Just like an investor diversifying a portfolio to protect against risk, restaurant operators would be wise to identify inventive new revenue streams right now – particularly those that have potential to generate sales and loyalty if business from more traditional channels lags in the months ahead. In addition to the obvious benefit of sustaining business, new revenue streams are also an opportunity to reinforce your brand values and, in turn, build loyalty. Chipotle, for one, recently announced it is launching a Chipotle Goods line, which includes not just the usual branded t-shirts but also leggings, baby clothes, jackets, cell phone cases, water bottles, socks, tote bags and even luggage, Nation’s Restaurant News reports. As part of this effort, Chipotle is upcycling 300 million avocado pits it uses each year to create a plant-based dye that is used in some of the products – then donating proceeds to organizations that make fashion or farming more sustainable. When you consider your restaurant’s values, what are you hoping your guests take away from their experience with you? If you take a step back, can you identify how your most loyal guests might be interested in supporting new branches of your business – simply because they make it possible to experience the best of your brand?
As COVID-19 spikes threaten to force restaurants into a cycle of loosening and tightening restrictions, loyalty programs may provide some much-needed stability. In a recent interview with The Spoon, the president and cofounder of Paytronix said during the worst of the downturn, one customer – who was representative of what the company observed with others – saw sales from non-loyalty members drop 75 percent, while sales from loyalty members fell just 20 percent (and their spending was not significantly lower than pre-COVID levels). It’s likely, for this reason, that major brands including Starbucks, Wendy’s and Taco Bell have been either introducing or upgrading their loyalty programs recently – adding new benefits and offering more convenient app-based payment methods. What can your restaurant do to entice customers to become more loyal to your brand?
Consumers are willing to pay a subscription fee for everything from podcasts to vitamins to tech gadgets these days. So why not their favorite restaurant? According to research from the Global Banking and Finance Review, 70 percent of business leaders say subscription-based business models will be central to their future prospects – and yet for many businesses across different industries, subscriptions remain an area of untapped potential. When it comes to restaurants, subscriptions for drinks, food and really anything consumers crave may an emerging way for foodservice businesses to monitor loyalty to their brand and build in some longer-term sales security through recurring revenue. Grub Street reports that Panera, for example, which launched a monthly coffee subscription service for $8.99 last winter, is now considering other ideas including a lunch subscription service focused on kids who are learning from home this fall. It’s easy to see why: A parent who has paid for their child’s lunch subscription is more likely to make a point of coming to Panera for lunch – and perhaps ordering a meal of their own. If you have been offering meal kits or dessert boxes or family-style dinner bundles during lockdown, these items could easily convert to subscription-based services that not only give you some advance warning to source the items you need in your inventory, but also help you secure some recurring revenue for the uncertain months ahead.
As the easing of restaurant dining restrictions in states across the U.S. has given restaurants a bit of a reprieve from the plethora of economic challenges COVID-19 has caused, it may be difficult to even stop for a moment and ponder the challenges ahead. But as temperatures cool around many parts of the U.S., potentially making outdoor dining less appealing, restaurants will need an airtight off-premise sales structure to sustain business. Many are struggling with that. In new survey research released by Upserve, 47 percent of restaurant operators who responded said their biggest challenge of the past several months has been shifting to a new business model such as online ordering and delivery. Meanwhile, between February and April, Upserve found that online ordering grew 3,868 percent. As winter approaches, how can you fortify your online business and ensure you’re not losing delivery fees to third-party providers? Is your website (and if applicable, your app) easy to navigate for people looking to place an order? Do you make dishes easy to customize due to customer preference or health requirements? Is your menu efficient to prepare and stocked with items that are just as tasty upon delivery as they are served in your dining room? If you offer delivery via third-party provider, are you communicating to customers how much it helps you if they pick up their order instead? Can you entice customers to pick up their order in exchange for a discount or other benefit? People will still crave restaurant food as the virus persists into the cooler months, so how can you streamline the process of connecting them with yours?
At a time when food delivery providers can charge commissions on the order of 30 percent, restaurant delivery is facing pressure to evolve – and fast. The good news is that new models are appearing all the time – and they are building on the community spirit that has been on the rise since the start of the pandemic. Fare is a new commission-free food delivery service that CaterCow just launched in New York City. Instead of delivering small, individual orders, it offers a select menu of foods that must be ordered in advance and are then delivered in bulk to a person’s door within a specific building or neighborhood. While it requires some planning and coordination across households, the only charge is to the recipient, who pays a delivery fee (which starts at $3 and climbs based on the size of the order, according to Restaurant Dive). The restaurant keeps the rest. As restaurants have had to close in recent months, or even in the best cases, adapt their models to the current environment, consumers have become increasingly aware that restaurants need patrons to meet them halfway. That may translate into a willingness to forgo some convenience for the sake of ensuring a restaurant’s profits. Can you entice your customers to adapt to picking up meals themselves if you offer a discount or a free item in exchange? Could you mine your tech to identify pockets of customers, then offer a deal to cost-effectively deliver meals in bulk to apartment buildings yourself? Could you partner with nearby restaurants to share a delivery team? Now is the time to think creatively about how to get food to customers – and to tell them how they can best support you.
Everyone needs to eat – but the experience of eating at a restaurant or enjoying restaurant food is something that will keep consumers coming back to your business, particularly if they have had to cook for themselves for several weeks on end. Recent Toast research found that 78 percent of Millennials would rather spend money on an experience such a restaurant or activity than on an item at a store. Whether guests are dining at your restaurant right now or opting for delivery, you can fine-tune the experience you offer. First, focus on making your brand come through effectively via delivery. Ensure your menu of delivery items travels well and represents the best of what you can offer off-premise – and take care to update it online, particularly if you have introduced new items recently. When you send out an order, help customers connect with your business – Deliverect suggests small acts like a handwritten note or a smiley face on a receipt can go a long way, or you can enclose a small photo of your team to introduce customers to the people who are working hard for them behind the scenes right now. Provide vouchers or other promotions to increase future deliveries and in-house orders. Think about how you can get people back to your restaurant once people are ready to dine out again: Stay in touch with other business owners in your community to plan potential events together, and keep your conversations with guests going on social media (share some photos too) so you’re front of mind for them when they are ready to dine out.
To be sure, there are plenty of gloomy news headlines about the restaurant industry right now – and more than ever, restaurants need the support of their communities to recover. But at a time when it is easy to feel overwhelmed by the multitude of challenges standing in the way of rebuilding business, take heart in the examples of operators who are somehow doing better than ever right now. They are succeeding, seemingly, through a combination of letting go of ego, ignoring the desire to keep items on the menu out of sentiment, being willing to flex to new business conditions each day, and focusing on what people need right now – even if it doesn’t necessarily mesh with the polished brand the restaurant had in its beginnings. Take Alinea veteran Eric Rivera of the Seattle restaurant Addo. A report from Wired details, Rivera has been offering an ever-changing menu of items ranging from $9 food bowls, to meal-and-wine packs, to eat-at-home versions of his 20-course tasting menu during the pandemic. He has even thrown in some Game of Thrones- and Seattle Mariners-themed dinners to mix things up. The constant changes give him some new fodder for social media promotion on an ongoing basis, and people are linked from Addo’s social media posts to its Tock sales platform, which allows customers to order meals in advance (and Rivera to better manage inventory and waste). Addo’s dining room now looks more like a warehouse and the employees who once served a roomful of guests are now staffing in-house delivery for the restaurant.
The reopening of restaurant dining rooms across the United States has been a study of extremes, whether in terms of guests’ responses to restaurant reopenings, operators’ willingness to enforce new health and safety guidelines, or even the guidelines themselves. As we enter the summer months and jurisdictions look to accommodate outdoor dining in previously unseen ways, we’re likely to see an even broader range of approaches to kick-starting restaurant sales. While your state and local authorities detail the precautions your business must take to protect against the spread of COVID-19, there is also room for some imagination within the rules you must follow. Hearing from operators who have deftly maneuvered through their own reopenings may help you sidestep some challenges (or even just plain awkwardness, like how to go about confirming the accuracy of orders when everyone in your establishment must wear a face mask, or determining how guests can best store their masks while they eat). A new website launched by Team Four Foodservice, www.foodserviceceo.com, can serve as a guide to the many guidelines restaurants are following right now. The site includes information from health and safety authorities but also recommendations from industry consultants. It may offer you some ideas that make sense to implement in your business. In any case, leaning on your network of restaurant operators as you reopen can help you tackle existing challenges and anticipate potential ones.
Does your menu look different right now? Scrutinizing it will help you make sure you’re not only staying on trend but are also providing value, minimizing waste, spending money wisely, considering the production capacity of your staff, and offering foods that are best suited to where customers are most likely consuming them – whether that’s in your dining room or off-premise. New research from MicKinsey entitled “How Restaurants Can Thrive in the Next Normal” advises operators to start out by offering their usual menu, emphasizing core dishes and comfort foods. Then attract customers to your value items and upsell from there. It will likely be necessary to reprice some items to compensate for current market fluctuations. A separate report from Johnson & Wales advises operators to identify ways to reduce the work needed to prepare menu items, particularly if they’re working with a scaled-down team. Consider keeping a mix of proteins, pasta and vegetarian items on hand, then rotating in a new category on a two-week rotation to keep things interesting. Even if you have a loyal following looking to come in and dine with you, your current seating capacity guidelines limit how many in-house meals you’re able to serve. When in doubt, err on the side of bolstering your takeout menu and offering items that travel and reheat well.
The experience of sitting down at a restaurant, ordering a favorite meal and enjoying the service is something so many people are craving right now. But for a lot of operators looking to reopen, the math doesn’t look workable – at least right now. The need to create extra space between tables, significantly reduce overall capacity and limit the kinds of in-person interactions that once helped define service will lead to a further reduction in previously slim margins. So what are operators – particularly those relying on full-service business – to do? Take the creativity you used to develop your business, menu, brand and service and channel it into reinvention. With so many small businesses trying to keep sales flowing, it’s a time when experimentation is needed and missteps are more easily forgiven. Depending on the flexibility of your space, whether you own or lease your property, what extent you can adjust your restaurant’s layout and hours, and the limits of your imagination, you may be able to make sweeping changes. Do you serve a popular seasoning, sauce, wine or other item that can be packaged and sold in a corner of the space you once used for seating? Can you open a small greenhouse in your parking lot and grow foods for sale – or even for your business use at a time when staples like lettuce can be difficult to source? If off-premise dining becomes the norm in the long term, can you restructure your space to accommodate a deli case full of sandwiches and salads to go or expanded catering options? At a minimum, take a close look at your menu to ensure you are maximizing your revenue while seating capacity is limited. People who enter the restaurant industry tend to have vision, learn on their feet, and carry on in the face of risk. It’s time to use all of those traits to your advantage.