Summer is here, record-breaking temperatures can be a challenge for operators to do business as usual, or for people to be willing to eat at restaurants outdoors (or even indoors, unless there was reliably cold air conditioning). As we move through summer, extreme weather conditions – whether intense heat, fires or hurricanes that knock out electricity or otherwise impede business – will continue to be a threat to different parts of the country. But if the pandemic taught the restaurant industry anything, it taught us how to flex in response to a changing situation. Now is a good time to review your emergency management plan: If your facility is hit with a power outage, for example, will you be alerted right away? What actions should this trigger with regard to preserving inventory, safeguarding your facility and contacting employees? If a heat wave strains the energy grid and knocks out your air conditioning, how could you flex your service model, hours, menu and staffing to avoid short-term closure? To be sure, many challenges that come along may be out of your hands. But if you can prepare cloud-based back-up plans to guide you through how to shift operations in different potential scenarios, you may be able to ride out the challenges a little easier.
As evidence of their growing prominence in the restaurant industry, ghost kitchens are now getting their own events. In June, the Ghost Kitchen Conference in Dallas addressed this new and growing segment of the restaurant industry and how brands are approaching everything from menu development to digital marketing to site selection. Nation’s Restaurant News reports that ghost kitchens are demonstrating potential and an ability to gain competitive advantage in a few key areas. Service is one. While demand for delivery and off-premise restaurant food is high, the experience of eating this food can be lacking and difficult for operators to control. There is opportunity in the ghost kitchen segment to condense the physical distance between restaurants and customers and also channel more resources into building stronger relationships with delivery providers in an effort to make delivery a higher-quality experience (Fazoli’s, for example, treats delivery drivers to breadsticks.) Because ghost kitchens are small, nimble and flexible, there is also potential for them to push the boundaries of the segment. They can easily plug into grocery stores, airports, hotels or other facilities with a captive audience for restaurant food. Finally, these kitchens are lowering the barriers of entry into the industry. No longer does opening a restaurant require a substantial investment or attractive real estate (though the challenges of marketing ghost kitchens without brick-and-mortar counterparts surely generate new challenges related to marketing and customer engagement).
The pandemic has been a time of reckoning for restaurant employees – and, since labor is scarce, also a time of empowerment. Bit by bit across the country, more restaurant workers are taking steps to unionize, whether in an effort to improve the current working environment at their restaurant or to normalize and spread the employee-friendly culture they already experience at their restaurant. It’s a trend that industry analysts expect to continue. In the U.S., just 1.2 percent of the estimated 11.9 million people working in restaurants and foodservice belongs to a union, according to the U.S. Bureau of Labor Statistics. That makes the industry one of the least unionized of any employment sector, despite its reputation – fairly or unfairly – for instability, low benefits and pay, and abuse from managers and guests. Many new efforts at unionization, such as those at Pavement Cooffeehouse in Boston, have been employee-led. In other cases, restaurant operators are going so far as to encourage the unionization of their business at the outset. In Rochester, N.Y., Meghesh Pansari, the owner of the Indian restaurant Nani’s Kitchen, encouraged his employees’ decision to unionize – perhaps because his restaurant already has an employee-friendly culture that he would like to serve as a model for other operators. Workers there share tips, make $15 an hour, get a week of paid sick leave annually, and the company covers half of the monthly payment for the health care package it offers full-time workers through the Healthy New York EPO plan, according to the Rochester City Newspaper. One shift leader said, “We had to unionize at Nani’s because we already had very good conditions, and we think that it’s important to kind of try to start pushing this and encouraging other restaurants to unionize.”
Restaurant digital orders skyrocketed 124 percent in March over the same period in 2020, according to NPD Group. That spike resulted in an influx of new restaurant loyalty programs in the market over the past year. Now a number of brands are revamping their existing programs in order to fine-tune their approach to their loyal guests – and enhance their actionable data as a result. As CNBC reports, some of those changes include improving the number or the quality of rewards for guests, expanding the number of payment options (including cash), and incorporating technology that recognizes a guest as soon as they enter the drive-thru or front door, enabling staff to greet the person by name and call up their preferences before they say a word. Others are providing loyalty program members with information on how many rewards they have earned in the past year. To be sure, as more of these programs enter the market, it will become harder for them to stand out – but it also means consumers will come to expect some rewards customized to their preferences in exchange for their regular business at restaurants.
The pandemic has set all kinds of innovation in motion across the restaurant industry, so it makes sense that it would touch delivery, which many in the industry viewed as ripe for reinvention even before the pandemic. New models have been emerging in recent months in an attempt to make delivery work financially for restaurants, particularly for smaller ones that don’t have the scale to support in-house delivery or to be able to afford the fees charged by third-party vendors. One such model is community-based delivery services. Many of these services, which have been popping up in places as geographically diverse as Nebraska, Ohio and Washington, D.C., are cooperatives – the result of owners and workers pooling resources to provide delivery without the unmanageable costs. As The Counter reports, the participating restaurants pay membership fees to cover operating costs, as well as salaries for drivers and dispatchers. They receive a share of profits each year. In practice, this could amount to a $300 monthly fee for a restaurant to participate, along with a monthly subscription fee or a flat, per-order fee for customers. If you have a loyal following of customers and relationships with other restaurant operators around your community who struggle to make the math of third-party delivery work, joining (or starting) a community-based delivery service might be a helpful alternative.
It may seem like ghost kitchens have experienced a lot of growth in the past year, but there’s still a long way to go. According to Euromonitor, ghost kitchens could create a $1 trillion global market by 2030. Between now and then, expect a lot of innovation in the space, along with a range of ways for operators to make them a part of their business model. If you’re considering a ghost kitchen as a means of diversifying your sales capabilities, make sure you start from a place of strength when it comes to your digital brand. If you plan to have a scaled down brick-and-mortar presence, you still need a reliable way to get in front of consumers – particularly a strong digital connection, such as an Instagram account that gets regular engagement from followers and a customer database that allows you to segment your mailing list and target guests with informed promotions. On the latter point, operating a ghost kitchen will be most effective if it is set up within a small radius of the customers most likely to buy food from it, so understand the tastes of the surrounding area. If you have the brand connection with customers and you’re close enough to them that you can get their favorite dishes to them shortly after they’re out of the oven, you’re in a good position to succeed – and if you’re sharing your ghost kitchen space with complementary businesses that can enhance your own promotions, all the better.
While surviving the pandemic was one challenge for the restaurant industry, coming out of it is another: Stress on the food supply could make it more likely that restaurants will offer promotions of foods that end up being inadequate in supply, inflated in price, or unavailable altogether. Strains on labor are contributing to the challenges in food distribution as well. As Mark Allen, chief executive of the International Foodservice Distributors Association, told the Wall Street Journal recently, “Over the last six weeks, we have seen the market come roaring back faster than anybody would have anticipated. The start-up has been, in many ways, as difficult as the shutdown…Everybody is trying to turn it on immediately and the capacity might not be there.” However, having a multi-tiered back-up plan can help you manage when you’re caught short on key supplies. As you consider your menu in the coming months, lean on the systems you have on hand to track pricing fluctuations and supply. If you have a dish you want to keep intact with no substitutions, you should be aware of multiple routes you might take to recreate it using different suppliers in case there is a food supply or safety problem in a particular country or region. If you’re open to changing up a dish with substitutions, identify first- and second-runner-up ingredients and brands that could help you recreate the dish if your first-choice options suddenly became scarce.
At a time when restaurant operators are scrambling to find staff like never before – and perhaps lowering standards to do so – Chipotle managed to attract nearly 24,000 applicants through an online job fair recently. This occurred a week after the brand announced it was raising its minimum wage to $15 per hour. It’s no coincidence: Restaurant workers are demanding greater financial stability. While not every restaurant has the resources to raise hourly wages, it’s still a good time to scrutinize labor expenses and address weak points. Even before the pandemic, the turnover rate in the hospitality sector was higher than the turnover rate in nearly all other sectors. According to The Restaurant Technology Guys even an $8-per-hour employee can end up costing a company around $3500 in direct and indirect turnover costs. The more you invest in recruiting and retention up front can minimize your costs in recovering after an employee leaves. Even if you’re unable to raise wages, taking steps to prevent payment inaccuracies and ensure employees can access their wages and tips right away can boost morale and retention. Restaurant Dive report says, 31 percent of financially insecure workers have quit a job because of a lack of financial wellness. On the flip side, more financially stable employees (87 percent) are likely to remain in their job in the next year, as opposed to workers who are financially unstable (58 percent). Every little thing you can do to promote financial stability can help you keep the people you hire.
Seemingly all restaurant operators have had to adjust how they operate during the course of the pandemic, whether by enabling curbside pickup, designing delivery-friendly menus, redesigning a strip of sidewalk to accommodate tables in any weather, or otherwise. But even as we ease back into more normal conditions, it will likely benefit you to retain many of the changes you have made. For one, make your outdoor dining areas usable year-round with the help of solid structures, sturdy weather-resistant canopies, heat lamps and even those dining bubbles used widely last winter. This is simply about scrutinizing your entire real estate footprint so you are making money from each square foot. Along those lines, try flexing your space to better accommodate carryout and delivery orders during lunch, or offering promotions to remote workers looking for a temporary workspace or snack break during your quiet periods. Your takeout menu is another area that needs to hold strong with foods that travel well, coordinated cocktails and special touches like notes or candies included in the bag. Continue to seek out technology that will help you streamline ordering and payment, minimize lines and turn tables faster. Finally, maintain your efforts to show your commitment to cleanliness. Hand sanitizers should be ready for guests as they walk in your doors – and asking guests to sanitize their hands before they sit can help you show them you care about safety.
At a time when labor challenges are at an all-time high in the restaurant industry, a number of brands are taking a look at the experience of restaurant work and improving the aspects that need help. One of the areas moving to the forefront right now is employees’ mental health, which has been hit hard during the pandemic. Historically, the restaurant industry has not been known for its focus on employees’ mental health needs – and to be sure, mental health has been a growing concern for employers across industries during the pandemic – but now a number of restaurant brands are trying to change that as a means of attracting and retaining staff. Last fall, Noodles & Company added free in-person and online counseling sessions to its benefits plan. In May, Chipotle, which already offers in-person, phone or virtual visits with a licensed counselor for employees and their families, announced it was also bolstering its support of mental health via a new virtual platform called Strive. A Restaurant Business report says the Strive platform provides one-on-one coaching and support, and according to Chipotle, “gamifies each employee’s wellness experience” by giving them an opportunity to win gift cards and save money on health insurance, among other benefits. While such benefits aren’t widespread across the industry, they may gain momentum as restaurants vie for staff and need to think of creative ways to enhance the working environment for employees. Further, mental health benefits aren’t the only ways restaurants can improve upon a culture that needs a boost. As this Restaurant Dive report indicates, restaurants that have simply communicated clearly and considered employees’ home situations and financial concerns throughout the pandemic have had an easier time retaining people.