![]() Whether you’re participating in a Restaurant Week or developing other events designed to draw traffic during normally slower periods this season, now is a good time to fine-tune your loyalty program. It can help you capture the higher volume of guest data coming to you and turn an occasional guest into a regular one. What’s more, it may help you ride out otherwise challenging market conditions. Paytronix research found that loyalty program members were responsible for a larger proportion of total sales after the onset of the pandemic, and that the top 10 percent of loyalty guests were responsible for more than half of all spending for eight months in 2020. Further, according to Waze, 40 percent of consumers feel their participation in a restaurant loyalty program would encourage them to spend more on their food orders. But at a time when consumers are receptive to loyalty programs, it can also be difficult for restaurants to make their program stand out. To do so, focus on deeper personalization. That could mean using Bluetooth technology to automatically identify a loyalty program member and pull up their most recent orders, introducing a gaming promotion to drive traffic during certain periods, or simply rewarding customers with more of what you know they love. Dunkin Donuts, for one, sends “Year in Review” emails to its DDPerks members based on their yearly purchases and activity. It’s simple and it brings people back. ![]() For restaurants, the past two years have taken creative problem solving to a new level. That has extended to how new and existing restaurant projects are being funded. Higher numbers of restaurants have been inviting loyal guests to help fortify their business for the long haul by becoming investors – the number of restaurant crowdfunding projects on Kickstarter alone grew from 3,400 in mid-2019 to nearly 4,000 in January of this year. The timing makes sense, considering the vast number of restaurants that have been looking for business loans and the smaller pool of large investors available to support them. Further, a restaurant’s loyal guests know first-hand how the business makes a positive impact on their community. If you’re interested in learning more about the possibility of asking guests to support your business in this way, there are a range of contribution models that have come about to help, including Honeycomb, which allows a donor to potentially earn a return on their investment, unlike the lower-stakes, Kickstarter-type models in which someone makes a donation and gets a free meal or merchandise in return. Of course, this also means that operators have more local eyes on them as they run the business day to day – though small restaurant investors may also view their investment as less of a wealth-building scheme than a means of paying it forward. ![]() Supply challenges could persist for the remainder of 2022 and into next year, according to the prevailing commentary from restaurant industry analysts. Consumers are well aware of the shortages and are experiencing them at grocery stores themselves, along with higher prices as compared to restaurants. But with a little planning, you can entice guests to order from you and avoid reminding them of the inventory (and staff) you may lack week to week. Now is a good time to develop a contingency plan for the year, to cover recipes, ingredients, promotions and equipment. First, scrutinize your recipes and look for ways to flex them with a range of ingredients – swapping in different vegetables, grains, sauces and spices, for example. For each dish, have a roster of back-up ingredient options that you can turn to if a key ingredient isn’t available. Be able to make quick adjustments to your physical and online menus based on your supply so guests aren’t in the position of ordering an advertised dish only to be told it’s unavailable. This is yet another year when operators will have to do more with less, so consider how you can serve guests in a way that is as resource-efficient as possible (and then incentivize guests to support you in that way). If you want to elevate your takeout business to ease the burden on your staff or manage better with a skeleton crew, for example, you could offer a discount when guests submit an order for collection before 5:30pm – or whenever your dining room normally begins to get busy. Finally, look at your cooking equipment and try to forecast what is likely to need a replacement or repair. Then, look to simplify your preparation and menu so you aren’t so heavily reliant on individual pieces of equipment that could let you down and take extra time to be repaired or replaced. ![]() As restaurants look for new ways to boost guest loyalty and ensure steady traffic in 2022, subscription offers have become more commonplace. Brands including Panera, Pret A Manager and Taco Bell have all extended subscription offers to guests – and now Sweetgreen is testing a $10 subscription offer that allows guests to get $3 off their orders within 30 days of their subscription purchase. Forbes reports that the offer is the latest phase of Sweetgreen’s initial loyalty program, launched over five years ago, which rewarded customers with $9 in credit for every $99 they spent in restaurants or on the app -- a program more akin to the punch-card loyalty programs of the past. Subscription offers are worth considering because they may keep a brand more front-of-mind for guests at a time when restaurants need the assurance of steady traffic. Each month, the guest is reminded that there is value in returning to you. At the same time, each of their return visits can yield helpful data that allows your business to craft future offers to that guest – data you would not have if you simply issue a blanket discount after the guest reaches a purchasing threshold not connected to details about their past purchasing behavior. What items on your menu tend to bring customers back? Does your coffee attract people on their morning commute? Does your soup-and-sandwich combo generate reliable lunchtime traffic? Or perhaps there are profitable parts of your menu that you’d like guests to support more steadily. These could all be areas worth testing with a subscription offer. ![]() So much can feel out of control right now with regard to the supplies you need to run your business. One supply (among many) that has been climbing in price and scarcity in recent months is natural gas. In September, CNBC reported that prices had climbed 99 percent higher on a year-to-date basis due to escalating demand and concerns around supply. But unlike the many other items in short supply right now, natural gas consumption is something you can take active steps to reduce in your business without a significant downside. If you experience an especially cold winter or simply broad fluctuations in the traffic coming to you, being more efficient with your natural gas usage in cooking, washing and heating could generate significant savings. The Rail suggests that when cooking, aim to avoid overusing appliances – so limit the time you spend preheating, avoid using a larger oven when a smaller one will do, precook foods in a steamer prior to frying, limit use of the range top and schedule your cooking to ensure you are making most efficient use of ovens and cooktops. When washing, wait to use your dishwasher until it is full, turn off water heaters when the restaurant is closed, and ensure that water tanks and pipes are well insulated. When heating, use smart thermostats and set them to align with the business schedule and occupancy. Finally, keeping appliances maintained, clean, and free of buildup – whether grease, limescale or dust – can help ensure you’re not overusing energy. ![]() Amid supply shortages, rising food prices and wages, and inflation increasing at the highest rate since 1982, restaurant operators have had no choice but to pass some of their costs on to customers. Accordingly, menu price inflation hit a 39-year high in November. Data from the U.S. Bureau of Labor Statistics indicated that prices for limited-service restaurants, which have been hit especially hard by labor shortfalls, have increased nearly 8 percent in the past year, while prices for full-service restaurants have increased 6 percent. While the environment continues to pose challenges to restaurants, there are steps operators can take to strengthen their position. In the back of the house, it’s more important than ever to have a keen grasp of menu costs and to use forecasting tools for inventory and sales in order to minimize waste and find suitable substitutes for ingredients that aren’t available. In the front of the house, it’s crucial to show customers that you provide an experience worth paying for – and one that many of them continue to crave as the pandemic keeps people at home. Consider how to make your offerings special – by elevating the dining experience in-house and developing creative menus that guests wouldn’t prepare for themselves at home. Finally, while you don’t necessarily want to draw guests’ attention to price increases, you can share the efforts you are making to contain costs and source quality ingredients. After all, consumers are paying more at the grocery store now too – so a higher bill at their favorite restaurant shouldn’t come as a shock. ![]() As Covid-weary diners flock to dining rooms and short-staffed restaurants struggle to meet the demand, some operators are shutting off less profitable streams of service (like delivery) during periods when they couldn’t otherwise manage all of them at once. The Wall Street Journal reported recently that Applebee’s, Olive Garden and IHOP were among the restaurants choosing to shut off online orders at specific times. This capability, if you don’t have it already, is one to consider implementing this year as part of your tech toolbox. Going forward, there may well be times when you need to scale up and scale down order streams at the flip of a switch. Being able to handle those transitions smoothly – and also marrying those actions with corresponding offers designed to attract guests to your other service areas – can help ensure a steadier flow of business. ![]() At the time of this writing, retail vacancy rates were forecast to rise to 19.2 percent for the end of 2021, surpassing the previous high of 17.6 percent in 2010, according to Moody’s Analytics. But what sounds like bad news for the state of the industry could actually be good news for restaurant operators looking to negotiate and renegotiate contracts with landlords. Landlords want to keep their good tenants operating, and according to Amy Eskola, a partner with the law firm Messner Reeves who specializes in real estate transactions and contract negotiation, there is a lot of opportunity for operators to secure more beneficial terms right now. During a recent podcast interview with Elliot Maras of Kiosk Marketplace, Eskola said operators are (often successfully) seeking to adjust their contract terms in a wide variety of ways right now, including rent adjustment, abatement or deferment; basing rent on a percentage of sales, and for new locations, negotiating longer buildout periods, arranging to have rent commence at the time of permitting or opening, or securing a lower rent for the first year of operation. Anything is possible if you can present a solid, thoughtful case for it. Before approaching your landlord, conduct some market research so you have a clear sense of what terms similar businesses in your area are getting. If you’re seeking an agreement that hinges on your sales, also ensure you can present clear and organized financial statements that demonstrate your plans to manage expenses and build the business over the long term. ![]() Two years into the pandemic, many people working or investing in the restaurant industry are still (understandably) operating in defense mode – cutting back on expenses, trying to anticipate the next challenge and otherwise playing it safe until somewhat more normal conditions return, whenever that may be. But for others, it is prime time to take risks. For instance, Fortune recently reported that since the start of the pandemic, Mercado Partners' Savory Fund has doubled down on restaurant investments. It raised two separate funds of $100 million each, aggressively invested in seven new restaurant brands and opened 55 new restaurants. On a smaller scale, forward-thinking operators are also finding opportunities for reinvention right now (and at a lower-risk entry point than might exist when the restaurant industry is flying high). QSR Magazine reports that when the restaurant Otto’s Tacos was concerned about having to close, neighboring restaurant Mighty Quinn’s Barbecue, which had a similar inventory, equipment, commitment to quality and footprint in New York City, saw an opportunity to grow both businesses. Otto’s Tacos has survived as a virtual brand run out of Mighty Quinn’s kitchen facility. While the pandemic continues to throw curveballs at restaurant operators, it is also revealing opportunities for positive and profitable change – if you know where to look. ![]() For many consumers, it can feel like life is returning to pre-pandemic times, complete with in-restaurant meals and holiday gatherings. But as we begin another winter with Covid hovering in the background, restaurant operators are still having to develop strategies for keeping business humming during uncertain times. Beyond efforts to make outdoor dining a comfortable reality, indoor dining well-ventilated, and off-premise sales seamless, the industry has also been pushing Congress to replenish the Restaurant Revitalization Fund. The effort has reached a critical point and the Independent Restaurant Coalition is urging operators to make noise in Congress right now by contacting representatives and encouraging restaurant patrons to get on board too. If you want to get involved but aren’t sure where to start, the coalition has developed some resources to help, including an outreach guide, which includes background about the fund and sample scripts that can be used as the basis for emails, calls and social media posts, as well as state-specific resources. If your loyal guests are willing to help you in the effort, here is a flyer you can share with them – it includes some information about the fund and how they can help spread the word on your behalf. |
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