Even before the pandemic, ghost kitchens were on the rise for their ability to ensure faster, less expensive food preparation and more efficient delivery to customers looking for off-premise dining options. Now, many restaurant operators are looking at ghost kitchens as a critical way forward at a time of great uncertainty for the industry. They may be on to something: Recent research from Euromonitor found that the global market for ghost kitchens could reach $1 trillion by 2030 – and in the process, capture big slices of industry segments including drive-thru sales, take-out foodservice, ready-to-eat meals, pre-packaged cooking ingredients, dine-in foodservice and packaged snacks. But when you’ve been running a traditional brick-and-mortar restaurant, what actions (and investment) are required to pivot to the ghost-kitchen model? Food distributor US Foods is aiming to give operators a hand with that transition through its newly launched US Foods Ghost Kitchens program. The company promises that for an average start-up investment below $5,000, they can help operators open a ghost kitchen concept in about three weeks and achieve an average profit margin exceeding 35 percent. The program includes market research, marketing support, a digital technology framework, menu optimization and management guidance.
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.
“No one really had this in their playbook.” That’s what one conference planner said in a recent New York Times report about how the pandemic has forced changes to conferences and business meetings – and the hospitality surrounding them. Restaurant operators who hosted events before the pandemic have faced an equally steep learning curve. Now, as guests begin returning to dining rooms and we all look forward to being able to safely gather in larger groups for parties, weddings and less formal celebrations that have been put off in recent months, how can you plan accordingly? If you’re feeling ready to take bookings for events later this year and into 2021, your event management protocol will naturally need an update – and it’s something you can promote to your guests now to encourage their business and demonstrate your commitment to keeping them safe when they gather. As you think about replacing buffets and self-service stations, how can your menu, service model and staffing plan flex to accommodate it? Can you cover or wrap food items, plates and utensils to minimize cross-contamination? Serve individual plates to guests either at the table or in a buffet line? Transition to fixed menus that minimize waste and are easier to prepare and serve? Adapt your indoor and outdoor spaces to ease traffic flow and allow for better ventilation? Your service agreements – both with guests and any vendors you use – may need an update as well to help protect safety and ensure you are protected legally in case lockdown measures force cancellations down the line.
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.
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.
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.
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?
From the clattering of dishes to the blaring of music to the loud conversations of guests trying to hear themselves over the din, restaurants can be noisy places. It can be enough of a turn-off that guests will avoid your business. (Case in point: There is an app called Soundprint that dubs itself the “Yelp for noise” and allows users to search for restaurants quiet enough to allow for conversation.) If the sound levels in your restaurant bother guests and employees, take some cost-effective steps to lower the volume. Toast suggests minimizing the scraping of chairs on the floors by using felt pads on chair legs. Keep music at a level where people can have a conversation without shouting. Use textiles to absorb noise – curtains, tablecloths, area rugs, and soundproof panels on walls and ceilings can all help. Finally, keep noisy food preparation equipment in the kitchen, or if you have an open-concept space, consider installing a transparent barrier between guests and food prep areas.
“I’d have a tough time sleeping at night if I was handing our food to an untrained, random third-party driver to then carry that over to our customer, because what happens when you have a service failure or you have a product quality problem in that situation?” That’s what Domino’s CEO Ritch Allison said during an April 2019 earnings call. Of course, Domino’s has the scale to be able to manage delivery orders in-house (and also a vested interest in making consumers doubt the reliability of third-party delivery providers). But if you’re using third-party providers, it’s worthwhile to note – and attempt to manage – their shortcomings, since consumers are more likely to blame the restaurant for service failures than the delivery provider. A recent nationwide survey of 1,000 consumers by Steritech asked questions about the pluses and minuses of delivery and offered suggestions on how to address challenges. When the surveyed consumers have had problems with delivery, they included such challenges as the food taking too long to arrive, the packaging not keeping the food at the proper temperature/containing spills/preventing tampering, and order inaccuracy. Steritech advises taking a range of actions to help: To better resolve service issues, consider printing phone numbers for problem resolution on receipts, packaging or seals – or create an online portal for resolving disputes. Minimize phone orders in favor of online orders for better accuracy. Prioritize order accuracy and quality checks before food leaves your restaurant. Provide real-time delivery tracking or time estimates and send text alerts when food is en route. Offer online tipping options. Communicate your fee breakdown clearly so consumers understand where their money is going. Finally, it’s worth mentioning that some brands are trying to provide the best of both worlds: Panera, for one, is offering a hybrid system whereby it relies on third-party providers to take orders but then uses its own fleet for delivery to better manage quality control.
Want to win over customers? It’s not about having mouth-watering new specials or transforming your marketing strategy. It’s all about your operations. (At least that seems to be the trend based on recent performance results of a number of major brands.) As reported in Restaurant Business, brands including Dunkin’, McDonald’s, Starbucks and Wendy’s have prioritized operational changes over menu innovation in recent months. Wendy’s has focused on eliminating tasks and training employees to improve speed of service. McDonald’s continues to experiment with automation and has held competitions to find ways to serve guests faster. Dunkin’ has streamlined its menu and changed the layout of stores to improve flow of operations. As for Starbucks, third-quarter same-store sales increased 7 percent and store traffic increased 3 percent, due to what the company says is its focus on simplification – reducing the tasks that need to be completed in-house and shifting employees’ focus to guests. How can you simplify your operation – both with and without technology – to deliver better service?