Dining pods, igloos and other creative outdoor seating options continue to be a needed source of revenue for restaurants. In an industry of narrow margins, the benefits of these spaces can’t be unseen – operators would be foolish to let go of the opportunities they now know these spaces provide to boost profitability, advertise menu items to people passing by, and cater to guests who simply don’t feel comfortable eating in a crowded dining room anymore. (In fact, data that Yelp released earlier in the year indicated that the total number of restaurants listing outdoor dining on their website was more than 26,000 – up from less than 8,000 in February of 2020.) However, the novelty of these spaces has had time to wear off and not everyone wants them where they live. As a result, it has become more common for restaurant operators to face criticism from neighbors for everything from noise pollution to increased rodent activity due to the use of outdoor dining areas. But there are ways to keep the peace if you’re struggling. A recent opinion piece on Restaurant Dive suggested that outdoor eateries could be built without speakers – or that restaurants be required to turn down the music at a certain hour in the evening. Cities might offer restaurant operators a standard kit of materials designed to keep them clean and safe for guests, neighbors and others. People who live adjacent to the restaurant could be offered a special discount or other perk when they visit to help secure their buy-in. The holiday period can be a good time to extend some of this goodwill to help smooth out relations and generate some winter business in the months ahead.
Set holiday expectations
High inflation and a shortage of staff could mean the holiday season will be looking a little different this year at many restaurants around the country. According to research from Alignable, 48 percent of operators aren’t hiring seasonal or permanent employees, and another 8 percent are laying off employees because revenues no longer support additional hires. At the same time, consumers have been steering their purchases toward more experiential things – to include travel and restaurant meals, as Mastercard CEO Michael Miebach shared on a quarterly earnings call in late October. When consumers spend right now, they’re looking for something special – and that sentiment only ramps up around the holidays – but that can be difficult for restaurants to offer consistently with a skeleton crew. To avoid creating a recipe for guest disappointment and staff burnout, now is a good time to steer your holiday guests toward the experiences that you’re best able to manage with a smaller team than normal. That could mean focusing on promoting holiday meal bundles to be eaten at home, closing your dining room to accommodate more special events where you can more easily plan ahead with staff and supplies, and promoting gift cards for VIP experiences you’re offering in the slower winter months. If you’re operating as usual, just make sure you’re serving a menu that’s as easy and fast as possible to execute with a limited crew.
As consumers have paid more at the grocery store and elsewhere due to rising inflation in recent months, they have largely taken rising restaurant costs in stride. But recent reports indicate this could be changing as some foodservice businesses have continued to raise prices after covering their own inflation-related costs. Some operators, particularly of fine-dining restaurants, are now receiving pushback from regular guests taking issue with added fees that don’t seem to add up – whether it's the doubling of the cost of a bowl of pasta or an inexplicably higher corkage fee for a bottle of wine. To be sure, in an industry of slim profit margins and amid forecasts of a looming recession, operators may be trying to eke out a financial cushion wherever they can. Just know that you may get some resistance from guests – and you may be pushed into a situation where you are honoring previous prices for loyal patrons or otherwise bending your own rules to keep guests coming back. Prepare your staff by explaining the reasoning behind any significant price increases you have implemented, helping them answer guest questions with transparency, and, where possible, avoiding making price increases that may appear to have a flimsy rationale backing them up. To help make big pricing jumps less necessary, bring as much efficiency to your kitchen as possible – from ingredient selection, to waste management, to portion sizing. For example, many chefs report shopping farmer’s markets regularly to integrate even more local, plant-forward options into the menu where possible, since this can minimize significant price spikes and help a restaurant avoid passing them on to guests.
One recent survey found that 80 percent of guests say restaurants help them access favorite flavors that they can’t duplicate at home – or at least that’s what they think – and that’s what drives them to support restaurants. At a time when restaurants are duelling with grocery stores, meal kit companies and even convenience stores for business, it helps to know the reasons compelling your guests to order from you. Are you an end-of-the-work-week treat? Do you offer easy mobile ordering and prompt delivery to suit hungry consumers who want their meal as soon as possible? Do guests trust that you will surprise them with fresh ingredients prepared in inventive ways? Can you package your ingredients in ways that make it easy for a guest to prepare one of your meals for friends at home and look like a talented chef? As you welcome larger numbers of guest orders in person and offsite over the holiday season, solicit people’s feedback about what brought them to you over their many alternatives. Their input may help you to develop plans for new offerings that will help you bring people back and keep business steady in 2023 as economic uncertainty – or simply uninviting winter weather – makes eating out (or even ordering out) a tougher sell.
As so many restaurant operators struggle to recruit and retain employees, it may help to consider tapping into alternative sources for potential staff. For a growing number of operators, that has involved hiring people who have been through the justice system and are reliant on their work as a bridge to an independent life. Recently, 50 representatives from around the country joined the National Restaurant Association Educational Foundation in Washington, D.C., to celebrate the success of the Foundation's HOPES (Hospitality Opportunities for People (Re)Entering Society) program, which has enrolled more than 700 people who have been through the justice system and were subsequently connected with career opportunities in the restaurant, foodservice, and hospitality industry. The program, which launched in 2019, is a collaborative effort across seven states to identify, train, employ, and ultimately advance people who have been through the justice system and are seeking a career path in the restaurant industry. It facilitates work-readiness and restaurant industry-specific training through its network of state Departments of Corrections, state restaurant associations, and 13 community-based organizations. Following their training, participants are connected with opportunities through its network of local and national employer partners, including MOD Pizza, Inspire Brands, and Dave's Killer Bread Foundation. Chooserestaurants.org provides more information about the program, its results and how to get involved.
For restaurant operators increasingly watchful of their spending, energy bills are a common area of concern. In recent months, electricity bills for consumers increased nearly 16 percent over the same period last year, marking their highest rise since 1981, according to the U.S. Bureau of Labor Statistics. Total energy costs were about 24 percent above August 2021 levels. For restaurants, which rely heavily on gas and electricity for so many functions that are central to business, finding ways to trim energy expenses and use energy as efficiently as possible is especially important to the bottom line. This is particularly true as the industry continues to recover from the pandemic, extreme weather has disrupted production in oil-producing states, and the war in Ukraine has put upward pressure on natural gas and coal prices. If you don’t have a strong idea of the biggest contributors to your energy costs, conduct an energy audit to help you better understand how your equipment – and your staff’s use of it – can be improved. Your equipment itself may be adding unnecessary expense due to a malfunction or inefficiency. Refrigerators, for example, can be responsible for half of a restaurant’s power use; gas burners consume far more energy than induction burners. You may be running appliances for longer periods than is necessary. Sensors and other energy-efficient tools can help, as can a regular survey of equipment to ensure it’s operating as it should.
In September, the restaurant industry added 60,000 jobs, according to the Bureau of Labor Statistics. While the industry is still 4.5 percent below pre-pandemic staffing levels, the data represent a healthy jump in employment for a sector hit hard by the pandemic. While the majority of operators expect economic conditions to deteriorate in the coming months, according to a National Restaurant Association survey, such an environment may shift the dynamics of the labor market, bringing a fresh infusion of people looking for employment and a continued uptick in hiring. For restaurants, this represents an opportunity to attract and retain talent – but doing so relies on having the kind of culture in which staff can thrive. In a recent podcast, Brant Menswar, an author and speaker who helps organizations navigate change and improve culture, shared several components of high-performing cultures. He said top cultures offer connection – a sense of purpose, belonging and partnership with others toward reaching a common goal. They provide safe spaces where people can contribute without fear of ridicule and be their authentic selves. These cultures offer opportunities for personal growth – and that could be through professional opportunities and responsibilities and/or opportunities for personal improvement. Finally, employees need to be given the freedom and authority to make decisions and find creative solutions to problems. If and when the dynamics of the labor force shift, will your restaurant provide the kind of culture in which people can thrive?
There is still time for restaurants to develop a plan to capitalize on the coming holiday season. But at a time when the economy is uncertain, consumer spending is in flux, and inventory is unreliable, it’s critical to lean on your marketing programs, as well as your data, to generate interest and sales in the places where they are most likely to bring in profits. Consider what combinations of offerings and experiences your restaurant can promote this season – including onsite events, offsite catering, VIP dining packages or other high-end experiences, meal/dessert/wine subscriptions, gift cards, and items you can sell at retail. But before launching a wide range of programs, study your audience. For your most loyal guests, offer a personalized offer now that helps you gather data for upcoming promotions. Launch an offer to help convert regular guests to your loyalty program so you can better study their purchasing patterns too. What audience best suits each promotion? What channels can you use to reach them? What holiday menu items have been most popular with those guests in the past – and where are the best places to feature those items again? Where can you generate the best combination of value and experience with the resources you have available – and how should you allocate your budget accordingly? What promotions are best left to another season or year?
Restaurant operators have been offering more limited-time offers (LTOs) this year than last year – and according to Datassential research, 54 percent of operators say they are a central part of their business. In uncertain economic times, they can be a valuable tool for gaining control, enabling operators to test new menu items, make use of limited ingredients amid supply chain strains, and simply have something new, interesting and urgent to offer and promote to guests. The fall months tend to feature a litany of LTOs at restaurants, but the season shouldn’t dictate your plans. Datassential advises operators to think beyond seasonal ingredients when planning LTOs, opting for fresh, high-quality ingredients or new flavors before items that people typically associate with the season. Consider having guests themselves vote for their favorite LTO or invite them to provide feedback about items you’re testing – it can help you not only secure guest buy-in but also offer an experience that will better connect them to your brand. Use LTOs as opportunities to upsell profitable items on your menu – like a specialty cocktail that pairs well with the LTO and can be promoted alongside it. Finally, it’s most important to build LTOs that suit not only the guest but also the times: Make sure your offers are foolproof to prepare with the staff, skills and ingredients you have on hand.
How much of a price increase is too much for guests? Amid record-setting inflation, it’s a question that many restaurant operators are struggling to answer. A recent study by Revenue Management Solutions may provide some insight into the tipping point. While the research focused on quick-service restaurants, it provides a starting point for assessing price across the menu in other restaurant categories – and an incentive to maximize profitability and value. QSR Magazine reported that RMS analyzed in-store price increases during the second quarter of this year over the second quarter of last year at 25,000 quick-service restaurant locations across the country. It found that net sales hit their highest point at around 13 percent. Beyond that, price increases negatively impacted traffic so much so that net sales began to decline. Further, some locations found that declines in traffic began at around the 6 percent increase mark. While this study represents one data point to consider, it reinforces the need to ensure your individually priced items maximize profitability when it comes to ingredients and labor. Where you have menu items that can easily be bundled to boost check totals, emphasize value – consumers continue to seek it out as a means of justifying food spending.