sales as the industry’s key growth engine. Recent consumer data demonstrates the potential. For example, Foodable reports that more than 80 percent of consumers younger than 35 are using on-demand food ordering apps about twice a week, and Food On Demand reports that delivery sales are 75 percent higher than in-store sales. At the same time, a declining percentage of consumers want to talk to others when visiting a restaurant, according to a recent study from Harvard Business Review. Clearly consumers still crave a restaurant experience but the best way to engage those people may no longer be via an in-person conversation. Harnessing technology to drive off-premise sales is key to tapping into the off-premise opportunity. Do you have a technology blueprint for driving off-premises sales? As of this writing, we were a few weeks away from the 5th annual Takeout, Delivery & Catering Symposium, which will gather industry leaders to forecast what’s ahead for off-premise sales, as well as how operators can use customer analytics to drive sales and engagement, and how technology can make a restaurant operation more efficient. Stay tuned for details from the event in the coming weeks.
As Beyond Meat and the Impossible Burger compete for market share and fast-casual and quick-service brands scramble to bring meat substitutes to their menus, don’t forget some other plant-based meat alternatives that may suit your menu well. In a recent Upserve survey of 9,000 restaurant operators, jackfruit had climbed 52 percent on menus in the past year. Unripe jackfruit has a taste and texture that mimic meat and can work well as a pork or chicken substitute. It is also nutrient-rich, containing calcium, iron and potassium, and because it is a natural plant-based protein, it may appeal to guests looking to consume more whole foods.
Not every restaurant wants to be family-friendly. But if families are in your target demographic, there are steps you can take to serve them well as summer approaches and they spend more time eating out. First, offer some healthy (or at least real) options: think chicken nuggets that are breaded and baked instead of deep-fried, fresh fruit and vegetables, and desserts that aren’t packed with sugar and artificial ingredients. Scale down portion sizes and be flexible with sauces, sides and substitutions to accommodate allergies and fickle appetites. Package or present kids’ options as meal deals with creative, kid-friendly themes — and weave in your branding to get a social media boost. Adjust the rhythm of the meal so you serve adult drinks and kids’ appetizers first, follow with adult appetizers and kids’ meals, and then serve adult entrées and kids’ desserts. Offer crayons and create an activity placemat or cover tables in butcher paper so parents don’t have to struggle to keep kids entertained while they wait. And speaking of making things easier for parents, try offering a kids-eat-free deal on days when you’re also promoting parent-friendly specials. If you have the space available, seat families at booths or larger tables that can accommodate extra gear and give children space to spread out. Having changing stations (or at least a flat space that can be used as one) in all restrooms can help make your restaurant an easier choice for families too.
The purpose of restaurant apps is evolving. According to research from App Annie, Gen Z, as compared with other generations, is 30 percent more engaged in apps that aren’t about gaming and other forms of entertainment. Instead, they value apps that are key to the mobile checkout process and help to keep them loyal to and engaged in a brand. Last year, Americans overall spent 140 percent more time in food and drink apps than they did during the two years prior to that. While there are certainly more apps joining the market that help account for that growth, operators are also becoming more savvy about guest engagement. Connecting with consumers and elevating their level of engagement is less about having an app that entertains and more about providing a simple, relevant, customizable experience whether the person is accessing the restaurant online or in person.
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.
The automation of a growing number of restaurant tasks may be creating anxiety about the future of restaurant jobs, but the National Restaurant Association’s new State of the Restaurant Industry report had some positive news on that front. According to analysis of the U.S. Census Bureau’s American Community Survey, the number of restaurant jobs with annual incomes between $45,000 and $74,999 jumped 71 percent between 2010 and 2017 (that’s compared to climbing just 21 percent for the overall economy during that period). The result is a sign of career growth prospects and upward mobility even as lower-level jobs decline, particularly at tech-forward brands. Still, recruiting and retaining employees was a top concern operators shared in the report, with 35 percent of operators saying they struggled to find people for open positions, particularly in back-of-house roles. Longer-term projections shared in the report indicate a shrinking teenage labor force, long a key demographic for restaurant operators looking to hire staff. Employees older than age 55 could be stepping into their shoes, however: Between 2017 and 2018, the number of adults in this age group who work in the restaurant industry climbed 70 percent, or by 400,000 people. Does this statistic match your hiring experience in recent months? Watch for the National Restaurant Association to launch a training and certification program that will highlight longer-term professional opportunities available in the restaurant industry.
A cloud-based point-of-sale system has plenty of benefits, allowing you to access your system from anywhere and manage your data even when your Internet is down. But as a Cake report points out, other benefits of these systems may also make for happier employees. By having the ability to review dynamic reports stored in the cloud, you can readily identify your busiest and most profitable shifts and then make changes as needed. Your staff, in turn, can make their own changes so they have the shifts they want and can easily trade the ones they don’t — and you’re not caught short-staffed. Beyond that, your cloud-based system can track what your employees earn. At a glance, you can identify who is bringing in the most sales, then reward (and have a better chance of retaining) those who are best for your business.
If you’re taking steps to reduce your restaurant’s waste and make your packaging more environmentally friendly, why not share the benefits with your guests? A study from Cone Communications about corporate social responsibility found that 88 percent of consumers are more likely to be loyal to a company that supports social or environmental issues. Similar proportions of guests say they trust such companies and would buy a product from them if given an opportunity. Upserve suggests some tips for building a positive image around your sustainability efforts, including offering a discount on the dishes you offer that have the lightest environmental impact (try assessing your ingredients with an eye toward how local they are or how much water or pesticides were used to grow them). If a guest brings his own container to pack up leftovers, offer a small discount or promotion. You can even host a recycling event, encouraging guests to drop off electronics or less-easily-recycled items and then recycling those items on their behalf. If you need to increase your operation’s sustainability efforts before you promote what you’re doing, QSR Magazine suggests you make space behind your restaurant for compost and recycling bins in addition to trash bins, as well as a cardboard baler that will allow you to condense the footprint of your boxes and have them collected at one time. Then work with your supplier to improve upon your packaging. Order compostable or biodegradable packaging and utensils, or if you have to order plastic, aim for only plastic No. 1 items, which are the most frequently recycled plastics. Finally, understand what can and cannot be recycled by your provider. You may be overlooking items —lightbulbs, batteries and printed menus, to name a few — that are recyclable.
Are your accounting practices still paper-heavy and technology-light? Automating your processing of invoices can unlock a number of real-time benefits for your business, according to a Restaurant Nuts report. For one, automating your invoices can help you capture data by line item and decrease the number of manual processes you must manage, which allows you to spend more time on other parts of your business. You can track inventory prices (in addition to your other bills) in real time, so you can make adjustments to your ingredients or menu pricing as soon as they’re needed and not have to play catch-up. The same goes for waste — an automated system can help you see what’s selling and what’s not so you have a better handle on the supplies you need, and if you ever have to reject a shipment, you can make sure you keep on top of any credit given to you by a vendor.
Offering a targeted loyalty program will build your customer base — no big surprise there. But how much more effective is it to offer such a program than to not offer a program at all? And with so many businesses offering loyalty programs nowadays, how can you stand out? New research from Accenture Interactive found that members of customer loyalty programs generate 12 to 18 percent more revenue for businesses than customers who aren’t members of a program, Dine Engine reports. What’s more, 81 percent of consumers said they were more likely to continue giving their business to brands that offer a loyalty program and 73 percent are more likely to recommend a brand with a strong program. The report said consumers are more likely to adjust their spending based on a loyalty program by spending more money to earn more rewards. These programs may even help restaurants retain loyal guests during economic downturns when consumers are cutting back on discretionary spending. However, research from Forrester found that more than 80 percent of loyalty programs use currency such as points or miles, which can make it difficult for programs to stand out. To boost your program’s chance of success, it can help to remove the barriers that stand between your guests and the rewards they can earn. Show them a clear path to rewards and try to avoid having them encounter multiple barriers such as having to download an app, remember a membership card or login details at each visit, enter a code or register an account online. Also, take a look at potential experiences you can offer your guests. What memorable events or offers can you provide that won’t easily be replicated by your competitor down the street?
Adopting new technology for your restaurant may seem like a necessary evil — the initial investment can be substantial, there are multiple pieces and functions to consider, and it’s impossible to know how quickly the popular tech tool of the moment will become obsolete. Still, the numbers show clearly that restaurants that don’t adopt technology will be left behind. Operators from brands including Wings Etc., Fazoli’s and Your Pie have struggled with this dilemma and they addressed it at the recent Restaurant Franchise & Innovation Summit in Louisville. According to a report in Kiosk Marketplace, the leaders emphasized that operators feeling vexed over tech decisions aren’t alone. The best way to make progress, they agreed, is to focus on doing one thing (or a few small things) well and then gradually improving upon those efforts. Zero in on your biggest pain points or opportunities: Your Pie has set out to perfect its AdWord campaigns to find the right customers, while Fazoli’s has focused on building upon its data-rich loyalty program. For whichever tech tools you decide to focus on, create a broader strategy that considers all of your stakeholders and spells out how they might contribute to (and benefit from) your success.
Rising labor costs are forcing all restaurant operators to make tough decisions about how to manage staff and how to prepare the food they serve. But what happens when the decisions you have to make are central to the brand identity your guests associate with you? Case in point: Chop’t. The fast-casual chain is known for chopping salad in front of the customer, a practice that provides some visual intrigue while sending the message to guests that their food is freshly prepared according to their tastes. But the company announced recently that it would be making the switch to pre-chopped ingredients. (Guests can still have their salad chopped but have to request the service.) Darren Tristano of FoodserviceResults predicts that regular guests could be turned off by these changes — in the short term — but will probably forgive the changes and return to old habits eventually. Just the same, if you’re experiencing a similar need to cut back on services that are central to your brand and important to your best guests, what can you do? A well-executed loyalty program may help you bridge the gap. Chipotle, for example, recently unveiled a new digital loyalty program designed to both give guests what they want and continue to collect customer data that will help the brand feed future decisions that will keep guests engaged. Skift Table reports that the new loyalty program, which was market tested for months, awards guests with free chips and guacamole after one purchase. Each $10 purchase earns guests one point and after $125 spent, guests earn a free entrée. These enticements are encouraging more visitors to sign up for the loyalty program — and share their data in the process. From there, Chipotle can study what factors bring those guests back and make them spend more money, whether it’s discounts on certain items or special promotions. What can you do to keep your guests coming back?
A growing number of fast-casual restaurants are becoming less about having guests stay and eat and more about letting them pick up food to go or have it delivered. Eatsa, the fast casual bowl concept that pioneered the idea of automating food to go, is now focusing on helping many of these fast casuals launch virtual restaurants, which can help brands test potential concepts or service models with minimal investment. The Spoon reports that Eatsa’s new tech offering, dubbed Omnichannel Intelligent Queue Software, can calculate the exact status of an order, send customers a down-to-the-minute update, and alert delivery drivers about the exact time to pick up an order so it doesn’t wait for long. When a driver arrives, a branded pickup station directs the person to the specific order that needs to go. (Deliveroo is the first customer to put the new Eatsa tech into practice at its 10-kitchen food hall in Singapore.)
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