Are you making the mistake of focusing more on attracting new customers than on retaining the ones you already have? Research from Performark found that the likelihood of selling to an existing customer is about 60 to 70 percent — far higher than the likelihood of selling to a new one (5 to 20 percent). The good news is that engaging your existing customers is also easier, particularly if you harness the power of your POS. Your system can help you in several key ways, according to Upserve: First, it can tap into the preferences of your guests and help you identify offers that are likely to entice them. If your barbecue wings appetizer is a best seller, your POS can tell you — and you can use it as part of a promotion to bring guests in the door during slow periods. Second, you can offer an automated rewards program that requires almost none of your staff’s time. Your guest can sign up via smartphone and their credit card becomes their loyalty card, automatically collecting rewards (and providing you with more data to improve and personalize that person’s experience) each time it is used. Third, it speeds up the overall experience. When you have a system that gets orders to the kitchen faster, helps your staff avoid standing in line when cashing out a check, and allows guests to pay and leave as soon as they are ready, the result is a faster, smoother flow of a business and a more satisfied guest. Finally, when your POS can seamlessly integrate and track your in-house and delivery orders, you can appeal to guests who already know what to expect from you and want to enjoy your food from home, as well as attract new customers looking to try a new option.
Restaurants can be a tough investment — and when operators are beholden to investors looking for swift profits and some say in financial and operational matters, the challenges can multiply. But a handful of new investment groups, with restaurant industry veterans at the helm, are coming onto the scene and could be changing the model for restaurant investment. Ron Shaich, founder of Panera, along with his partner and fellow Panera veteran Keith Pacal, just announced a $300 million investment fund for restaurants. Skift Table reports that the fund gives “evergreen” capital and industry expertise to operators in an effort to give them additional time to build a business that has staying power. (This is opposed to traditional venture capitalists or private equity firms that invest in companies with the intention of building business quickly and selling at a profit after three to five years.) While profits matter to the fund, there is less of a rush about them — perhaps because of the industry insiders running the operation. Shaich’s goal for the fund, he says, is to give operators an alternative to having to fundraise, negotiate board disagreements or navigate Wall Street culture when they are trying to run a restaurant — all challenges for him when he ran Panera. The fund comes on the heels of Danny Meyer’s similar private investment firm, as well as the Kitchen Fund, which Eater reports has invested in such industry successes as Sweetgreen. These funds could represent an emerging new model for operators looking for financial tools and operational support with fewer strings attached.
As Amazon has disrupted consumer perceptions about the accessibility of food and other products, some food delivery companies are taking cues from its playbook by offering Amazon Prime-style subscription services. DoorDash, for one, recently unveiled a program in which subscribers pay $10 per month in exchange for free delivery from participating restaurants. Subscriptions could be a winner for restaurants and delivery companies alike, according to Skift senior research analyst Seth Borko, who said such services tend to encourage higher consumer spending and utilization. The challenge, he says, is making sure consumers feel they are getting their money’s worth.
Are you putting your loyalty program to work? Research from Accenture found that 66 percent of consumers in the United States spend more money on brands to which they are loyal. Offering the right mix of benefits can generate a significant boost to sales — one extreme example is Starbucks, which has 11 million members and, as of early 2016, $1.2 billion in customer funds loaded onto its plastic and mobile Starbucks cards, Upserve reports. The brands reaping the biggest benefits from their loyalty programs are using a combination of discounts, targeted marketing and experiential rewards to motivate their guests. Upserve recently assessed some of the most forward-thinking brands in this area. The Palm’s rewards program, for example, carries a $25 fee but that is returned to guests in the form of a $25 gift card after sign-up. Members get changing rewards each month, including exclusive wines and cocktails, as well as substantial discounts on wine. Panera, a longtime innovator in this space, is another to watch, with 28 million members who can easily reorder favorite purchases via the program, receive personalized offers based on those orders, and get recipes and cooking suggestions from the brand. Panera also makes the experience of collecting food more convenient for its members — they can order online, then visit a store and pick up their food from a designated Rapid Pick-Up shelf in the store, avoiding a long wait in line. To maximize your program’s power, Accenture advises you regularly identify and eliminate aspects of it that aren’t working, encourage your members to be your advocates and try to attract new customers through existing ones. Also note that millennials can be tough to attract to these programs — mine your data to understand what range of offerings brings them back.
As the holidays approach and you prepare to hire additional staff, it’s a good time to refine your onboarding processes to ensure you and your new employees have a clear shared understanding of how you operate and what behaviors are important to you. The Rail suggests having a behavior contract in place to help you clarify your expectations with your team. (Though avoid one Florida operator’s punitive approach, which included a contract listing monetary penalties for such employee infractions as having a cell phone out during work hours.) Instead, consider having your team sign a document in which they agree to give their best effort regarding certain behaviors central to your brand and financial stability, such as greeting guests when they enter or depart, leaving their phone in the car during work hours, or committing to being thoughtful about the amount of napkins, straws or other operating supplies offered. Having clear expectations at the outset provides a foundation upon which to have coaching conversations about performance areas that need to be corrected later. When you need to have those conversations, follow through by documenting the problem, explaining what needs to be corrected, and providing clear consequences that are in line with the magnitude of the problem. Miracle Restaurant Group has a guide to progressive discipline that includes such steps as an oral warning, written warning, suspension and separation, as well as a matrix listing a range of behaviors that can result in various consequences. It advises that operators choose the level of discipline with care so it is appropriate to the situation and is consistent with their actions in similar situations with other team members.
As consumers are demanding their favorite foods whenever and wherever they want them, delivery companies are following suit. Popular overseas delivery operator Deliveroo just launched a new feature, Food Market, which could be a sign of where delivery is headed in the U.S. (particularly in light of reports that Uber is in talks to buy Deliveroo). Food Market enables consumers to select dishes from different restaurants when placing a delivery order via Deliveroo, so they can order their favorite salad from one restaurant and their favorite burger from another — or more easily satisfy the tastes of several people when ordering for a group.
As the demand for off-premise dining grows and restaurants scramble to make third-party delivery work for them logistically and financially, it can be easy to forget something: Third-party delivery may not be the right fit for your restaurant and you can find a formula for growth without it. Consider Darden, one large player in the industry that has held off on it. FSR Magazine reports that Darden CEO Gene Lee is taking a wait-and-see approach to third-party delivery, particularly for its Olive Garden brand, for a few reasons: He’s not sure it will be executed well. He is skeptical about its potential for creating growth at scale. The financials of third-party delivery aren’t appealing. It would mean losing control of valuable consumer data. And it could threaten the profitability of Olive Garden’s growing off-premise business. Factors like this have not prevented other restaurants from jumping into the third-party delivery space. But Olive Garden, for one, is proof that big growth is possible without third-party delivery. The brand reported a 5.3 percent surge in same-store sales in the first quarter, along with double-digit increases in its off-premise business (it currently delivers $100 catering orders placed 24 hours in advance but not individual entrees). It is instead focusing on replicating and improving upon its popular promotions and high-value menu items like “create your own lasagne” and “buy one, get one” deals on entrees — as well as staying true to their core customer and improving engagement with that person. They’re proof that taking the contrarian view can work.
How often do you conduct accounting reviews of your business? If you work on a monthly basis, you may want to reconsider: Orderly suggests accounting reviews on a four-week cycle, giving you 13 four-week periods to review over the course of a year. Since each cycle is exactly 28 days, you will be able to make more accurate comparisons to other periods in order to calculate your profits and losses.
Does your restaurant use digital menuboards? QSR reports that 56 percent of consumers can be influenced by them — and if you mine your POS data properly, they can help you position products more effectively, bundle select menu items together to increase check totals, and drive profitability. But before you invest in the technology, QSR suggests you first take stock of your current menu items using your POS data so you understand your best sellers and most profitable items. Identify the items that are most profitable and accessible. Measure how guest demand for menu items changes over time based on pricing. How did discounts or price spikes affect demand? Understanding how customer behavior changes over time — and what will discourage sales — can help you price items profitably. You should be able to prioritize each menu item according to its importance to your brand, have an action plan for each menu item and menu category, and have measurements in place that can help you assess performance.
Amid extreme weather and other changing market conditions, it can be tempting to favor suppliers that offer ingredients for low prices. But hiring a cheap, potentially unregulated supplier can result in a foodborne illness outbreak due to food that hasn’t been properly harvested, processed, stored and delivered. When vetting potential suppliers, Statefoodsafety.com advises asking for records of regulatory permits, licenses and inspection reports, as well as HACCP or HARPC certifications. Conduct an in-person audit of the supplier to understand its manufacturing practices and ask questions. Finally, consider the promises you make to guests about the food you serve: Do you say you offer sustainably sourced seafood, for example? Make sure that you’re aware of any legal requirements tied to food you serve, and that the supplier meets those requirements.