![]() As restaurant operators have tried to accommodate off-premise guests in recent years, the ghost kitchen quickly emerged as an appealing solution – giving operators a low-overhead option for starting a new foodservice concept or keeping an existing one humming while dining rooms were closed. But growing pains have begun to emerge for the industry. A recent Restaurant Business report indicated that operators were struggling with the high cost of delivery from their ghost kitchens, as well as attracting and paying staff and marketing locations that were designed to be invisible to the public. But since ghost kitchens were initially promoted as operator-friendly entry points into the industry, some say their difficulties may be more rooted in the experience of the operators themselves. John Meyer, CEO of Ghost Financial, which provides loans, insurance, payroll and other financial products to ghost kitchen operators, told Restaurant Dive that ghost kitchens have been attracting operators who lack industry-specific skills in digital advertising, targeted advertising and integration with delivery apps. But as we have learned from the pandemic, every challenge creates an opportunity: To help ghost kitchen operators get up to speed, Meyer developed GhostU, an online educational program designed to help restaurateurs build, scale and run a profitable ghost kitchen. Restaurant Dive reports that the program provides a minimum of 12 videos, along with step-by-step worksheets and three months of access to Ghost Financial’s Ghost Kitchen Community, where ghost kitchen owners can share their experiences and access interactive workshops and Q&A sessions. ![]() Labor Pains Is your labor pool feeling a bit shallow? You’re far from alone. In the National Restaurant Association’s May 2022 tracking survey, 58 percent of operators said recruiting and retaining employees is the top challenge currently facing their business. Some tactics to improve your ability to attract and retain staff: Weed out dangerous or dirty tasks – try to either automate them or improve them. Incorporate more tools and appliances that don’t require skilled labor to use. Embrace speed-scratch and other ready-to-go ingredients that cut down on labor. Put your training on autopilot so your managers and staff can spend more time with guests or on food preparation. Finally, leave tempers at the door. ![]() Record-setting inflation and ongoing food supply problems have transformed menus – but chefs are finding that the transformation can be for the better. As Fortune reported recently, food inflation’s effect on the price of many popular kinds of seafood has resulted in chefs serving up lesser-known, exotic alternatives. One example: the snakehead fish available on Maryland’s Eastern Shore. It’s a frightening-looking cross between a catfish and an eel that happens to be a delicious crowd pleaser – and even better, only $6 for a whole fish. Other operators have needed to remove much-loved signature items from their menu because the costs just don’t add up. The owners of Chicago’s Parachute removed their signature bing bread from their menu, not only because of the 63-cent profit it generated for the restaurant but also because lower-cost substitute ingredients weren’t cutting it and there was a significant amount of labor required to produce it. They wanted to move toward a more equitable system that compensates staff better, and the bread wasn’t helping them get there. Looking across your menu, are there items that drag down your profits, overall food quality or staff compensation? In a recent interview, Chef Kathleen Hoffman, senior culinary manager for U.S. Foods, said in the current climate, she is focusing on helping chefs create scaled-down menus that address all of those challenges: “We help them winnow their menu down so they do five things really well instead of 10 things just okay,” she said. “The days of the 20-page menu are over.” For chefs, this often means making the call to remove menu items that guests love and have come to expect. Just trust that doing so can actually help you protect your business for the longer term. ![]() Does your loyalty program give as much back to you as it does to your guests? While restaurant loyalty programs once relied on discounts to get guests to return, times are changing. To be sure, you want to use your loyalty program to track guest tastes and buying patterns and translate that information into action. But you can also take your program a step further by harnessing it as an experience you can provide guests. As operators struggle with inflation and supply shortages, providing a memorable guest experience can be a superpower – and can help keep you afloat in these challenging times. How can you use your program to drive people to you? Tap into guests’ fear of missing out by offering an exclusive VIP menu to members. The loyalty program Thanx is helping one operator offer a hidden menu for their highest-spending loyalty customers – it unlocks after a guest spends $200 in 90 days, according to a Nation’s Restaurant News report. The hidden menu can include fan-favorite menu items, be used to test limited-time offers, or simply offer items that are easier to offer to a smaller audience (and can help a restaurant manage inventory more efficiently). All of these potential offerings can create a sense of exclusivity that provides the extra nudge guests need to order from your restaurant right now. ![]() Inflation is a worry for nine out of 10 adults, according to a survey taken recently by the online research firm Momentive for The New York Times. As guests scrutinize more of their expenses, discretionary restaurant spending is a natural place for them to cut back. But on the plus side, demand persists for restaurant food – it may just look different for a while. As John Church, co-head of HSBC Bank’s food and beverage unit, told The Food Institute, “Consumers are likely to trade down during inflationary times as they will want to continue to enjoy some level of out-of-home dining experience.” Restaurant operators may just have to double down on strategies to get guests in the door. Right now, focusing on providing value can help. Offer combo meals that emphasize cost savings – like a family meal deal that may even provide some leftovers for lunch the next day. Create a sense of urgency with guests by creating a rolling line-up of limited-time offers. Give people a reason to return by asking them if they want to receive special offers, then following up with deals related to foods they have enjoyed from you in the past. Take a page from your pandemic playbook and package up an experience – a cooking class or wine tasting, for example – that makes restaurant food or drink feel like a worthwhile outing or a go-to choice for someone looking to give a special gift. When you offer those experiences, talk them up on social media to inspire guests looking for memorable ways to gather with friends and family. ![]() No doubt, restaurants are feeling squeezed with the ongoing pressures of inflation, a tight labor market and even rising transaction fees from credit card companies – and the costs are too high for operators to absorb. As a result, many restaurants are finding creative ways to pass their extra expenses on to consumers. According to a recent article in the Wall Street Journal, fees with such names as “fuel surcharge,” “noncash adjustment” and “kitchen appreciation” have been appearing regularly on restaurant checks in recent weeks. How – and when – you present such costs can have a significant impact on your guests’ response to them. For instance, presenting a surprise list of incidental costs tacked onto a bill can make a guest feel nickel-and-dimed – or worse, that you’re not being honest with them. It’s better to present any added charges under a single umbrella and make guests aware of them at the outset – verbally from the server, in a note on the menu, or both. In a report from Inc., Zachary Weiner, CEO and founder of Finance Hire, an outsourced financial controller for small businesses, said that even though people are well aware of inflation, being transparent about any extra fees and where they are coming from can go a long way in helping guests understand why they are needed. ![]() Resuming “business as usual” has been impossible for many restaurants in the current economic environment. As brands have increased prices in recent months – typically multiple times – many are needing to take new approaches to close the profitability gap. A recent Restaurant Business report described how Chili’s, which has increased prices six times in the first nine months of its fiscal year, is now overhauling its service model and menu to drive not only better efficiency now, but also better adaptability down the line. Wyman Roberts, CEO of Chili’s parent company Brinker International, said the brand’s new menu, which will be more costly, will reduce operational complexity, restructure their value proposition for better margins and provide pricing flexibility in the future. The company is also aiming to operate more efficiently through a service model that uses handheld devices and more food runners (including robotic food runners in some locations) to help reduce the labor they need. Even if you’re not already planning to overhaul your business in a similar way right now, the efforts restaurants are making to eke out profits will change the competitive landscape for everyone – and could force changes on others. As you look at your operation, it’s more important than ever to address pain points and friction wherever you experience them – and consider approaches that may make your restaurant look a lot different than it has in the past. Your service model, menu, labor strategy, foundational technology and marketing strategy should all be on the table as you consider how to prepare your business to succeed now and adjust as needed in the future. ![]() At the time of this writing, remaining hopes for the replenishment of the Restaurant Revitalization Fund (RRF) were dashed when the $48 billion bill to provide relief to small businesses hit by COVID restrictions could not get sufficient votes to overcome a filibuster. Last year, the fund had helped restaurants struggling with the strains of the pandemic to pay employees and cover debts. However, of the more than 278,000 restaurants that applied for funds, only 101,000 restaurant applicants received grants before the Small Business Administration had exhausted its funds. For the remaining restaurants, the replenishment of the fund was especially critical. According to the National Restaurant Association, 62 percent of operators who didn’t receive funding have racked up additional debts and 57 percent have fallen behind on expenses. The Independent Restaurant Council estimates that more than half of the 177,300 independent restaurants awaiting RRF grants could close without additional aid. So if relief isn’t coming in the form of grants, where can operators find it? Start with your relationships. Find other operators in your situation and discuss how you might help each other through this rough patch by pooling staff or supplies, sharing expertise or even partnering in a different venture like a virtual kitchen. Lean on your strong relationships with landlords and suppliers and look for any leeway they might give you on existing contracts. Finally, talk to your guests. They don’t want to see a favorite community business go away, so this is a prime time for them to demonstrate their loyalty. They might be able to help you brainstorm ideas to generate much-needed income and community support in the near term. ![]() Rare, difficult-to-source ingredients are so 2019. At a time of high inflation, supply-chain strain and increased awareness of carbon footprints, it has become far more fashionable – and yes, far more necessary – for restaurants to take a pantry-to-plate approach. That means creating mindful menus that make the best use of ingredients you have in plentiful supply each season. Most items you order should be workhorse ingredients with a range of applications – as the star of one dish and a supporting player in another, for example, or as a reliable contributor of depth, texture or nutritional content in a variety of dishes. As an extension of that, now is a good time to review your portion sizes, find creative ways to use every part of an ingredient, and repurpose any leftovers into interesting specials. Food waste costs the hospitality industry over $100 billion a year, and more than 70 percent of that waste occurs before it even reaches a guest’s plate. Adopting tools that automate your inventory management, ensure you’re spending money on the best-value ingredients available, and precisely measure the size of a portion can help you ensure you’re not leaving money on the table. ![]() Winning a new customer can cost five times more than it costs to retain an existing one. What’s more, even a small increase in customer retention – say 5 percent – can boost profits anywhere from 25-95 percent. Taking the best benefits of your technology and reinforcing them with strong interpersonal customer service skills can help you cement the loyalty of the guests who are already coming to you. Your guest data is your best asset, so analyze it and create opportunities to collect more of it – through your loyalty program, as well as through tech-based ordering and payment. When your Customer Relationship Management system is integrated with your POS, you’re better able to address repeat customers by name, pull up their preferred dishes and table location, and elicit regular survey responses from them to identify their likes and dislikes, as well as your own opportunities for improvement. But this information is even more powerful when it is blended with more anecdotal input from staff who interact with your guests. Your team can tag a guest as a VIP, a wine connoisseur or as someone who enjoys the best of what you offer, giving you extra intelligence to make the person’s visit special. Taking better care of your best customers is also likely to result in their sending their friends and family your way – so you may end up winning new customers anyway. |
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