When it comes to restaurant food delivery, the numbers don’t often add up – for the operator, the customer or even the third-party delivery company. A recent New York Times report found in a survey of GrubHub, DoorDash, Postmates and Uber Eats – the four largest third-party delivery apps in the U.S. – that customers were paying as much as 91 percent more for food delivered via these apps. In the meantime, operators are trying to carve out razor-thin profits from delivery orders and delivery companies are struggling to make money in a sea of competition. But since off-premise demand continues to climb and restaurants are adjusting their sales models and even their physical structures to accommodate it, how can operators make the costs easier to swallow for both customers and themselves? Offering delivery by hiring in-house couriers can help, though it isn’t necessarily feasible for everyone. A Restaurant Dive report says industry analysts predict restaurants will adjust prices, use virtual kitchens, adopt their own branded platforms or renegotiate their commission rates with third-party delivery companies in an effort to get ahead. Renegotiation may come in the form of changes in sales structure too: Technomic says a key way that providers are evolving right now is by offering delivery subscriptions – all-inclusive delivery for a monthly fee, as well as delivery discounts for loyal customers – incentives that can come directly from restaurants too.
Last year, restaurant prices climbed 3.1 percent year over year, according to the U.S. Department of Agriculture, and they are set to increase again this year between 1.5 and 2.5 percent. If you’re among the many operators that must raise prices this year, consider how you might achieve that without turning off your guests. First, try adding some value to the dishes you serve and the experience you provide. Some low-cost ideas that guests may perceive as adding to their experience could include offering fresh-baked bread or a larger side salad with a meal – or finding ways to make your menu more memorable, whether that means writing a guest’s name in chocolate sauce on a dessert plate or creating specialty artwork in the foam of a latte. Could you do a better job of explaining the quality of the ingredients you use? If guests get some extra detail about the steps you’re taking to provide a quality product, they may not mind paying a premium. If you have plans to upgrade your branding or marketing materials (to include your menu design), make pricing changes at the same time so you’re not simply taking your existing menu and plugging higher prices into it. Next, focus on your loyalty program – if you’re offering your best guests a chance to get something at a discount or for free, even if it is just once in a while, you can make higher prices easier to swallow. Finally, at a time when consumers value transparency, consider sharing your cost dilemma with them via social media or your email list – it helps if you haven’t raised prices in a while and can say you’re not willing to cut corners on quality. Of course, be sure to encourage them to share their feedback about what’s working well and what isn’t so they feel they are contributing to your success.
Are you sending customized promotions to your guests based on their past orders? Adjusting your menu or specials based on guest data you have collected? Changing the items you promote on your digital menu when changes in the weather make guests crave different items? The era of hyper-personalized marketing is here – and the more personalized you can make the experience for guests, the better. There are important payoffs for restaurants: A study from Deloitte found that one in five consumers who expressed an interest in buying personalized products was willing to pay a 20 percent premium, and 22 percent of consumers are happy to share some data in exchange for a more personalized service or product. Hyper-personalization was a key prediction in a recent report from Modern Restaurant Management that collected a roundup of insights from restaurant industry experts about the trends to expect in 2020. In the report, Dan O’Connell, CEO of Foodmix Marketing Communications, said he sees the industry taking personalization even further than the “you may like” recommendations that restaurants are using widely now. Think matching flavors to personalities, offering guests personalized recipes and packaging, and serving up customized latte art for every guest who orders coffee. Of course, hyper-personalization makes it all the more inspiring for guests to talk about it on social media. After all, when you feel like a business knows you well and celebrates what you like, you want to tell friends about it.
Want to boost your traffic? Develop a strategy around limited-time offers. According to Technomic, limited-time offers have increased 64 percent at Top-500 chain restaurants and retail businesses in the past five years – and they aren’t going anywhere. But LTOs are not a slam-dunk for restaurants: While they can help brands boost traffic and generate excitement on social media, they can also be expensive and risky for a restaurant, not to mention time-consuming to plan and execute. According to a Restaurant Business report, Brian Hipsher, vice president of City Barbeque, says developing an LTO can involve up to 150 steps for that brand, with phases including ideation, marketing, trial and test, and feedback and survey. Want to boost your LTO success rate? The restaurant software company Eat advises you tap into seasonal appeal, much like Starbucks with its pumpkin-spice latte or the Shamrock Shake at McDonald’s. Make sure your offer is in fact only available for a limited time, since scarcity drives demand. Restaurant Business also suggests pricing the item carefully – you don’t want it to be too expensive for guests to want to try – and using vivid photography, special ingredients and a novelty factor to help elevate an offer over those of competitors. Finally, consider collaborating with a partner to increase your reach, promote your values or demonstrate your efforts to support the community: POS Sector suggests partnering with organic vegetable producers on a limited-time salad offer, for example.
More isn’t more when it comes to your menu. As Fred LeFranc, managing partner of Results Through Strategy, told Restaurant Dive recently, operators can expect menus across restaurant segments to become simpler this year. There are a number of benefits your restaurant can generate by slimming down its menu – both for your financials and for your guests. The blog Chef Works suggests that a smaller menu will help you ensure your menu is a clear reflection of your brand, since extra items can muddy guest perceptions of a restaurant and the values behind it. It can also help your chef shine by focusing on the dishes and concepts that are his or her central strengths. As for your guests, you will make their decision simpler and easier to customize, minimizing the potential regret they may feel after ordering an item they’re uncertain about and making it easier for you to adapt items to their tastes and tolerances. (On that point, a smaller menu makes your business more efficient too, with fewer ingredients to prepare, potentially fewer suppliers to manage, fewer invoices to pay, and less waste.) Finally, having a smaller menu may give your restaurant more of a boutique feel, making each dish feel more special – not like a large collection of items offered in the hopes of appealing to every possible appetite.
At a time when consumers are eager to sample new trends, tire of eating the same dish repeatedly, and yet have highly customized dietary restrictions and preferences, how do restaurants respond? Operators might tune in to what’s happening at Sweetgreen, which made its mark as a fast-casual salad chain and is now in the midst of scaling up its brand. A recent New York Times report about Sweetgreen said while the chain used to update its basic menu of 10 items every 18 months and offer three seasonal options five times each year, its current lineup of 60 ingredients allows for nearly endless customization – all while ensuring each item tastes like a Sweetgreen salad. As one of the cofounders said in the article, “There is a physical limit to the number of items we can have on that line. Every item has to earn its keep.” You can beat menu fatigue at your restaurant by incorporating limited-time-only choices and seasonal items that guests will expect to disappear in a few weeks. Cycling in new ingredients on top of the foundational workhorse ingredients you use can help you test guests’ response to new items and audition potential keepers. What tactics do you use to make sure your inventory is stocked with menu workhorses – while also allowing for the breadth of new choices guests demand?
Team Four’s corporate chef expects the year ahead to bring an increase in smaller meal offerings – that includes more snacks on demand, as well as a range of smaller entrée portion sizes. These changes can be opportunities for chefs to test new ingredients, offer more health-conscious options and minimize food waste and cost. For example, as snacking grows in popularity and replaces the three-square-meals mindset in some cases, you can develop your menu with items that aren’t simply comfort food but also pack some nutritional value and dietary functionality. A recent Technomic report found that in the past two years, 40 percent of consumers said they were snacking on healthier foods. So when it comes to your snack menu, think plant-forward tapas, hummus sharing plates, vegetable-based dips and chips made from ingredients beyond the potato: lentils, quinoa, eggplant or kale to name a few. As for entrées, reducing your plate size – or offering the option of half-plates to help guests customize their experience with you – can ensure plates come back cleaner. A Danish study found that if the size of a plate shrinks by just 9 percent, food waste can be reduced by 26 percent.
Storytelling is “the new strategic imperative of business,” according to a report in Forbes. A brand with a strong narrative is a powerful brand – and science backs up the power that stories can bring to a business. Studies have found that by telling stories, the brains of the storyteller and listener synchronize, creating a shared experience. The brand consultancy Buffer suggests three ways you can use storytelling to help your business as it relates to employees, vendors and customers: First, instead of offering suggestions to get people on board with your ideas, tell a story that has the outcome you’re hoping the suggestion would have achieved. Use persuasive language – bringing in quotes or stories from outside experts as needed – and simple, heartfelt words to get your message across. Then apply those actions to a challenge you’re facing using the communication vehicles you have at your disposal. Need to get your team to improve its waste management or food safety practices? Weave real-life stories into their training sessions. Want to make sure your guests know about your efforts to buy from local suppliers and support the community? Integrate language into your menu that describes the origins of your ingredients and make sure your marketing materials and social media communications tell stories about your local connections.
For many restaurant operators around the country, 2019 has been the year of the rising wage. As the restaurant consultancy Aaron Allen & Associates reports, 21 states announced increases for 2019, and several states that already had high minimum wage rates saw major rises. California and Massachusetts saw increases above 9 percent and Maine experienced a 10 percent climb. Further increases are coming in 2020. Can your menu prices alone accommodate these sorts of increases in your labor spending? It’s not likely. To help your restaurant thrive amid labor challenges, Aaron Allen suggests operators assemble a plan that involves strategies for menu development, marketing, labor optimization, brand relevance and rejuvenation, technology adoption and even robotics. For instance, crafting a well-developed menu can lift check totals, increase party size and help you identify opportunities for limited-time offers, upsells and new profit lines. Conducting an audit of your brand and what sets it apart, as well as of your past, current and future marketing activity, can help you fine tune your strategy and avoid overspending. Similarly, if you audit how tasks are completed in your restaurant and what you’re spending on the labor required to complete each one, you might identify ways to adjust your service model or uncover tasks that can be eliminated or handled by technology. Speaking of tech, what processes can you make more efficient and guest-friendly through the use of technology? Could a tech-based solution help you minimize ongoing labor challenges? You may not need to take action in every area but knowing where you stand in these aspects of your business can help you pinpoint weaknesses that can lead to financial challenges down the line – and help you identify and build upon your greatest strengths.
Most U.S. consumers rate their interactions with brands as simply “okay,” according to a Tempkin Experience Ratings report, which asked 10,000 consumers to rate 318 companies across 20 industries in the areas of success, effort and emotion. Not great (though to be fair, there were some food brands that consumers rated highly, including Wegman’s and Subway). On the positive side, though, that result leaves plenty of room for brands to deliver an experience that impresses guests and brings them back. CBInsights, which builds software that predicts technology trends, identified three components that generate positive emotional reactions and enhance the customer experience, turning “okay” experiences into “wow” experiences: sensory marketing, quality time and human connections. Restaurants have an automatic advantage on the first point. CBInsights points out that scents, for example, can trigger memories and emotions – and that consumers spend an average of 15 more minutes in places that have pleasant smells. So the aroma of the apple pie on your menu may have the power to trigger someone’s happy childhood memory (and connect it to your brand). On the second point, quality time, brands are creating immersive experiences that extend far beyond an initial transaction – Taco Bell’s recent launch of a pop-up hotel (featuring not-yet-launched menu items and other promotions tied to the brand) is one extreme example of how this can be done. Finally, brands are using human connections to bond with consumers. As companies delegate more tasks to technology, they are freeing up staff to engage in more face-to-face interactions with customers in order to help them and gather insights from them. How can your brand combine sensory marketing, quality time and human connections to provide memorable experiences for guests?