As the pandemic continues, hybrid work arrangements look like they may be here to stay for many – if not most – companies around the country. Global research indicates that 72 percent of corporate leaders plan to offer hybrid models of working. How might your restaurant meet the moment? If your dine-in business lunch traffic continues to be low, could your business find a new way to attract the guests who used to come to you? Panera, for one, has been acting on a new strategy aimed specifically at remote workers. They are offering scheduled group ordering, as well as catering for companies with workers in different places. At a time when companies are trying to navigate how to maintain camaraderie across employee teams that may only see each other for a few days each week in satellite offices, offering a regularly scheduled catered lunch might be an appealing way to make the most of the time employees spend face to face. Or, you could target the large population of consumers working from home. The World Economic Forum said recently that up to 20 percent of the U.S. entire workforce will continue to work from home permanently, up from 5 percent pre-pandemic. If you’re located in an area with condominium complexes where people are apt to be continuing to work from home, offering a scheduled building-wide delivery might enable you to attract lunchtime traffic – even if it’s not in your dining room As the supply chain is being impacted by factors including labor shortages, extreme weather, gaps in the availability of raw ingredients, and a spike in demand from consumers returning to foodservice outlets, businesses at every link in the supply chain are feeling the stress. At a time when some foodservice operators have been completely dropped by their distributor(s), the strength of your partnerships is paramount. At the time of this writing, the average fill-rate from manufacturers to distributors was running below 85 percent. But the service level for Premier Value 4 members is considerably higher than this average. That is due to the work our distribution partner, US Foods, is doing to rebalance inventory to provide our members with the best possible service. In recent quarterly earnings releases, US Foods and Sysco disclosed their food cost inflation rates: 8.2 percent and 10.2 percent, respectively. To keep this in context, a normal food cost inflation would be in the 2-3 percent range. Value 4 members have protection against this inflation with contracted manufacturer agreements (CMA). CMA’s give access to 350 vendors covering 105,000 products. Over the past 15 years, inflation on CMA products has been half of the inflation of non-CMA products. Our CMA contracts are firmly in place and while we will not know if that 50 percent “savings” rate is less or more until the current hyper-inflationary period has settled, we are confident that using CMA products is your best protection against inflation – and will offer extra security until we return to conditions that feel closer to normal. If you do not have these protections from your suppliers and partners, consider calling Value 4 to see if you qualify for our programs. Not so long ago, a food truck was often perceived as a potential means for a fledgling restaurant concept to develop a following with the public before launching a brick-and-mortar location, or for a smaller independent restaurant to spread its brand awareness. Now, established brick-and-mortar brands are looking to food trucks as a way of modernizing to suit the constraints of the Covid era. Take Au Bon Pain. Nation’s Restaurant News reports that Tabbassum Mumtaz, the CEO of Ampax Brands, which is the new franchisor of the Au Bon Pain bakery and café brand, considers food trucks – along with ghost kitchens – to be important tools that the brand can use to modernize itself. Research from IBISWorld found that from 2016-2021, the food truck industry has grown at an annualized rate of 7.5 percent, surpassing the growth of the broader foodservice sector. To be sure, food trucks have their disadvantages – at the time of this writing, most small, independently owned food trucks weren’t eligible for the Paycheck Protection Program or Economic Injury Disaster Loans. However, they do offer a key advantage – namely flexibility – that happens to suit the current times extremely well. While the pandemic has decreased demand for food truck business in office parks, it has increased opportunities for it in residential neighborhoods, hospital and grocery store parking lots, and highway rest stops. At a time when everything from labor shortages to supply chain kinks are posing challenges for operators, doing anything you can to manage and minimize waste is especially important. To be sure, there are plenty of tech-driven solutions designed to help prevent over-ordering supplies, measure ingredients, condense leftovers and reroute excess inventory – but a number of simpler solutions exist that restaurants can start using today. Most of them have to do with skewing small when it comes to portion size and accommodating size preferences. For instance, you can offer a choice of portion sizes and provide smaller container sizes of any refillable items. Make sure that whatever side dishes or even garnishes you’re serving are ones the guest has chosen, so you’re not perpetually throwing away the potato chips and coleslaw you have always served with your sandwiches. Pricing items à la carte can help. The National Restaurant Association also suggests offering guests the option of splitting an entrée or having part of it wrapped to go before it is served. To help minimize waste once your meals have left your establishment, you can provide reheating instructions on food packages to-go to ensure the meal retains its quality as much as possible when eaten as leftovers. Other than labor, the top challenges for restaurant operators right now are escalating food costs and short supplies, according to recent commentary from Larry Reinstein, industry consultant and president of LJR Hospitality Ventures. (And of course, labor shortages can impact both costs and supplies.) When you look at your operation, where might there be room to flex when the foods you are known to offer are priced out of your budget or are simply unavailable? First, consider what dishes and ingredients on your menu are more variable and adaptable. You may be able to be more flexible with ingredients than you think. Case in point: When Wingstop, which literally has chicken wings in its name, had to keep business going amid a wing shortage in recent months, it offered the alternative of chicken thighs, the National Restaurant Association reports. For every dish you serve, consider how you might reinvent it without a perceived loss of value for the guest – or if you should temporarily replace it until cost and supply challenges shake out. Of course, you may have some room to raise your prices – media reports are spreading the word to consumers that they have not been paying sustainable prices for restaurant food in recent years. But if you must raise prices, look for other ways to elevate the experience you’re providing guests – particularly if you’re already short-staffed and out of popular menu items. This is where the human side of the restaurant business has an opportunity to demonstrate its worth. 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. |
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