According to a recent poll from global data intelligence firm Morning Consult, 59 percent of Americans now say they feel comfortable eating at a restaurant. So as pandemic-related dining restrictions are lifted and consumers look for more in-person dining experiences, where does this leave ghost kitchens? In the near future, some ghost kitchen operators that didn’t start as brick-and-mortar locations may have greater challenges in getting the word out about their brand. Others like C3 are even considering reverse-engineering into small physical locations – how quickly times change. But delivery isn’t going away, and though we can hope there won’t be another pandemic any time soon, business disruptions happen and restaurants need to have plans in place to manage both large and small challenges that arise. Regardless of what portion of sales you generate from off-premise business, the big lesson of the pandemic may be to build a business model that can flex as much as possible – and to adopt the tools that enable quick pivots. For restaurants, that could mean having some kind of customer-facing physical presence (even just a small brick-and-mortar location or food truck) to keep the brand interesting and front-of-mind for consumers, ensuring that every square foot of your real estate footprint is paying for itself, leaning on delivery to scale business up or down in response to a range of conditions, and adopting technology that can help you adjust staffing, inventory and menus on short notice.
Even before the pandemic, labor recruitment and retention was a major challenge for restaurant operators. Now that we’re in a position where business is suddenly ramping back up and all restaurants are looking for staff at once, that challenge has ballooned. It’s causing operators to create new talent pipelines, rethink roles and find ways to automate more tasks. Along those lines, the fast-casual chicken chain PDQ is expanding upon its relationship with Best Buddies International, a nonprofit organization that seeks to create opportunities for people with intellectual and developmental disabilities. Nation’s Restaurant News reports that the chain has set a goal of hiring at least one person from the organization to each of its 45 locations in Florida. Wage increases aren’t feasible for all restaurants, but some brands are trying that too, in addition to taking steps to recast restaurant jobs as careers: Chipotle, for one, is raising its hourly wage to $15 and also creating a new career path for aspiring restaurateurs that allows managers to earn salaries of $100,000 in as little as three and a half years. Finally, operators are assessing ways to speed up or automate tasks so they are less reliant on labor fluctuations. Robin Gagnon, co-founder of We Sell Restaurants, told Modern Restaurant Management that robotics are being tested at every position at a restaurant, ranging from cooks to table service, and that we’ll see more ordering via app and kiosk now that consumers have grown accustomed to it. In the kitchen, Gagnon predicts that more concepts will look to get food out more efficiently by preparing items in advance and assembling them rather than offering full service.
On-demand food delivery is just getting started – and restaurants may be just one part of it. Uber announced recently that it had partnered with the on-demand delivery startup GoPuff to offer items from grocery and convenience stories in 95 cities within the next couple of months. (This is on top of its recent acquisition of Drizly, enabling the delivery of alcohol.) As grocery stores offer more ready-to-eat foods and companies like Uber appear to be making it easier for consumers to have food and drink delivered when they want it from businesses beyond just restaurants, where does this leave restaurants? To be sure, developments like this hint at how third-party delivery companies could be shifting gears to promote greater profitability after the pandemic – and potentially become less reliant on business from restaurants. In any case, as life begins to return to normal, restaurant operators need to continue to think about how they can innovate. That means studying developments in delivery and identifying new ways to make it work financially, whether through in-house options, partnerships with other restaurants or other avenues. It’s also about looking for new opportunities to get a restaurant’s brand in front of consumers – via such routes as ghost kitchens and partnerships with grocery stores that can offer hot or prepackaged restaurant food to go – or elevating and differentiating the in-restaurant dining experience so consumers feel the need to make it a bigger part of their lives again. A recent report from Restaurant Hospitality shared some things operators are doing to innovate, ranging from delivering food to lockers in apartment buildings to finding creative ways to minimize food waste.
So many of our payments have become contactless in the past year – and businesses have felt the need to offer card-not-present payment options in an effort to maintain safety, enable off-premise food purchases and promote customer convenience. But as card-not-present transactions have climbed alongside food delivery orders in the past year, so have the opportunities for fraud. Research from Aite Group forecasts a 16.4 percent increase in card-not-present fraud this year. This fraud can hit restaurants with chargebacks that are difficult to dispute, but fortunately there are steps restaurants can take to help detect and prevent fraud. Overall, it’s about identifying patterns about your customers – who they are, how they are ordering, are and how they are finding you. Machine learning tools can help you identify what good customers look like – then flag those that look risky. For example, an order placed from a city other than the one listed as the delivery destination might raise a red flag for a restaurant business. ATM Marketplace advises having a fraud-protection provider that helps screen every transaction – and it’s important for the restaurant to partner with them to ensure the system is adaptable to the business. In a recent webinar entitled “How to Protect your Restaurant from Online Scammers,” Brittany Allen, Trust & Safety Architect at Sift, advised restaurants to use fraud detection systems that provide an activity log that lets them view a customer’s session history, and which use a single dashboard that eliminates the need to jump from tool to tool. Beyond that, Allen said a restaurant operator should know how different fraud alerts rank for their business – and what kinds of fraud similar businesses are facing. Finally, a system should allow you to take action somehow, whether to flag a suspicious transaction for further review or to stop a transaction from occurring.
After a tumultuous year, restaurants are coming back in a big way – though the landscape is looking different than it did before the pandemic. According to Yelp’s Economic Average report released in April, which tracks the number of restaurants listed on Yelp by restaurant operators and consumers, more new restaurant businesses opened in the U.S. during the first quarter of 2021 than at any other period over the last 12 months. The restaurants across the nation that experienced the most growth during the quarter, the report said, tended to be those that offer takeout, outdoor dining and other Covid safety precautions. Restaurants with food-delivery services experienced the greatest increase – a 22.1 percent spike. This trend is likely to last for some time – at least for restaurants beyond fine-dining establishments – particularly as consumers have taken on new habits over the past year. Does your restaurant have a seamless system when it comes to offering food for off-premise consumption? A Restaurant Business report says it will continue to be important for operators to streamline their processes – e.g. continuing to offer curbside pickup and trimming menus to include items that travel the best, as well as leaning on data a bit more to predict traffic surges and lulls, craft new promotions to drive demand, and manage orders coming from multiple sources.
We’ve all heard the stories about how difficult it is for restaurant operators to hire staff right now. But as we emerge from the pandemic, the operators that have survived have learned lessons that can also help them thrive – and attract creative people who want to be part of that. Even though it may be tempting to return to pre-pandemic ways of restaurant management, the landscape has changed – and restaurant roles can (and perhaps should) change too. In a recent Eater report, New York restaurant operator Michael Schall said he was able to retain his staff last winter – even as people abandoned both the city and the industry – by rethinking the roles of staff he couldn’t lose and guaranteeing their income for a set period of time. Kitchen staff were kept busy through the quiet months with his restaurant’s newly created grocery and meal kit programs, and with odd jobs like painting. As restaurant life begins to feel closer to normal, consider how you can help your team build careers with you for the longer term. Can you use their help in extending the new income streams you created to keep going during the pandemic? Could you use your space and staff for new purposes – and at new times – now that so many potential guests have adjusted their work schedules? Could you create new multifunctional roles that involve technology or social media marketing now that we have seen the need for strong off-premise sales structures? As we return to somewhat-normal conditions, now is a good time to decide what lessons of the past year are worth applying permanently.
As restaurants reopen again in a big way, they are facing yet another unprecedented challenge, though one that probably would have been welcome last spring: having to hire new staff to handle a steep rise in business at the same time as all of the other restaurants in the area. Not only are restaurants having to make themselves appealing to customers beginning to venture out again right now, but they are also having to put their best foot forward for potential foodservice employees who can have their pick of employers. As a recent New York Times report suggests, at a time when an extra dollar or two could mean the difference between attracting an employee and not, it’s important to understand what your competitors are paying. Is there room for you to partner with other restaurants in your area to exchange ideas, share staff or pool resources that could drive interest in your businesses? Consider paying referral bonuses to existing employees who recommend another staff member once that person has been on your team for a set period of time. Take another look at your needs – could you hire someone inexperienced but eager and train them instead of holding out for a more experienced person who meets a longer list of criteria? Also assess the benefits (financial and non) that you’re able to offer, from meals to career development opportunities to loyalty bonuses for employees who stick with you for a while.
Chances are you have some kind of loyalty program at your restaurant – and if you have graduated past the little plastic loyalty cards carried on keychains, you might think your program is doing okay. But have you studied exactly how well it’s helping you turn a new customer into a loyal one? Are you able to assess large amounts of data and translate that into targeted promotions that reach customers at just the times when they’re most likely to respond? According to a recent podcast on Pizza Marketplace with Tom Byrnes, vice president of marketing at LedgerPay, most loyalty programs aren’t succeeding. Research from Deloitte found that the average loyalty app loses 95 percent of its active user base within 90 days of it being downloaded, so most restaurant loyalty programs are engaging only a small portion of their customer base. Still, loyalty programs, when done right, are worthwhile: It’s nine to 11 times more expensive to recruit a new customer than to retain an existing one, so having a loyalty program that attracts and continuously engages new members is paramount. Your program should allow you to not only collect consumer data but to easily slice and dice it in a meaningful way. When you create a promotion for a subset of your loyalty program members, you should be able to readily find out how many people took you up on it, for instance – and how that offer’s response rate and profits compared to the promotion you sent them last month. How well does your program deliver for you?
In the past year in particular, it has often seemed like restaurant operators have been asked to accomplish the impossible: Simplify the ingredients you use but accommodate everyone from carnivores to vegans to customers with allergies. Increase wages for employees but avoid noticeable pricing spikes on your menu. Make your menu feel special and unique, but it should not be complex or time-consuming to prepare. The list goes on and on. And as consumers venture back into restaurant dining rooms and order delivery in the months ahead, expectations will continue to climb. It’s a good time for you to take a look at your business and decide what you value – and just as important, what you don’t care about as much – so you can do your best with the people and resources you have and then filter out the noise. What are your core values? What impression do you want your customers to have of your business? In which aspects of your business are you not willing to compromise or accept a substitute? Assess each area of your business and identify things that are out of your control and can’t be negotiated – like managing food safety requirements and government-imposed business restrictions. Where you do have some control, where are your biggest pain points? Where are things going especially well – and how can you apply those positives to other areas of your business?
If you thought last year was a rollercoaster, this year might be another – with a few more ups and downs instead of a long, gradual drop. As we emerge from the pandemic, the great news is that consumers are excited to support restaurants in a big way: A recent survey of 5,000 consumers by the marketing company Constant Contact found that 44 percent of respondents said restaurants were among the first businesses they plan to return to. Some restaurants, particularly those that have incorporated technology into the day-to-day management of their business, have already experienced record-breaking customer demand (and therefore sales) this year. Of course, we’re not completely in the clear just yet, and a premature return to indoor gatherings could lead to a fourth wave of the virus. How can restaurants manage being in the position of having to rapidly ramp up inventory and staff like never before, navigate potential supply chain shortages, and then have to scale business back down in the event of an uptick in infections? First, be nimble: As you adopt new technology and systems for your business, prioritize those that allow you to make decisions minute to minute. Can your system help you adjust your menu, ordering and staff scheduling if a key ingredient suddenly climbs in price or becomes scarce, if your state reports a spike in infections, or if the weekend forecast is likely to bring crowds to your restaurant? Then keep your back-up plans handy: That means knowing what ingredients can be substituted for others in a pinch, creating multiple points of interest on your menu so people have many reasons to order from you, and knowing which companies can provide temporary workers on short notice for certain roles if you’re faced with sudden spikes in business.