As if it wasn’t important to know your true food costs before the pandemic, it’s all the more crucial now as many restaurants around the country are having to operate at a reduced capacity, rethink their menus and determine where to best allocate diminished resources. By getting an accurate handle on your waste, over-portioning, theft and even the shrinkage of ingredients, you can see what menu items are really costing you – then adjust your promotions so you encourage guests to select your highest-margin items. A recent webcast from Restaurant365 reinforced the power of tracking actual vs. theoretical food costs as a means of accomplishing this. Theoretical food costs are what your food costs should be based on the cost of your ingredients, while actual food costs are what your restaurant actually spent. There will be variance in those numbers, but getting a more precise understanding of where it comes from can help you minimize it. While there are a number of places to focus to help cut waste, it can be most helpful to analyze your individual ingredients and identify those with the greatest cost variance. Drilling down like this can help you zero in on what needs attention or adjustment, whether it’s your portion control of a certain dish, the prices you are getting from a supplier, or the need for a substitute dish on the menu.
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.
In recent months, your business may have offered more bulk meals or meal kits to customers looking to enjoy restaurant-quality food during the lockdown. Are these options worth carrying over as people begin to return to dining at restaurants and gathering with more people? Simon-Kucher & Partners, a global strategy and marketing consulting firm that works with a range of major restaurant brands, addressed this question in a recent study they conducted about consumer behavior after COVID-19. The findings, as reported by QSR Magazine, indicate that the answer is a probable yes. Prior to the pandemic, it found that 33 percent of consumers favored home-cooked meals, while 67 preferred food prepared away from home. Contrast that with preferences during the pandemic (55 percent vs. 45 percent) and preferences projected between six and 12 months post-lockdown (37 percent to 63 percent). In many areas, it will likely take a number of months before consumer routines return to what they were like prior to the pandemic. Providing some core menu items that can be offered as family-style meals, or packaging up ingredients that can be combined and cooked at home, can offer some additional freedom to guests – and perhaps tip the scales in your favor when consumers are considering where to order their next meal.
The pandemic has made the need (and demand) for efficient restaurant food delivery even clearer. If you operated a dining room before but don’t see it being a practical business move going forward due to physical distancing and capacity requirements, you may be considering going the virtual route, with a focus on driving off-premise sales. This doesn’t necessarily require moving to a new location. Depending on your leasing status and the flexibility of your landlord, you may be able to transform your current business and space into a ghost kitchen. If you need help to convert your existing business into a digital business call Team Four Foodservice.
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.
With weeks of lockdown still ahead for most of the U.S., we’re all yearning to return to “normal.” But until there is a COVID-19 vaccine or some kind of medical treatment available that helps people manage the worst effects of the virus, we are likely looking at continued social distancing in some form. Even if restrictions ease and people are no longer quarantined in their homes, it’s unlikely they will be gathering in large groups to do the kinds of socializing and celebrating that restaurants have, until recently, been able to accommodate. But can you envision a halfway point for your business? In order for businesses to participate in the gradual reopening of the economy, they will have to adopt new practices to help ensure the safety of their employees, suppliers and customers. Will you be able to create adequate space between tables in your dining room, between servers and customers, and between employees? If so, how might this affect the number of tables you turn and staff you employ during a shift? How can you adapt your usual methods of serving food and pouring wine to allow for distance? Can your employees safely get to and from work while maintaining social distancing? Can you adopt no-contact practices for accepting and inspecting deliveries? Is it possible for you to adopt all of these measures while continuing to employ any business-model shifts you are using now to help bring in business, such as selling meal kits and specialty ingredients or providing curbside pickup? Thinking through the possible scenarios now and developing a plan can prepare you to quickly ramp up business – and avoid having to make major decisions on the fly – in the months ahead.
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.