![]() New research from Credit Suisse found that limited-service chains are charging an average of 20 percent more for third-party delivery. At a time when restaurant operators are especially cognisant of the limits of what consumers are willing to spend, that figure could well be over the line. While it’s no surprise that delivery costs would surge amid steeply increasing costs for gasoline, along with other items needed to run a business, it means restaurant operators will, yet again, need to be creative about getting food to consumers. After all, the same surging fuel costs that are increasing delivery prices could also keep consumers off the roads. Is there an area of your business that might help you better manage rising costs – or make an off-premise meal more worthwhile? This is all happening at a time when people are especially eager to gather – and are finally feeling a bit safer in doing that – so could you focus on catering for offices that are bringing their employees back together more regularly, or for weekend picnics now that the weather is getting nicer? Could you participate in food festivals or bring a food truck to office parks or city centers where you have a steady stream of traffic on foot? Could you organize a single drop-off of food orders for companies with large numbers of employees onsite? Consumers are still eager to have restaurant food. The economic situation being exacerbated by the war in Ukraine just means restaurant operators will have to use their ability (well-honed during the pandemic) to quickly adapt to new challenges. ![]() Just when Covid-19 was becoming more manageable for restaurants, the war in Ukraine is intensifying inflationary pressures on everything from wages to food supplies to equipment. No doubt, these are trying times for operators – and economists expect them to continue into next year. But these times can also provide opportunities to fix operational processes that have long needed attention and can no longer be ignored. As Keith Anderkin, chief supply chain officer for the fast-casual chicken chain Zaxby’s, recently said in a podcast for Restaurant Business, “never waste a good crisis.” Imagine how your business will be in a position to thrive in better times if you can get a handle on any weak points now. So what might you do to ensure you’re operating as efficiently as you can? Fine-tune your communication with your marketing team so you’re able to adjust your calendar of promotions in sync with your changing supply. That may mean focusing more on core menu items that are easier to source, then weaving in limited-time offers as needed to ease the pressure when supplies become scarce. Or it could mean strengthening your pipeline of menu items in development so you have a deeper bench to lean on when a key player isn’t available. You might assess your current and future equipment needs and find out where a substitute piece of equipment may be acceptable – and get a jump on ordering something that is critical but comes with a long waiting period. It may mean taking a closer look at your labor and identifying how to ensure you’re using it wisely in both front-of-house and back-of-house tasks. It’s rare to be operating at a time when so many challenges are colliding. Making sure you’re in close connection with all areas of your operation can help you understand any areas where you might find some relief. ![]() Restaurants are facing a retention crisis as much as a hiring one, according to a recent report from QSR Magazine. Specifically, it mentioned how a study from messaging platform Medallia Zingle found that 68 percent of U.S. hospitality workers said their organization was working with fewer staff today than before the pandemic. Further, it found that 38 percent of hospitality workers were considering, or already had plans to, leave the industry within months. Hiring and onboarding staff consumes resources that operators lack right now – so what are the best ways to retain the people you hire? To be sure, compensation is part of it, but other factors are just as important. The pandemic is demonstrating the need for restaurants to offer opportunities to build longer-term careers. Within your operation, are you helping your staff cross-train and gain new valuable skills? Do you have a practice of trying to promote from within? Considering how the pandemic has magnified the need for flexibility, can you identify any ways in which you can bend a little bit in response to staff needs? Finally, employees who feel listened to feel more valued – so survey them formally and informally on a regular basis. If and when someone valuable to your team resigns, ask for a casual exit interview so you can understand why the person is leaving – and try to implement some changes based on their feedback. Who knows? You may even be able to retain them as a result of asking for their feedback ![]() At the time of this writing, it had just been announced that Congress would not be replenishing the Restaurant Revitalization Fund as part of the omnibus spending bill, which would have given about 200,000 foodservice businesses a critical lifeline to help manage the ongoing challenges the industry continues to face. So what now? Stephani Robson, an emeritus professor at Cornell University who studies the restaurant industry, recently said the pandemic’s biggest lesson for restaurants has been to “be lean.” Surely you’re already doing a lot of that, or aiming for it, but can more be done? To be sure, technology can help in the effort, but only if implemented in ways that make life easier and faster for guest and staff alike, and can be scaled up, scaled back or otherwise adapted when the operation needs to change. Does your technology ensure you don’t have too many staff working a shift? That you don’t accumulate food waste before a dish ever reaches a guest? That you can make incremental adjustments with ease when you’re short on a key ingredient and you need to incentivize guests to try another dish? If you can follow the waste in your operation – whether in food, time, staff or other resources – you may find some practices that can be improved and made leaner. Ask Team Four for help in uncovering them. ![]() Labor – specifically, the recruitment and retention of staff – is among the top challenges restaurant operators say they are facing this year, according to recent surveys from the National Restaurant Association. The pandemic has amplified operators’ need for staff and also increased already-high quit rates in the industry. But on the positive side, it has also motivated many foodservice brands across the industry to creatively transform restaurant jobs into longterm careers. Two executives from Los Angeles-based Everytable landed on Nation’s Restaurant News’ 2022 Power List for developing a program to do just that – and it reflects Everytable’s values to make healthy food more available in food deserts. In a recent webinar with Nation’s Restaurant News, Everytable’s Christine Hasircoglu and Bryce Fluellen discussed the company’s new social equity franchising program, which includes elements that other brands might repurpose. They said that while women and minority groups are often the people working on the front lines of restaurants, their numbers dwindle at higher levels of restaurant leadership. Everytable set out to create new paths for leadership and ownership at their company by committing to hiring and promoting staff from within their company and their community – and also making franchise ownership a more achievable goal for these staff. To do so, Everytable partnered with philanthropic organizations to develop a program that guides candidates through a year-long, paid apprenticeship. It includes management and leadership courses, assessments and a final interview that, if successful, culminates in a franchise agreement for the person – and the seeds of a longer-term career in the industry. There are no up-front costs for the person upon the opening of the franchise (access to capital is often a major barrier to franchise ownership for marginalized groups), and the person signs an agreement to repay costs over a five-year period. ![]() Labor attraction and retention isn’t getting any easier for restaurants. According to a Bureau of Labor Statistics report released in January, quit rates for the accommodation and foodservice industry increased from 4.8 percent to 6.9 percent over the previous year, a larger spike than any other sector listed. As the pandemic has amplified restaurants’ labor challenges, businesses across the industry have been taking a range of approaches to attract and retain staff. According to research from Black Box Intelligence, pay increases are only part of the solution. Offers of sick days, paid leave and variable pay are also on the increase in an effort to improve restaurant workers’ quality of life. Dig, the chain of approximately two dozen local, farm-sourced restaurants in the Northeast, has been taking cues from the pandemic-era offerings of corporations and giving their staff the option of a four-day work week. According to a Fast Company report, Dig experimented with the offering while they were running a smaller number of restaurants during Covid lockdowns. Staff were given the option of working one less day than they would normally, but the same number of hours across the week. As Dig offers a 40-hour work week, this has meant that participating staff work 10-hour shifts. While it may not work for every restaurant or every employee, Dig leaders say that the workers who have chosen to stick with the schedule have reported having better work-life balance and more time for responsibilities outside of work. (In fact, in an internal survey of 45 people who have participated in the changed work week so far, 87 percent said they would recommend the new schedule.) Looking at your shift schedule, staff needs and restaurant tasks, what might you adjust to offer better work-life balance to staff without sacrificing business needs? Even on a small scale, could you take any cues from businesses in other sectors that are known for strong attraction and retention of staff? ![]() Ghost kitchens: Do the numbers work for you? Ghost kitchens are continuing their climb: By 2030, they are predicted to hold a 50 percent share of the drive-thru and takeaway foodservice markets, respectively, according to Statista. As restaurant operators think about the best ways to serve existing customers and tap into new markets, ghost kitchens could be an important part of a business strategy. Perhaps you had to close a brick-and-mortar location before or during the pandemic – or you want to enter a new market that sounds like a good match for your brand. You could open a small brick-and-mortar location in a high-traffic area to collect information. But you may be able to gain the same – or better – insights with a ghost kitchen operating with a much smaller real estate footprint in a less-expensive area. Ghost kitchens’ ability to help brands test market viability in a low-risk way is exactly why brands like Famous Dave’s consider them to be important to their business model. As Al Hank, COO of Famous Dave’s parent company BBQ Holdings Inc., said in an interview with 1851 Franchise: “That is typically a multi-million-dollar test, and you never know what the outcome is going to be, but ghost kitchens allow you to do it in a much more cost-effective manner.” So exactly how cost-effective might a ghost kitchen be for you? Dan Fleischmann of the restaurant equity investor Kitchen Fund developed a ghost kitchen calculator, available at Restaurant Dive, to help concepts get an initial sense of whether a ghost-kitchen concept might make financial sense. You plug in some key data about the business, cost structure and volume assumptions, then the calculator projects the resulting profit or loss, as well as the return on invested capital. ![]() What if your customers could be anywhere in the country – or even the world? It’s an appealing thought at a time when operators are struggling to manage high inflation, supply chain fluctuations and general uncertainty in the market. But the creative solutions that have come out of the industry in the past two years have the potential to transform the industry into one of greater opportunity for all. In a recent segment on CNBC, Joe Ariel, the CEO of Goldbelly, discussed how the Omicron variant and inflation concerns have triggered a surge in food e-commerce. He expects more companies – his among them – to take an omnichannel approach to food sales going forward. Imagine if a family was craving a wide selection of regional specialities – Philly cheesesteak, New York cheesecake, Chicago pizza – and they could enjoy authentic versions of them at the same meal? Or perhaps your restaurant gets a lot of summer traffic and guests who have been coming to you for years want to be able to enjoy your food year-round. Are there stars on your menu – memorable entrées, secret sauces, special desserts – that you could serve to a worldwide audience with the right marketing and packaging? How can you take what you do best and get it out to your best customers? ![]() The value menu looks a lot different nowadays at a wide range of quick-service and fast-casual brands. McDonald’s, Denny’s, Burger King and Domino’s are among the companies that are skinnying down their most economical meals. The changes have included decreasing the number of chicken nuggets from 10 to eight, removing price caps on value-menu items and raising the prices of individual items across the menu, according to a recent Wall Street Journal report. Consumers are noticing the changes and facing a decision: Is this restaurant meal worth a few extra dollars (or a little less food) if I can find something less expensive at the grocery store? For some restaurants, this may mean recasting menu items as something special vs. a means of saving money. Understanding your menu cost has become more important than ever in the midst of inflation and supply shortages. Last year, restaurant prices increased 6 percent, the highest jump in nearly 40 years. But just as important as pricing could be how you’re presenting your menu items and promotions to your guests. Mine your data to better understand the dishes your guests love and when they are ordering them. What drives them to order from you? Is it convenience? An end-of-the-work-week treat? Tapping into what motivates them can help you frame your menu in a way that makes the decision to place an order an easier one for them – even if the bill is a little higher right now. ![]() The combined challenges of the pandemic, inflation, supply chain problems and labor shortages have made it clear: To survive and thrive in the years ahead, restaurants will need new ways of operating. The good news, according to the National Restaurant Association’s 2022 State of the Restaurant Industry report, is that two key customer demographics are particularly welcoming of the changes. Specifically, adults born between 1980 and 2003 (Millennials and the older edge of Gen Z), as well as a fair share of Boomers, are embracing the efficiencies that technology is bringing to the ordering, purchasing and collection process, while also demonstrating an open-mindedness about the role restaurants can fulfill in their lives. For example, these consumers see restaurants as meal partners. Even if they’re planning to eat at home, they may still look to restaurants to provide a part of that meal or a kit that makes it easier to prepare their full meal. These customers place high value on takeout – and 94 percent of millennials said they would order a wider array of to-go foods if they were packaged to preserve them better (70 percent are even willing to pay more for upgraded packaging). Millennials and Gen Z, in particular, like alcohol with their order too, giving operators some room for creativity with promotions for higher-margin drinks that customers don’t want to prepare at home. They’re open to buying subscriptions for restaurant meals or opening house accounts that offer a discount for prepayment. Importantly, they also like the efficiency of tech-enabled ordering and payment – and that extends to ordering through virtual assistants. All told, the definition of a “great” restaurant experience is changing – and those changes bring greater efficiencies and possibilities for restaurants, amid the challenges. |
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