If you’ve been in business long enough, you likely have a strong idea of what your ideal customers look like, how they order from you and what they like to see from you. But COVID-19 has changed this in a couple of ways. For one, the pandemic has persisted long enough to have created lasting – or at least long-term – shifts in consumer habits and expectations. The times when people eat, what they eat, and who (and how many) they eat it with have all changed. Further, as we power through what we hope are the final months of the pandemic, recovery from it will be uneven across consumer segments. Older guests may hesitate to dine out. Families may sustain their level of takeout ordering or perhaps dine out more often, particularly if they have spent months at home managing home learning. Instability in the economy may dissuade younger consumers from using discretionary income for restaurant meals and beverages as often as they once did. Or you may not see clear demographic-specific sales patterns overall. All told, if you leaned on hunches or impressions to sustain your business before, you will now need to mine your data and be able to make actionable decisions about it every hour and every day. This will enable you to respond to small, frequent shifts in consumer behavior with promotions and menu items that connect with them – and avoid wasting food and money within your business in the meantime.
You may have decided by now that you don’t need to hire new hosts or waitstaff as you prepare your restaurant for post-pandemic service – but what about staff whose expertise is in technology? A recent report from Hospitality Tech references the southeastern U.S. restaurant brand Sonny’s BBQ, which relies on the skills of two full-time, highly skilled data analysts. These analysts synthesize industry data, sales and profits, marketing statistics and other data to develop and fine-tune strategies for data analytics, customer relationship management and personalized guest experiences. Strengthening your business and brand in these difficult times is about harnessing information – about elements ranging from your market and customers to each item and promotion on your menu. That may require you to rethink how you manage your business and what expertise you need most. Doing so can help prepare your business for future bumps – and bring some needed predictability to your business in 2021.
In 2019, the annual employee turnover rate in the restaurant industry reached 75 percent – an all-time high. Labor challenges – whether in finding and hiring talent, providing training, allocating resources to pay and reward staff, or some combination of the above – are a key concern for the vast majority of restaurant operators. COVID-19 has added yet another wrinkle to those challenges. If labor is a challenge for you, you might learn something from Susan Reilly-Salgado, a former doctoral student who, more than 20 years ago, wanted to write her dissertation on the successful hospitality culture that restaurateur Danny Meyer had developed. She approached Meyer, agreed to work in his restaurant for six months, and then partnered with him to create the Hospitality Quotient (HQ) – a set of six soft skills they thought a high-performing employee in Meyer’s restaurants should possess. These skills – curiosity, empathy, integrity, kindness, self-awareness and work ethic – comprise just over half of the skills an employee should possess to do their job well, they believed, with the remaining skills being the technical skills needed to do a specific job. Even if your restaurant offers very different food or serves a different clientele, these qualities should translate. An empathetic employee will make an effort to ensure a guest with a severe food allergy receives the correct dish – and will be mindful of their safety as we emerge from the pandemic. A curious employee will take an interest in learning new skills on the job and will likely spark the kinds of new ideas you need to operate successfully in the current environment. As you look to bring employees back on board or even hire new staff, consider it an opportunity to elevate your service. When you screen applicants, what questions can you ask that will bring HQ qualities to the surface – or demonstrate that a person lacks those qualities?
At a time when restaurant finances are getting squeezed from many directions, do you know which budgetary battles are most important to fight? In other words, when you’re managing such expenses as labor, ingredients, rent and third-party delivery, does your balance sheet give you clear answers about how much each of those expenses is impacting your bottom line? It needs to, since your gut instinct may not be correct. Case in point: The results of a recent study by New School Center for New York City Affairs and the National Employment Law Project found that restaurants in New York City were more negatively impacted by rising occupancy costs and the fees charged by third-party delivery services than they were adversely affected by the near-doubling of the minimum wage paid to hourly employees in the past five years, Restaurant Business Online reports. The Fight for $15 wage battles of recent years had many operators concerned they would need to boost menu prices beyond what guests were willing to pay – and minimum wage escalation isn’t an insignificant expense for operators to be sure. But while New York isn’t like every market, the rising minimum wage in the city has had a smaller-than-expected impact in a diversity of regions, whether in Manhattan, Queens, Brooklyn or the Bronx. As the minimum wage has been ascending in geographical regions across the country for years, you may be able to protect your bottom line by focusing on negotiating more favorable terms with a third-party delivery company, adjusting your business model so you can occupy a smaller or different footprint, or getting a stronger handle on hidden back-of-house costs.
How much science is behind your menu? In other words, to what extent do you review your restaurant’s sales, inventory, scheduling, loyalty program and other areas of your operation where you collect data to better understand how these predictive analytics work together? Doing so can help you predict what will sell, so you have sufficient inventory on hand and won’t lose sales opportunities. It will also help you put your ordering on autopilot by considering both the historical and day-to-day sales of your business when you order supplies. By having a better handle on what you will need, you can plan your food preparation tasks accordingly so you minimize your waste. Best of all, being able to predict the cravings of your guests goes far in bringing them back.
Any chef can confirm it: Running a restaurant well can require the skills of a lawyer, doctor, designer, HR manager, mechanic, janitor, and the list goes on. And that’s on top of having to offer an appealing, in-season menu that can be readily adapted to different nutritional needs. While that ever-changing environment can bring interest and variety to each day, chances are you were drawn to the restaurant industry more because of the food than for your ability to negotiate a beneficial contract or identify the best cleaning supplies. Further, the multitasking often required in a restaurant setting can kill productivity: A University of Michigan study found that when a person attempts to accomplish more than one task at a time, productivity drops by 40 percent. Team Four’s Palette program can serve as an extra pair of hands, taking on some of the responsibilities on your plate so you can multitask less and focus more on parts of the business that suit you best. For example, Palette can help you fine-tune your brand, including redesigning your menu or updating your graphic identity on your website, signage and marketing materials. You can also access restaurant equipment, linens, office and cleaning supplies, along with services for managing waste collection and pest control. And in case your menu or inventory needs attention too, we can help you develop new recipes, identify cost-effective menu substitutions, improve your food safety record and offer negotiated contract pricing to help ensure you’re getting the products you need at the best value. You can access the full list of services included in Team Four’s Palette program at www.palettefoodservice.com.
Between rising labor costs and falling traffic, there is no shortage of factors squeezing restaurant profits right now. Raising prices to meet margins is one option, but how much are your guests willing to pay before they take their business elsewhere? And what if sales shortfalls are simply due to shifting trends — or your competitor across the street offering a similar product for less? If you use data analytics to manage your food costs, you can uncover helpful information about your inventory. Since your inventory likely eats up 25 to 35 percent of your operating budget, it’s a good place to find lurking costs that can be minimized so you can better manage your spending. To identify opportunities, look at your supply chain and product mix. Do you know how many times your product changes hands and how prices shift with each transition? If you’re looking for help with this and much more, ask about Team Four’s Palette program. We can assess your supply chain, purchases and product mix and then recommend action steps that will help you lower food costs without sacrificing your quality standards. That might involve substituting quality products that still reduce food costs, or identifying trend changes, purchases that aren’t in line with your product specifications, or pricing that doesn’t reflect current trends. Learn more at www.palettefoodservice.com
Mining your data will take you far in predicting your sales and labor needs, but it may not cover all your bases. Factors that are a little less predictable — like a Nor’easter, for example — can catch you unprepared. In addition to monitoring the weather, Upserve advises you to keep tabs on a number of other factors that can send your business on a wild ride if you don’t prepare. At a time when delivery is on the rise, watch for promotions from third-party providers and prepare for a potential spike in delivery business when they offer discounts. Also keep an eye on local events that might bump up your foot traffic and bring in guests from out of town who wouldn’t normally be filling your dining area. Economic factors like fuel prices can have an impact, too, perhaps causing a dip in your dining room business if not business overall.
Prepare to be shocked: The restaurant industry is known for its unusually thin profit margins (Toast suggests they range from 0 to 15 percent, with most restaurants falling between 3 and 5 percent). Okay, that probably sounds pretty familiar, but as with most other areas of your operation, your data can help you uncover surprising areas of waste and make best use of the profits you do have by tracking your profit and loss, as well as your projected and actual cash flow and cost. FSR Magazine advises collecting information on such costs as your rent and utilities, wages, revenues within a set time period, cost of raw materials, number of items sold and the average cost per item, total food cost, cash flow projections and profit. Reports from your POS can provide the most detailed information here, but also look to your credit card processor to identify trends, as well as records from third-party delivery providers.
If you’re among the many restaurants transitioning to delivery service, your POS can help you reap rewards from the data you collect from each order — but make sure you track your progress in a way that helps you respond to patterns as opposed to one-off customer complaints. For example, Modern Restaurant Management advises you to turn to your POS to assess your results as a whole: Do you have one delivery driver who is consistently late? A line worker who often misses including requested condiments in orders? Or do your soup containers leak, generating regular complaints from customers? Which items are your most profitable and which are rarely ordered at all? Reviewing your POS for patterns tied to your food, personnel, packaging and service can help you see where adjustments are needed.