Restaurant operators are feeling the pinch from all directions right now – double the unemployment of the general economy, widespread supply shortages and inflationary woes. One recent study found that 64 percent of consumers plan to cut back on their restaurant spending. Amid these challenges, many restaurant brands are trying to reconfigure their physical operations to accommodate the new ways in which consumers are demanding restaurant food. Some formerly full-service restaurants are converting to fast-casual or quick-service models. Others are expanding drive-through lanes, adding windows dedicated to third-party delivery pickup or otherwise making off-premise orders a bigger priority. But all of this costs money – and something has to give. In your operation, what might that be? Amid the strains of the times, there are also opportunities, as well as more companies looking to offer them. In a recent webinar, Morgan Petty of the Interactive Customer Experience Association moderated a discussion with representatives from Steritech and Zaxby’s about how restaurant operators might leverage current market disruptions to improve the brand experience they offer guests. Steritech, for one, is now supporting clients in the midst of remodeling by offering up its specialists to visit client restaurant sites around the country, take photos of every item that an onsite real estate team from the restaurant would normally want to inspect, then upload those photos to an online portal for review by the restaurant. The company says across 500 site visits, it has given restaurant clients back more than 500 hours and reduced their labor cost by 70 percent. Everyone is having to find creative ways to reduce spending, do more with less labor, or otherwise be more efficient with resources right now. What priorities are you managing that can be addressed in modified ways?
While the early months of the pandemic saw a sharp rise in restaurants’ off-premise sales, many operators with dining rooms are now seeing their in-store business climb back up. But that hasn’t chipped away at the momentum of off-premise sales. In fact, according to a recent consumer survey, 53 percent of respondents now believe food delivery is essential to their life. As long as in-person and off-premise dining options are both available, operators can expect to see demand for them – though the degree of demand in each area may be more difficult to predict. For this reason, it’s become even more important for restaurants to be able to unify their physical and online customer service experiences, providing a seamless transition between them. According to data from PYMNTS’ 2022 Restaurant Friction Index, which considers input provided in September by more than 500 restaurant managers across the country, unifying channels is a top priority for operators, ranking above such factors as payment options, ordering options and loyalty offerings as central to restaurants’ technology plans going forward. Achieving unity starts with understanding your brand and values. What are the key sentiments you want guests of your restaurant to walk away with after they visit your restaurant? Friendliness? Fresh ingredients? Sustainability? How can you weave those messages into your digital channels to ensure your brand identify comes through clearly regardless of where your customers consume their meals from you?
The Great Resignation continues across the hospitality industry. Figures recently released from the Bureau of Labor Statistics indicate that 6 percent of employees in restaurants and hotels quit their jobs in the previous month, a quit rate higher than virtually every other sector. But it doesn’t necessarily have to be this way at your restaurant. In fact, if you are experiencing this, take the current environment as an opportunity to revamp your approach to hiring and retaining staff. Start with your brand and envision the kinds of people you’d like representing it. The hospitality coach Matt Rolfe advises operators to first zero in on how to clearly communicate your vision, your goals for the business, and who you serve. That will help you ensure you are attracting employees who are not just there for the pay and benefits but who have also bought into the plans for the business and the experience you’re offering to guests. Make your job posting about serving others (how you develop employees and treat guests, for example) as opposed to emphasizing what you need. Then get specific about your business, brand and vision so your ad doesn’t blend in with the many others out there now -- and be honest about your expectations. Finally, ensure that all of those elements flow through your operation day to day. If and when good people leave, ask for an exit interview to help you understand the reasons why – and if it’s due to a lack of opportunity or a cultural problem within your restaurant, proactively make changes.
You may not need one – yet. Without a doubt, nailing your loyalty program can pay off: Harvard Business Review reports that increasing your loyalty following by just 5 percent can drive profits up by between 25 and 95 percent. However, Fast Casual reports that although the average consumer belongs to 14.8 loyalty programs, they are active in only 6.7 of them. So while much has been said in recent months about how restaurants can use their loyalty program to set themselves apart and drive business at a highly competitive time, a loyalty program on its own can become simply a discount program – and no great help to you – if it’s not deployed properly. That means tying it to consumer buying behavior, driving more frequent visits, and then learning more from those repeat visits. Your existing guests are your most important ones to focus on here. Before you get to launching a loyalty program, start with maximizing your tech stack – specifically your customer relationship management and customer data platform (CRM/CDP) – to collect information about your existing guests, what they buy from you and when. Once you’re armed with those insights, you will have a clearer path to using that information to influence their future buying decisions (and making them truly loyal members of your loyalty program).
Cryptocurrency has been generating a lot of restaurant news headlines lately as more brands test accepting the decentralized digital currency for payment, as a franchisee fee, or (as in the case of Shake Shack) offering it as a reward for customers. But is this a fad – or the start of something big? At the moment, there are signs that its appeal may wane – President Biden issued an executive order calling for the government to assess the risks and benefits of cryptocurrency, which could mean increased regulation isn’t far behind. Technomic research has found that only 1 percent currently accept payment in cryptocurrency and 4 percent anticipate doing so in the next couple of years, so it’s difficult to see this offering going mainstream in restaurants anytime in the near future.
New research from Credit Suisse found that limited-service chains are charging an average of 20 percent more for third-party delivery. At a time when restaurant operators are especially cognisant of the limits of what consumers are willing to spend, that figure could well be over the line. While it’s no surprise that delivery costs would surge amid steeply increasing costs for gasoline, along with other items needed to run a business, it means restaurant operators will, yet again, need to be creative about getting food to consumers. After all, the same surging fuel costs that are increasing delivery prices could also keep consumers off the roads. Is there an area of your business that might help you better manage rising costs – or make an off-premise meal more worthwhile? This is all happening at a time when people are especially eager to gather – and are finally feeling a bit safer in doing that – so could you focus on catering for offices that are bringing their employees back together more regularly, or for weekend picnics now that the weather is getting nicer? Could you participate in food festivals or bring a food truck to office parks or city centers where you have a steady stream of traffic on foot? Could you organize a single drop-off of food orders for companies with large numbers of employees onsite? Consumers are still eager to have restaurant food. The economic situation being exacerbated by the war in Ukraine just means restaurant operators will have to use their ability (well-honed during the pandemic) to quickly adapt to new challenges.
Just when Covid-19 was becoming more manageable for restaurants, the war in Ukraine is intensifying inflationary pressures on everything from wages to food supplies to equipment. No doubt, these are trying times for operators – and economists expect them to continue into next year. But these times can also provide opportunities to fix operational processes that have long needed attention and can no longer be ignored. As Keith Anderkin, chief supply chain officer for the fast-casual chicken chain Zaxby’s, recently said in a podcast for Restaurant Business, “never waste a good crisis.” Imagine how your business will be in a position to thrive in better times if you can get a handle on any weak points now. So what might you do to ensure you’re operating as efficiently as you can? Fine-tune your communication with your marketing team so you’re able to adjust your calendar of promotions in sync with your changing supply. That may mean focusing more on core menu items that are easier to source, then weaving in limited-time offers as needed to ease the pressure when supplies become scarce. Or it could mean strengthening your pipeline of menu items in development so you have a deeper bench to lean on when a key player isn’t available. You might assess your current and future equipment needs and find out where a substitute piece of equipment may be acceptable – and get a jump on ordering something that is critical but comes with a long waiting period. It may mean taking a closer look at your labor and identifying how to ensure you’re using it wisely in both front-of-house and back-of-house tasks. It’s rare to be operating at a time when so many challenges are colliding. Making sure you’re in close connection with all areas of your operation can help you understand any areas where you might find some relief.
Restaurants are facing a retention crisis as much as a hiring one, according to a recent report from QSR Magazine. Specifically, it mentioned how a study from messaging platform Medallia Zingle found that 68 percent of U.S. hospitality workers said their organization was working with fewer staff today than before the pandemic. Further, it found that 38 percent of hospitality workers were considering, or already had plans to, leave the industry within months. Hiring and onboarding staff consumes resources that operators lack right now – so what are the best ways to retain the people you hire? To be sure, compensation is part of it, but other factors are just as important. The pandemic is demonstrating the need for restaurants to offer opportunities to build longer-term careers. Within your operation, are you helping your staff cross-train and gain new valuable skills? Do you have a practice of trying to promote from within? Considering how the pandemic has magnified the need for flexibility, can you identify any ways in which you can bend a little bit in response to staff needs? Finally, employees who feel listened to feel more valued – so survey them formally and informally on a regular basis. If and when someone valuable to your team resigns, ask for a casual exit interview so you can understand why the person is leaving – and try to implement some changes based on their feedback. Who knows? You may even be able to retain them as a result of asking for their feedback
At the time of this writing, it had just been announced that Congress would not be replenishing the Restaurant Revitalization Fund as part of the omnibus spending bill, which would have given about 200,000 foodservice businesses a critical lifeline to help manage the ongoing challenges the industry continues to face. So what now? Stephani Robson, an emeritus professor at Cornell University who studies the restaurant industry, recently said the pandemic’s biggest lesson for restaurants has been to “be lean.” Surely you’re already doing a lot of that, or aiming for it, but can more be done? To be sure, technology can help in the effort, but only if implemented in ways that make life easier and faster for guest and staff alike, and can be scaled up, scaled back or otherwise adapted when the operation needs to change. Does your technology ensure you don’t have too many staff working a shift? That you don’t accumulate food waste before a dish ever reaches a guest? That you can make incremental adjustments with ease when you’re short on a key ingredient and you need to incentivize guests to try another dish? If you can follow the waste in your operation – whether in food, time, staff or other resources – you may find some practices that can be improved and made leaner. Ask Team Four for help in uncovering them.
Labor – specifically, the recruitment and retention of staff – is among the top challenges restaurant operators say they are facing this year, according to recent surveys from the National Restaurant Association. The pandemic has amplified operators’ need for staff and also increased already-high quit rates in the industry. But on the positive side, it has also motivated many foodservice brands across the industry to creatively transform restaurant jobs into longterm careers. Two executives from Los Angeles-based Everytable landed on Nation’s Restaurant News’ 2022 Power List for developing a program to do just that – and it reflects Everytable’s values to make healthy food more available in food deserts. In a recent webinar with Nation’s Restaurant News, Everytable’s Christine Hasircoglu and Bryce Fluellen discussed the company’s new social equity franchising program, which includes elements that other brands might repurpose. They said that while women and minority groups are often the people working on the front lines of restaurants, their numbers dwindle at higher levels of restaurant leadership. Everytable set out to create new paths for leadership and ownership at their company by committing to hiring and promoting staff from within their company and their community – and also making franchise ownership a more achievable goal for these staff. To do so, Everytable partnered with philanthropic organizations to develop a program that guides candidates through a year-long, paid apprenticeship. It includes management and leadership courses, assessments and a final interview that, if successful, culminates in a franchise agreement for the person – and the seeds of a longer-term career in the industry. There are no up-front costs for the person upon the opening of the franchise (access to capital is often a major barrier to franchise ownership for marginalized groups), and the person signs an agreement to repay costs over a five-year period.