The apps fighting food waste by saving restaurant meals from the trash

Restaurant Tech Editors
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The apps fighting food waste by saving restaurant meals from the trash

If food waste were a country, it would be the third-highest greenhouse-gas emitting nation behind the US and China. That’s because 40% of all food grown in the world goes uneaten each year, according to a World Wildlife Fund report from last year. And when food ends up in landfills, it produces huge amounts of greenhouse gases.

So it’s no surprise then that apps designed to combat food waste – by giving consumers the opportunity to purchase leftover, expiring or misshapen food at discount prices – have become increasingly popular in recent years. Some of these apps have millions of users in the US, and are growing internationally. TikTok users often post videos of the food they have salvaged from restaurants through the apps, and a Reddit community with more than 12,000 members shares photos of their hauls.

“For me, the most impactful way to make a difference was really to enable every one of us to make a difference,” said Lucie Basch, co-founder of the app Too Good to Go. “The idea of the app, of technology in the digital world today, is that it connects each other to one another, and that’s your chance to really make a difference.”

Laurel McConville, founder and CEO of Nectar & Green in Charlestown, Massachusetts, packs fresh pressed almond milk and almond pulp into surprise bags to sell on the app Too Good To Go in 2021.

Food waste happens at many points along the supply chain – from spoilage on semi-trucks to overproduction on the farm – and food waste experts note that those losses are only compounded the further food gets from its source. While developers hope that their apps will give consumers – who are responsible for about half of food waste – an opportunity to signal to retailers what they’re willing to buy – experts warn that true change will require systemic policy changes.

“It takes a village to solve a problem like this. And it’s not going to be one solution that does it,” said Josh Domingues, founder and CEO of the Flashfood app. “It’s going to be a collective combination of people that have really good intentions that work together.”

Basch agrees, adding “our only competitor is the bin”.

Users of the Too Good to Go app can search for local restaurants, bakeries and grocery stores – and purchase surprise bags filled with whatever remaining bagels, pad thai or groceries were left over at the end of the day. The bags range in price from about $3 to $5, but they’re stocked with food about three times that value – so customers are also getting a steep discount.

Too Good to Go first launched in Europe in 2015 and opened in the US in October 2020. Today it’s available in cities including Austin, Chicago, Los Angeles, Seattle and Philadelphia, and Basch says the app saves 300,000 meals a day from ending up in landfills around the world.

Deformed produce, like this bruised apple, is sold on the app Too Good To Go at a discounted price.
Deformed produce, like this bruised apple, is sold on the app Too Good to Go at a discounted price.

Besides saving meals from ending up in the trash, Too Good to Go’s primary aim is to increase awareness of food waste, eventually encouraging consumers to effect policy change in their local communities.

“The whole food chain is wasting food. So we need to help,” said Basch. “But for us, starting with the consumers and raising awareness with a super simple app that anyone can download and start using today was really the opportunity to make a difference for us.”

Other apps focus more specifically on food waste that occurs at grocery stores.

Shoppers can be picky – reaching for only the reddest apples or the largest onions. But Misfits Market has staked its name on the hope that they can also be whimsical – appreciating an oddly shaped squash or a fasciated tomato. While grocery stores often toss out, or decline to even purchase, “deformed” produce, Misfits only sells ugly fruits and vegetables that others might not want. Buyers can select from a variety of primarily certified organic and non-GMO products, which Misfits sources directly from farmers and then mails out in subscription boxes at 30% to 50% less than retail price.

One of Misfits’ main aims – besides combating food waste – is helping shoppers who live in food deserts access fresh produce, by mailing it to their door. Although Misfits doesn’t yet operate in all 50 states, it announced earlier this summer that it would be acquiring the similarly named Imperfect Foods, allowing it to reach customers in more regions.

Staff with Misfits Market demonstrates the app to people at a pop-up in New York City.
Staff with Misfits Market demonstrates the app to people at a pop-up in New York City. Photograph: Jared Siskin/Getty Images for Misfits Market

Meanwhile, Flashfood is an app that allows customers to buy expiring food from local grocery stores at reduced prices. Domingues, who launched the app in 2016, started researching food waste when his sister called him after catering an event where she’d had to throw out $4,000 worth of food at the end of the night. At the time, Domingues was living in a condo above a supermarket and wondered: how much food did it throw out every week? The answer, he learned, was on average $5,000 to $10,000.

There’s something about Flashfood that’s not unlike digging through the discount bin. The aim, Domingues said, was to make that process more accessible to today’s shoppers by putting it on their phone. To date, Flashfood has partnered with more than 1,500 stores in Canada and the US – mostly in the north-east and midwest – and has diverted 50m lb of food from landfills.

“What we wanted to do was give consumers the ability to show the change they wanted with their wallets, and that’s had a huge impact,” said Domingues. “We’ve saved shoppers tens of millions of dollars in grocery bills.”

But some experts warn that apps alone won’t solve the food waste problem.

Although food waste apps “do facilitate increased connection and communication”, they don’t “address the root causes of wastage and the need to change inefficient practices”, Tammara Soma, assistant professor and research director of the food systems lab at the School of Resource and Environmental Management at Simon Fraser University, said in an email.

“It’s hard for apps to tackle serious issues around poor policies and practices,” she said. “These apps can help with reducing or diverting food waste at one stream,” like at the farm, store or restaurant, “but it is not clear whether or not the final product will always be fully consumed by consumers or if they will end up going to the bin anyway.”

Heaps of rejected carrots and potatoes do not meet the criteria for supermarket vegetables at a farm in the UK.
Heaps of rejected carrots and potatoes that do not meet the criteria for supermarket vegetables at a farm in the UK.

When scholars talk about food waste, they’re really talking about two things. “Food loss” – waste that happens upstream, from the farm all the way to the front door of the grocery store – and “food waste” – losses that occur downstream, from the grocery store shelves to the kitchen (or restaurant) table. The “true cost” of food loss and waste doesn’t just include the food itself, Soma said, but all the labor, transportation, water and other resources that go into getting it to consumers.

That’s why, “the consensus by food waste scholars is that we need to target prevention”, she said, minimizing food loss at the source so that it doesn’t have the chance to waste more resources later. “However, prevention is not easy because this is where we need to challenge the current food system that results in inefficiencies and overproduction.”

In a paper published last month, Soma analyzed a different kind of app – one that attempts to reduce food loss from the farmer’s side. The open access farm management app, called LiteFarm, was designed to help farmers better track their harvest and sales, to get a basic sense of how much food they were losing. But Soma and her co-author found that farmers were actually able to use the app to plan their plots and schedule workers, thereby not only tracking but preventing food loss. Other apps, like Crisp, are working to collect similar data to help retailers lower their waste.

Soma hopes that food waste app developers consider ways their software can stem losses at the source. “It would be interesting to explore opportunities to use these apps to better facilitate local food procurement and direct markets in general,” she said. “Shortening the food supply chain and connecting producers and consumers may help transform our relationship to food and those who grow our food.”

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We believe everyone deserves access to information that’s grounded in science and truth, and analysis rooted in authority and integrity. That’s why we made a different choice: to keep our reporting open for all readers, regardless of where they live or what they can afford to pay. This means more people can be better informed, united, and inspired to take meaningful action.

In these perilous times, a truth-seeking global news organisation like the Guardian is essential. We have no shareholders or billionaire owner, meaning our journalism is free from commercial and political influence – this makes us different. When it’s never been more important, our independence allows us to fearlessly investigate, challenge and expose those in power

Published By: The Guardian

Life’s tough for small business owners, but forced tipping is a bad idea

Restaurant Tech Editors
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Life’s tough for small business owners, but forced tipping is a bad idea

There are many ways to tackle rising costs and a slowing economy – but automatic gratuity is not one of them.

A restaurant in Hyde Park, Ohio, called Dutch’s has this on its bills: “We offer living wages to our employees partially funded by a 20% automatic gratuity.”

The reason behind this? Profitability, of course.

“Restaurants are behind the eight-ball, and we are taking a lot of the costs on and are trying to figure out kind of again reactively,” the owner of Dutch’s told a local news station.

I get it. It’s not easy to run a restaurant nowadays, what with lingering supply chain issues, rising costs, labor shortages and a slowing economy. But adding an automatic gratuity to a customer’s bill is not a great way to address these issues. Why?

For starters, it’s deceptive. Getting an unexpected charge (and yes, it’s unexpected, because regardless of how many signs you hang on the wall notifying your customers, people aren’t used to this practice and don’t pay attention) is off-putting. Customers see it, and feel like they’re being duped into paying for something they didn’t agree to. I’m betting the owner at Dutch’s hears this once in a while.

It’s also counter-cultural. You can pontificate as many times as you want that tipping isn’t done in Europe or Australia (the owner of Dutch’s of course pointed this out) but this is not Europe or Australia. This is the US, and it’s a tipping culture. Will that change? No one knows. Many restaurants – even well-known restaurants – have tried tinkering with tipping policies in the past and failed. For now, American restaurant customers expect to leave tips. That’s not going to change anytime soon.

Not only are customers in the US expecting to tip, many of us feel like it’s our opportunity to show our gratitude, our largesse, or even our disappointment in the services we received. It gives us a perceived control over the buying process. By taking that away, you’re taking away our freedom to do this. It’s as if you’re saying: we’re not capable of judging the value of a service and you’ll do it for me.

It’s also counter-motivational. My daughter and many of her friends worked as servers in various restaurants throughout college. And trust me on this: they were all about the tips. The prospect of a busy night got them out the door and into work on time. Taking this away takes away their motivation to do this, and as a consequence will ultimately hurt the restaurant.

It’s potentially short-changing. By forcing a tip on a customer you’re risking that the customer doesn’t tip any more than what’s on the bill. I almost always tip 20%, but sometimes I’ll tip even more if the service is really good. If I get a bill with 20% added on I feel less motivated to add even more. There’s more math involved, and it throws me off my game a bit. I have to make more of an effort. These factors may disincentivize a customer to tip more than what’s on the bill, even if they originally intended to.

Finally, there are other ways to make sure your employees are properly compensated. Make sure your point-of-sale system prompts for tips. I get this all the time, even at retail stores where I don’t normally tip. Next, raise prices. But be strategic about it. Most restaurants raise prices directly in correlation to material cost increases. The price of ground beef goes up, so the price of a burger goes up. As an accountant let me say this: that’s not the way to do it. Work with a good accountant and spread the increase of prices across all of your products, not just the specific one affected.

Make your place a better place to work. It’s not always about tips. Do you offer three- or four-day workweek schedules? Are you flexible with your paid-time-off? Is there free food for the staff? Fun music? Do you have a health insurance plan or can you offer a few bucks to help pay down student loans for a staff member with some tenure? Do you treat your staff with kindness, respect and gratitude?

There are many affordable benefits you can provide that makes your restaurant a really great place to work. Given a choice to spend the day in front of the TV or hanging with workmates at the restaurant bussing tables, you might be surprised at how many of your staff would choose the latter if you provide the right environment.

Automatic gratuities are a bad idea. But that doesn’t mean you can’t afford to attract and retain the best people possible for your restaurant. And still profit. It’s not easy. But very achievable.

… we have a small favour to ask. Millions are turning to the Guardian for open, independent, quality news every day, and readers in 180 countries around the world now support us financially.

We believe everyone deserves access to information that’s grounded in science and truth, and analysis rooted in authority and integrity. That’s why we made a different choice: to keep our reporting open for all readers, regardless of where they live or what they can afford to pay. This means more people can be better informed, united, and inspired to take meaningful action.

In these perilous times, a truth-seeking global news organisation like the Guardian is essential. We have no shareholders or billionaire owner, meaning our journalism is free from commercial and political influence – this makes us different. When it’s never been more important, our independence allows us to fearlessly investigate, challenge and expose those in power.

Published By: The Guardian

Five hot topics as US food industry enters 2023

Restaurant Tech Editors
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Five hot topics as US food industry enters 2023

A year ago, this column argued the two major challenges in the US food industry in 2022 would be inflation and the continuation of the supply chain mess that started during the 2020 pandemic shutdown. These have been the two major industry-wide issues this year.

Food-at-home inflation, which has risen significantly over the last year, has meant regular price increases from brands to retailers, which hasn’t sat very well with the latter – or with consumers – but, for a few major food and beverage companies, has resulted in bumper revenue and profits.

Most other CPG businesses, though, particularly emerging brands, have had a much more difficult time both increasing prices and holding on to their pre-food inflation gross margins. Consumer demand for these companies isn’t as robust as for the big brands, which means there’s far less scope when it comes to raising prices with wholesalers and retailers.

As we look ahead to 2023, there are five areas that warrant particular attention from CPG companies operating in the US because of their potential large-scale impact.

Inflation moderates but continues

Food-at-home (products bought at retail stores) inflation isn’t going away anytime soon. The good news is the rate of growth has moderated slightly over the last couple of months. The bad news is it’s still far too high.

Expect to see continued moderation in the rate of growth of food-at-home inflation for the rest of this year and into next year. However, don’t expect to see a serious drop until at best the end of the second quarter of 2023.

An economic recession in early 2023 is still possible. If that happens, inflation will likely go away sooner rather than later because of the decline in consumer demand that a recession usually precipitates.

CPG companies are going to have a much harder time raising prices to retailers and wholesalers in 2023 than they have this year because of increased scrutiny by both retailers and elected officials.

Walmart and a couple of other major retail chains have already exerted some pressure on companies when it comes to what these retailers believe are too frequent price increases, while politicians from President Biden to Senator Bernie Sanders have recently been making public comments, suggesting some major packaged food and beverage companies are price gouging with their price increases.

US to see food-away-from-home comeback

Food and beverage companies have had a far less competitive three years than has been the case at any time in recent memory because of the huge drop in food-away-from-home sales.

It started with the 2020 shutdown when restaurants were either closed entirely or forced to operate in a limited way. The surge in Covid-19 cases in 2021 continued to dampen restaurant sales and this, along with high food inflation, has allowed food-at-home sales to continue to dominate this year.

Food-away-from-home sales have been steadily rebounding and, even with continued inflation, foodservice is going to exert a much more competitive force on brands doing business in grocery retail than it has for the last three years.

Prior to the 2020 pandemic, food-away-from-home sales were greater than food-at-home sales by a slight percentage margin. That reversed over the last three years. Look for food-away-from-home to gain steam in 2023. Barring an economic recession – and even with continuing food inflation – expect to see the two gain parity next year. If there is no recession, food-away-from-home could eclipse food-at-home once again.

More DIY, fewer acquisitions

Major food and beverage companies will make fewer acquisitions of emerging brands in 2023 than in the past few years and what deals there are will be larger in size (higher revenue brands) than has been the case in the recent past.

Instead – and this trend has emerged in the latter part of this year – big CPG companies will instead focus more on line and brand extensions, along with organically launching more brands of their own in 2023. Companies like Mondelez International and Hershey, which have been on a line- and brand-extension frenzy this year, are two examples.

The key reason is big brands, buoyed by a strong 2022 due to the growth in food-at-home sales, along with the gains made through inflation, have added confidence in their own innovation and brand power and are looking much more strategically at emerging brand companies than before when it comes to acquisitions.

When they see a big one they like, like Mondelez did this year with Clif Bar, they will strike. But I see the practice of acquiring emerging brands with annual revenue under $200-$250m declining significantly in the US food industry in 2023.

Line and brand extensions are also generally inexpensive ways for major food and beverage companies to increase sales. Hershey, for example, has extended its Reese’s brand in myriad ways this year, resulting in significant growth for the brand with very little expense, resulting in a good return on investment and an overall strengthening of the brand.

Industry consolidation is in the air

Grocery chains Kroger and Albertsons surprised the US food industry when they announced their mega-merger in October. The deal, scheduled to become effective in 2024 pending approval by federal regulators, would result in Kroger becoming the second-largest grocery retailer in the US, behind leader Walmart.

The transaction is likely to gain approval since Kroger has indicated it’s willing to sell off up to around 600 stores (and if pushed it will sell off more) in order to satisfy regulators’ anti-competitive concerns.

Expect to see other retailers, particularly regional chains, talk of consolidation in the wake of the Kroger-Albertsons combination. There are already discussions among retailers in certain regions about needing added scale in order to compete not only with a combined Kroger-Albertsons but also with the growing power of retailers like Aldi, which is the fastest-growing (in new store-count) grocery chain in the US. Aldi USA has over 2,000 stores and plans to double that number.

Consolidation on one end of the supply chain – in this case, the tip of the spear, retail – has a tendency to breed consolidation on the other end of the supply chain. Looking to 2023, it’s likely that we’ll see a big merger or two between major CPG companies.

The Kroger-Albertsons deal has set a tone in both the retail and CPG industries and the previously unimaginable is imaginable. In September, for example, a General Mills-Kellogg merger might seem too big to imagine or to get passed by federal regulators. But that isn’t the case two months later in November. Might Mondelez reignite its interest in Hershey from six years ago?

In the retail space, big deals like Amazon acquiring Target sounded unrealistic a few months ago. Not today. The US has both a vibrant and independent grocery retailing sector, as well as an entrepreneurial emerging brand universe, which makes the concerns over consolidation less critical than in many other countries. There are, though, legitimate concerns of an anti-competitive nature and they should be considered by not only regulators but by those of us in the US food industry as well.

Plant-based meat sanity

The last five years have been a wild ride for plant-based meat in every sphere possible except for the one that matters most – sales.

Despite all the attention given to plant-based meat by investors, the press and even retailers, the segment only represents 1.4% of total meat category sales as we close out 2022.

To say plant-based meat has been hyped – and I said just that in my April column –  is a totally fair statement. Much of this hype was generated by a single brand, Beyond Meat, which over the last couple of months has been receiving the opposite type of press to what it’s been getting over the last few years, which had been overwhelmingly positive.

In 2023, we’ll see a return to sanity when it comes to plant-based meat. It will return to its rightful place in the US food industry – as a niche product that offers an option for consumers and retailers in the giant meat category, where animal meat accounts for over 98% of category sales. At retail, plant-based meat will also return largely to the same place it’s been merchandised since veggie burgers were launched over four decades ago: centre-store and meat-department frozen-food cases.

The big unknown for 2023 is the economy and while I’m willing to take out my crystal ball in an attempt to shine some light on what I think some of the key macro trend and issues will be in the new year, I’m not going to venture a prediction when it comes to the economy, except when it comes to food inflation.

Economic recession has been in the air for months but job growth remains strong and, when it comes to groceries, consumers have kept on spending, only trading down to less-expensive brands, including private label, in a limited way.

Either way, I do predict an exciting year for the US food industry, which has proven its resilience over the last few years, through a pandemic, a supply chain mess, and inflation. As such, might 2023 be more of a walk in the park?

Published By: JustFood

What a Billion Data Points Reveal About the Restaurant Industry

Restaurant Tech Editors
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What a Billion Data Points Reveal About the Restaurant Industry

One thing is for sure—no off-premises channel can beat the overall satisfaction your customers experience when dining in.

What a Billion Data Points Reveal About the Restaurant Industry

One thing is for sure—no off-premises channel can beat the overall satisfaction your customers experience when dining in.OUTSIDE INSIGHTS | NOVEMBER 18, 2022 | ALEX BELTRANI

Each restaurant can no longer be treated as one uniform entity.

Rather, today’s hospitality businesses are essentially juggling multiple operational models under one roof: from providing hospitable on-premise dining experiences to delivering speedy off-premises orders. 60 percent of Americans order delivery at least once per week, and fast food chains report nearly two-thirds of their sales coming through drive-thru, which generates billions of dollars for the industry each month.

Needless to say, it can be incredibly challenging. From the overnight shift into off-premises ordering to now the return of dine-in experiences, what consumers used to value the most—yes, food—sometimes can take a backseat depending on how they order.

It’s therefore absolutely essential for restaurant managers and operators to add one thing to their ammunition: data. Specifically, customer experience and satisfaction data. It is the single source of truth that keeps you on track to providing what your customers uniquely want.

Over the last 12 months, over 200 restaurant brands across 9,000-plus locations have collected 10-plus million customer feedback survey submissions using Tattle—that’s over 1 billion feedback data points on guest satisfaction. We’ve summarized some key insights and trends in Tattle’s latest 2022 Annual Restaurant Report, and wanted to offer a bit of insight into what we found.

Dine-in is here to stay.

Data shows that total off-premises orders are only 9 percent higher than their pre-pandemic levels as a share of all restaurant orders.

Does it mean the off-premises craze is over?

One thing is for sure—no off-premises channel can beat the overall satisfaction your customers experience when dining in. The overall CER (Customer Experience Rating, what Tattle uses to assess a brand’s overall guest satisfaction) is by far the highest in the dine-in channel compared to off-premises channels. It’s leading the next best channel, takeout, by about 7 percent, and leading the lagging channel, delivery, by 16.3percent.

In addition, dine-in shows the most consistent performance over the year, fluctuating within just one percentage point. In comparison, drive-thru has the biggest fluctuations within 6 percentage points.

Tattle graph


Consumers are increasingly unhappy with the value they’re getting.

The most dramatic deterioration in performance goes to — value.

Tattle graph

This graph highlights trends in guest satisfaction across the most commonly surveyed operational categories. Value plummeted since May, dropping 5 percentage points over the past year. (As a side note, “ordering process” has typically been the top performing operational category across all ordering channels.)

Customer satisfaction is ultimately a function of reality minus expectation. When a guest gives a low satisfaction score to an operational category, it could be the experience was objectively less than ideal, or the customer holds high expectations, or both. In the case of “value”, we can easily find lots of macroeconomic explanations: inflation leading to both a lower consumer purchasing power and higher menu prices; labor shortage; the pandemic … the list could go on and on. However, it could also be that customers are expecting more from their meals—maybe they’re now comparing the value of a restaurant order to that of a grocery run; maybe they’re expecting a higher quality and better services for the same amount of money they spend.

Either way, there’s a shift to an emphasis on value as a result. For example, Papa Johns recently started pushing value this summer, offering any two from a selection of menu items for $6.99 apiece, a pivot from the company’s previous focus on convincing consumers to order more expensive items.

Be it the inevitable occurrence under the current economic climate, or a shift in consumer mindset, it seems that restaurant brands can’t simply ignore the topic of value anytime soon.

Order accuracy remains a big problem in off-premises channels.

Tattle graph

Besides “value,” “order accuracy” tends to be one of the lowest-performing operational categories across off-premises channels (takeout, curbside, delivery). This graph shows that dine-in is leading the next best channel, drive-thru, by at least 0.5 points (on a 1–5 point scale), and delivery is lagging far behind all the other channels.

Accuracy is a tricky area that’s hard to perfect, and has long been a challenge for many brands—even a quick-service giant like Wendy’s. The secret here is to understand exactly what’s going wrong in the “accuracy” equation of a restaurant. Sometimes it could be the preparation of a single item (e.g. “build-your-own” menu items tend to be a leading source of accuracy issues), whereas other times it could be a failure to follow special instructions given by the customer.

For example, Blaze Pizza uncovered that their accuracy issues are related to “uneven topping distribution”, and implemented a “triple check policy” to ensure every slice of the pie has all the toppings required. In addition, they use the accuracy score as a key indicator of which menu item should be allocated more marketing budget—because they know that those items would be of a consistently high quality.

What can restaurants do today?

While macro-level data trends are great, what can each restaurant start doing today to ensure a consistently high guest satisfaction?

There are three steps that operators almost can’t avoid:

1. Start collecting high-quality, high-quantity feedback data.

The reason is simple: you won’t be able to understand what your customers need and want without hearing from them first. High-quality data refers to structured, specific and accurate feedback data, rather than rants or ambiguous reviews on social review sites. On top of that, a high quantity of data is also necessary to paint a 360* view of the guest experience across different ordering channels.

2. Identify the lowest-hanging fruit and prioritize.

It can be overwhelming to receive hundreds and thousands of pieces of feedback from customers. Therefore it’s important to analyze and correlate the top improvement opportunity that will most likely improve overall guest satisfaction. Make sure to set that as an objective for location-level teams to follow, so that everybody is aligned on what matters.

3. Monitor any changes closely.

Collecting and acting on guest experience is not a one and done initiative. It requires restaurants to build it into their operational processes and consistently monitor, adjust and improve. Make sure you set regular meetings and review sessions with each General Manager and continuously benchmark each location’s performance across operational categories, ordering channels, dayparts and more.

Published By: QSR

How Restaurants Can Ease Employee Stress This Holiday Season

Restaurant Tech Editors
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How Restaurants Can Ease Employee Stress This Holiday Season

A recent study found two-thirds of seasonal workers ages 16 to 34 plan to look for temporary work during the holidays.

Going into a restaurant and seeing “Help Wanted” signs is something we, as patrons, see frequently these days. In fact, about half of full-service, quick-service, and fast-casual restaurant operators said recruiting and retaining employees was their top challenge in 2022, according to the National Restaurant Association’s 2022 State of the Restaurant Industry report.

And as the pandemic wanes and the holiday season nears, restaurateurs should consider ways to continue wooing prospective employees and keep the ones they have. This includes lessening their stress any way they can.

Challenges persist in the industry

Restaurant work is hard. I know because I used to do it. Servers, hosts, and food-prep staff spend long hours on their feet. Wages are improving but still low considering inflation, benefits are often minimal, and customers can be challenging, to say the least.

Most restaurants deal with understaffed shifts as soon as the holiday season begins—and sometimes staffing emergencies happen in the middle of service. It can be difficult for restaurant managers to keep loyal employees, especially during the chaos of the holidays.   

Employers have made attempts to attract those still interested in restaurant jobs, but it is hard to create an enticing offering when budgets are tight.

To keep top talent and attract new restaurant workers, consider the following.

Provide flexible scheduling

Consider flexible scheduling because it can be difficult to get personnel at any time of the year, but especially around the holidays when restaurants are busier than usual.

A recent study found two-thirds of seasonal workers ages 16 to 34 plan to look for temporary work during the holidays but would prefer working in a retail store to foodservice. One of the main reasons is that retailers often offer employee discounts on merchandise.

Therefore, restaurants that don’t already should provide a free or discounted meal during a shift and also consider flexible scheduling of some sort to allow prospective employees to gain better control of the hours they work and give them time to enjoy holiday gatherings, too.

Offer on-demand pay

A benefit that is quickly gaining traction in the restaurant industry and beyond is on-demand pay. Employers can offer this solution through a paycard that’s as easy to use as a debit or credit card (minus the fees) or a convenient app, which also doubles as a financial wellness tool that tracks spending habits.

By providing on-demand pay, also known as earned wage access (EWA), restaurant employees can get ahold of their pay right after working a shift, which enables financial flexibility and eliminates the need to wait for payday.

In fact, 78 percent of EWA users said access to their wages before payday helped them pay bills on time and avoid late or overdraft fees. Further, 51 percent of people using EWA said taking advantage of the benefit helped them improve their financial health.

Offering EWA can help retain these employees and create a sense of loyalty. And if you provide it and your competitors don’t, it can help attract and retain much-needed holiday help—staff that might even stay around longer than peak season.

Increase staffing beyond the holidays

One of the most challenging tasks for restaurant managers is building a reliable and strong team while putting together an employee holiday schedule that suits everyone’s availability.

With the holidays nearly here, these tips should enable you to lessen employees’ and prospective employees’ stress. Doing so could very well ensure that everyone—staff and customers alike—can eat, drink, and be merry.

Published By: QSR

CALL THE SCRAP YARD. WE HAVE A LABOR MODEL TO BE PICKED UP.

Restaurant Tech Editors
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CALL THE SCRAP YARD. WE HAVE A LABOR MODEL TO BE PICKED UP.

Sweet & Sour: The restaurant business has grappled with labor challenges for about 40 years now, but never a situation as trying as the current one. It’s time to rethink the very nature of restaurant work.

Peter says…

It’s been a while since we’ve climbed into the ring for our usual 10-rounder on some issue of importance to restaurants. After this give-and-take, any other issue might seem as trivial as the correct pronunciation of tomato. This time around, I’m arguing that the industry will suffer a devastating correction if it doesn’t completely trash and rebuild its labor model, and in double time at that.

The why’s are as evident as the Help Wanted signs choking out the We’re Open! notices on restaurant storefronts.  The business has been struggling since the mid-1980s to recruit enough workers to sustain its growth, but never has the shortage matched its current proportions. The typical U.S. restaurant has shortened its business week by 6.4 hours since 2019 because it can’t staff all shifts, according to Datassential. That’s a full night of lost sales.

Chains on a growth tear say they’ve had to temper their site-selection and opening strategies because not enough potential hires are available in a choice market to handle the expected volume of guests.  

The talent or effort required to produce a possible menu addition is getting as much consideration today as the product’s sales prospects. How can you sell something that you can’t produce, or at least not at a reasonable labor cost? No wonder menu shrinkage is carrying over so strongly from the pandemic, even with normal market conditions returning.

Meanwhile, restaurant workers are quitting at a volume and velocity the business world has never seen.

Most alarming of all, youngsters are showing outright disdain for restaurant work, a veritable rite of passage back in the teenage days of Baby Boomers and many members of the alphabet generations. The industry wouldn’t be the size it is today if it weren’t for the pools of high school and college students who needed jobs and were too green to find them anywhere but in foodservice. That social dynamic appears to be gone for good, courtesy of Uber and Amazon.

I could go on and on, but I’d better get in the queue for a table if I want to dine out. Seating abounds, but much of it is closed off because there aren’t enough staff members available to take orders.

At least I can watch the industry grapple with its reorientation while I wait. The industry’s ever-pressing challenge used to be drawing enough customers to make payroll. Now the essential mission is landing enough employees to take a shot at decent sales.

Yet much of the industry is pulling a Nero, fiddling away while the old restaurant model falters and smokes. The mindset seems to be that the business can ride it out until normalcy returns, helped along by labor-saving technology.

I’m convinced, given the public’s unprecedented disdain for the industry’s employment practices and standards, that normal is already here. It just looks a whole lot more discouraging.

Plenty of operators are trying to change the perceptions of restaurant work, but they’re not willing to address the core issues of pay and working conditions. Unless restaurants can change the belief among young people that foodservice jobs are barely more lucrative than running a lemonade stand, they’ll only want to work as servers or bartenders, if they consider the business at all.

The old rule of thumb was that labor costs should total around 30% of a restaurant’s sales. Until that rough guideline jumps closer to 50%, the industry will remain an employment option of last resort.

Sacrificing that much margin certainly won’t be pleasant, or easy. Less daunting should be the task of improving working conditions.

That doesn’t mean providing nicer break rooms or less ridiculous uniforms. The unionization drive that’s found traction during the last year or so has revealed two great truths about what would change the picture for potential hires. Sure, young people don’t want to put up with extreme temperatures, nasty bosses and an incessant grind. Those issues should be resolved pronto, even if it means significant investment.

But, as Starbucks and other organized coffee operations are learning, workers want their input on the business’ strategic direction to be at least heard and considered. And they also want the additional control over their own lives that comes with long-range scheduling. One of the demands posed by unionized employees to the Burgerville regional fast-casual chain was knowing what hours and pay they could expect two months hence. How else can they budget their time and income?

I don’t know of an off-the-shelf labor model that would be a perfect replacement for the current broken system. But I’d suggest the industry start looking at the setups that are used elsewhere in the world. Those approaches are unlikely to be a perfect solution, but investigating alternatives is a heck of a lot smarter than waiting for yesterday to come ’round again.

But what do you think?

Nancy says…

What I think, Peter, is that readers hoping to see some pugilistic fireworks will be sorely disappointed. You can unlace your boxing gloves and go back to your corner, because you won’t get a fight from me on this one. What you will get instead is an unhappy nod of agreement.

As you note, the labor issue has been a decades-long struggle, one that executives from the most innovative restaurant brands in the country have failed to address; I fear that now we are seeing the chickens finally coming home to roost.

The chickens in this case refer not to yet another onslaught of poultry sandwiches, but rather to the perfect storm of employment challenges that have beset the business over the recent past. I got a scary sense of the magnitude of the crisis at the onset of the COVID shutdown, when my neighborhood McDonald’s hoisted a sign at the drive-thru offering $10 an hour to start, while across the street the local Publix supermarket had set up a table to recruit labor at $15 an hour plus a nice benefits package.

Back in the day, as you point out, there was a virtually inexhaustible supply of teenage labor for whom the minimum wage wasn’t seen as exploitative. On the contrary, it was a handy way to earn pocket money to put gas in the car, or to buy the car to put that gas into, or to have a fun date night.

In the rush to build their businesses and set up their operating systems, it apparently escaped the attention of emerging-chain execs that the seemingly inexhaustible pool of teenage workers was, in fact, exhaustible—soon to be depleted by demographic, social and attitudinal changes.

By that time, the expectation of an endless availability of cheap labor became foundational to industry expansion; worse still, it was baked into growth plans of nascent national chains turning to the equities markets for necessary capital.

The resulting hiring-and-retention problems were recognized all the way back in the 1990s and gave rise to a comprehensive study called The Industry of Choice. Among the culprits fingered for employee dissatisfaction at that time were pay, scheduling and, most dispiritingly, acceptance of worker churn as the cost of doing business.

While it’s even more dispiriting to find how these issues have prevailed up to the present, I don’t think that we should lay the blame entirely on publicly-traded chains or the wolves of Wall Street. We should also acknowledge the important role played by others, notably our duly elected congressional stalwarts, who can be counted on to turn issues like immigration and minimum wage, both crucial to our industry, into political footballs that are punted away for a future resolution that never comes.

So, let’s cut to the chase here. You and I concur that the industry is at a tipping point, but I don’t entirely agree that unionization or a 50% labor cost are inevitable or viable long-term resolutions. Nor do I think we have to look abroad for answers, because some lie much closer to home.

And by closer I mean the West Coast, where regional powerhouse In-N-Out Burger has appeared on digital job site Glassdoor’s 50 Best Places to Work survey on the basis of an environment that is upbeat, enthusiastic, customer-centric and that, yes, pays above the national average and offers flexible scheduling.

You might argue that smaller brands like this one can be more flexible in competing with the bigger burger guys. But this September, White Castle, the Columbus, Ohio-based granddaddy of burger chains, was named to Fortune’s Best Workplaces in Retail 2022, the sole restaurant company among the 20 large employers who made the list. An extraordinary 80% of its 10,000 employees find it a great place to work based, they say, on the respect and recognition shown them. Proof of the power of this corporate commitment is the brand’s 25-Year Club, which has inducted 2,206 members who’ve hit that employment milestone with the brand over the years.

And now, Peter, we reach the part in our exchange in which we turn inevitably to Chick-fil-A, the contemporary chain juggernaut that seems to delight in subverting the status quo at every turn.

In this case, subversion comes courtesy of a franchisee in Miami, who boasts a 100% retention rate and receives truckloads of job applications. The reason: three-day workweeks of 13- to 14-hour days followed by four days off.

But wait, there’s more: Each worker is guaranteed an employee-pleasing seven consecutive days off per month. As a quick reminder, this is the chain that does north of $6 million in average unit volumes, is open only six days a week and is widely considered to be one of the very best operators in the history of the industry.

You’re right, of course, that there’s no off-the-shelf remedy for the labor crunch, but I do think there are restaurant examples that prove that these problems are not intractable. However, they took decades to develop and will require extraordinary will and creativity to remedy.

I may be a cock-eyed optimist, but I truly believe that there’s no challenge that can’t be solved with a steady application of foodservice operator innovation and foresight.

Powerful Features on a Self-Ordering Kiosk to Increase Customer Average Ticket-Size

Restaurant Tech Editors
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Powerful Features on a Self-Ordering Kiosk to Increase Customer Average Ticket-Size

Self-ordering kiosks have grown to be a vital addition in the restaurant ordering industry. Despite not being a new addition, the popularity of the technology has grown immensely. Companies that have opted to incorporate self-ordering kiosks into their businesses have seen a steady increase in success, as the powerful features they offer can increase your customers’ average ticket-size.

Features of Self-Ordering Kiosks

  1. Up-selling and Cross-Selling: Pasta and Cheese. Burger and Fries. Kev’s Red Beans and Rice. Tomatoes and Mozzarella. Butter and Corn. Some things just taste better together. Yet, often, many people forget that a simple add-on is all it takes to make their taste buds dance in delight. Or maybe they are unsure about what the perfect side would be. So how can you help your customers choose the best pairings? What can you say to convince them to try a combo or upgrade their meal? What is the best way to persuade them to order more to spend more?Self–ordering kiosks are your answer! The automated upselling and cross-selling prompts tempt your customers with even more deliciousness if only they pick a few extras. That is the secret behind increasing each customer’s average ticket size.
  2. Increase in Average Check Size: A self-ordering kiosk is a revenue-generating tool that you can easily install in your restaurant. Studies have also revealed that self–ordering kiosks have increased the average customer ticket size by 20% to 30%. Customers are highly likely to accept the add–ons that the kiosk suggests. That is because self-order kiosks can offer the perfect drink or a side that your customers are sure to love and which makes sense with their choices. The kiosk can also make them eager to taste different add–ons each time. It will help to keep customers coming back to your establishment.

    Must Read: The 9 Reasons Your Restaurant Needs a Self-ordering Kiosk
  3. Minimizes Human Error :The self–ordering kiosk is the best tool to cover the shortcomings of the counter staff. Your cashier or the waiter might forget to up–sell your products to customers, but the kiosk will never forget its duty to prompt your product range.Further, self – ordering kiosks are a perfect tool to control the customer’s ticket and their meal. Normally, a waiter or your counter staff does not mention the price when upselling, so the customer has no idea about the total amount of the ticket. But, self–ordering kiosks show the total ticket amount with each add–ons, so that customers will not get shocked by an unexpected charge.
  4. Comfort of Customizing Orders
    A kiosk is also a tool that makes your customer feel at home when ordering their meal because your customer will feel comfortable when ordering from a self–ordering kiosk. For instance, if they want to add extra cheese or extra sugar for their drink, he or she will not feel judged by the counter staff. They can also take their time while ordering at a kiosk without feeling pressured to rush in fear of wasting someone else’s time. This makes the customer spend more than they would when ordering at the counter.
  5. Keeps Staff Comfortable
    Self-ordering kiosks help to optimize your staff. Especially during peak hours, on Friday nights and on busy Saturdays you can reallocate your staff to areas that are falling behind by leaving the kiosk to take orders and process payments. This also helps you to increase your revenue by earning extra dollars from your customer. Therefore, it is good to remember that automated up-selling and cross-selling techniques are all about Increasing the customer’s regular ticket size.

Wrapping up

It is clearly seen that there are many benefits that self-ordering kiosks provide for restaurant businesses. Despite it not being a new addition to the industry the popularity of kiosks has grown vastly over the past few years. If you want to see your business revolutionize into the new age of technology, this is your opportunity.

Restaurant Management Software Market to Witness 16% Growth (2022-2028) | Due to Increasing Acceptance Of New Restaurant Service Technologies And Demand For Quick Service Restaurant Services | UnivDatos Market Insights

Restaurant Tech Editors
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Restaurant Management Software Market to Witness 16% Growth (2022-2028) | Due to Increasing Acceptance Of New Restaurant Service Technologies And Demand For Quick Service Restaurant Services | UnivDatos Market Insights

According to a new report published by UnivDatos Markets Insights, the Restaurant Management Software Market is expected to be Valued at 15 Bn in 2028 with a CAGR of around 16% from 2022-2028. The analysis has been segmented into Software (Front-End Software, Accounting & Cash Flow, Purchasing & Inventory Management, Table & Delivery Management, Employee Payroll & Scheduling, Others); Deployment (Cloud, On-Premise); End User (Full-Service Restaurant (FSR), Quick Service Restaurant (QSR), Institutional, Others); Region/Country.

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https://univdatos.com/report/restaurant-management-software-market/

The restaurant management software market report has been aggregated by collecting informative data on various dynamics such as market drivers, restraints, and opportunities. This innovative report makes use of several analyses to get a closer outlook on the Restaurant Management Software market. The Restaurant Management Software market report offers a detailed analysis of the latest industry developments and trending factors in the market that are influencing the market growth. Furthermore, this statistical market research repository examines and estimates the Restaurant Management Software market at the global and regional levels.

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Market Overview

Restaurant management software is designed to be an end-to-end software solution to help users run their restaurants. In addition, the increasing acceptance of new restaurant service technologies and demand for quick service restaurant services are driving the growth of the global restaurant management software market.

The Restaurant Management Software Market is expected to grow at a steady rate of around 16% owing to the increasing revolution in restaurant technology is estimated to drive the market. Moreover, the growing use of technology to manage operations in the restaurant sector is driving the global restaurant management software market. More than two-thirds of restaurant proprietors were found to be adopting point of sales (POS) systems in a recent survey. Additionally, it was discovered that 90% of these businesses used restaurant management software to keep track of their inventory. These days, coffee shops and bars automate their procedures using the same technologies.

Some of the major players operating in the market include Clover Network, LLC, Personica (Fishbowl Inc.), HotSchedules (Fourth Enterprises LLC.), Jolt, NCR Corporation, OpenTable, Inc., Oracle Corporation, Revel Systems, Square Capital, LLC, TouchBistro.

COVID-19 Impact

The food and beverage industry were shaken by the onset of COVID-19. Since there were temporary closures and fewer dine-in guests because of the COVID-19 pandemic, the restaurant industry suffered. However, restaurants have survived the pandemic because of the use of Point of Sale (POS) technology, which offer contactless payment options. Because of the pandemic, a lot of eateries and packaged food businesses have switched to using online sales channels to meet customer demand. However, some norms have changed, like the heavy use of food delivery apps, the current popularity of contactless methods, and the use of restaurant management software.

The global restaurant management software market report is studied thoroughly with several aspects that would help stakeholders in making their decisions more curated.

  • Based on software, the market is segmented into front-end software, accounting & cash flow, purchasing & inventory management, table & delivery management, employee payroll & scheduling, and others. Front-end software category to witness significant CAGR during the forecast period. This is mainly due to the growing adoption of POS software for uses such as meal ordering, billing, payment processing, customer engagement, sales tracking, and reporting on order management.
  • Based on end user, the restaurant management software market has been classified into full-service restaurant (FSR), quick-service restaurants (QSR), institutional, and others. The full-service restaurant (FSR) category is to witness higher adoption of restaurant management software during the forecast period. Among these, the full-service restaurant (FSR) to hold a significant share in the market in 2020. In addition, FSRs have advanced technologies to improve table turn times and reduce labor costs, by which they can offer better customer service according to the demand of the customers.

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Restaurant Management Software Market Geographical Segmentation Includes:

  • North America (United States, Canada, and Rest of North America)
  • Europe (Germany, United Kingdom, Spain, Italy, France, and the Rest of Europe)
  • Asia-Pacific (China, Japan, India, and the Rest of Asia-Pacific)
  • Rest of the World

North America is anticipated to grow at a substantial CAGR during the forecast period. This is mainly due to the digitalization and advances in smart technology, such as automated point-of-sale systems, wireless payment methods, and virtual reservation systems in the sub-continent, which are to be blamed for the market expansion in the region throughout the projection period. Further, Restaurant management software is used by food service providers in the area for a variety of tasks, including managing menus, and tables, scheduling employees, managing kitchens, managing recipes, etc. As per QSR automation, around 72% of Americans dine at quick-service restaurants for lunch.

The major players targeting the market include

  • Clover Network, LLC
  • Personica (Fishbowl Inc.)
  • HotSchedules (Fourth Enterprises LLC.)
  • Jolt
  • NCR Corporation
  • OpenTable, Inc.
  • Oracle Corporation
  • Revel Systems
  • Square Capital LLC
  • TouchBistro

Competitive Landscape

The degree of competition among prominent global companies has been elaborated by analyzing several leading key players operating worldwide. The specialist team of research analysts sheds light on various traits such as global market competition, market share, most recent industry advancements, innovative product launches, partnerships, mergers, or acquisitions by leading companies in the restaurant management software market. The major players have been analyzed by using research methodologies for getting insight views on global competition.

Key questions resolved through this analytical market research report include:

  • What are the latest trends, new patterns, and technological advancements in the restaurant management software market?
  • Which factors are influencing the restaurant management software market over the forecast period?
  • What are the global challenges, threats, and risks in the restaurant management software market?
  • Which factors are propelling and restraining the restaurant management software market?
  • What are the demanding global regions of the restaurant management software market?
  • What will be the global market size in the upcoming years?
  • What are the crucial market acquisition strategies and policies applied by global companies?

We understand the requirement of different businesses, regions, and countries, we offer customized reports as per your requirements of business nature and geography. Please let us know If you have any custom needs.

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Restaurant Management System Market Report Coverage

Report AttributeDetails
Base year2020
Forecast period2022-2028
Growth momentumAccelerate at a CAGR of 16%
Market size 2028USD 15 billion
Regional analysisNorth America, Europe, APAC, Rest of World
Major contributing regionNorth America to Dominate the Global Restaurant Management System Market
Key countries coveredUnited States, Canada, Germany, United Kingdom, Spain, Italy, France, China, Japan, India
Companies profiledClover Network, LLC, Personica (Fishbowl Inc.), HotSchedules (Fourth Enterprises LLC.), Jolt, NCR Corporation, OpenTable, Inc., Oracle Corporation, Revel Systems, Square Capital, LLC, TouchBistro.
Report ScopeMarket Trends, Drivers, and Restraints; Revenue Estimation and Forecast; Segmentation Analysis; Impact of COVID-19; Demand and Supply Side Analysis; Competitive Landscape; Company Profiling
Segments CoveredBy Software; By Deployment; By End-User; By Region/Country

About UnivDatos Market Insights (UMI)

UnivDatos Market Insights (UMI) is a passionate market research firm and a subsidiary of Universal Data Solutions. We believe in delivering insights through Market Intelligence Reports, Customized Business Research, and Primary Research. Our research studies are spread across topics across the world, we cover markets in over 100 countries using smart research techniques and agile methodologies. We offer in-depth studies, detailed analysis, and customized reports that help shape winning business strategies for our clients.

Published By: PR Newswire

How QR Codes Can Simplify the Restaurant Experience to Increase Customer Satisfaction

Restaurant Tech Editors
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How QR Codes Can Simplify the Restaurant Experience to Increase Customer Satisfaction

Over the past few years, the restaurant experience has changed in many ways, galvanized by the pandemic. With the rise in on-demand delivery, consumers have gotten used to quick service and easy-to-use technology, available right on their mobile devices, even in fine-dining restaurants. A prominent example of this trend in the U.S. – where handheld mobile point of sale (POS) adoption has tended to lag Canada and Europe – has been the heightened use of QR codes. By scanning QR codes on their smart phones, Americans can not only seamlessly access menus to order but also pay their bill in seconds

As QR codes have become more popular, it’s left some restaurants that don’t offer this technology behind, especially as diners have gotten used to the ease of ordering with a code and their phone. Therefore, to meet steadily rising consumer demand for a streamlined dining experience, it’s important for restaurants, bars, and other food service locations, to consider integrating QR code payments and technology into their businesses, with the goal of increasing both customer and employee satisfaction.

Deliver Faster & Better Customer Experiences

Consumers are constantly on the lookout for ways in which they can minimize the time they spend doing anything they consider burdensome, whether it’s grocery shopping or running errands. And the same psychological motivation also drives consumers when they dine in a restaurant. Through quick service, customers can get their food, enjoy their meal, and move on satisfied to the next thing they have to do that day.

One of the simplest ways to expedite the restaurant experience, without sacrificing the quality of service, is through order and pay-at-table options like QR codes. With QR codes on the table, customers are able to access the establishment’s menu, order, and then pay for food and drinks as they want. Depending on the payment technology the restaurant uses, they can also start an online tab and pay the bill at the end.

Through this technology, customers can complete their transaction without having to wait for a server to collect the check and sign a bill. Mobile payment options accessed by scanning a QR code also provide different pre-set tip amounts, along with an option to specify the tip amount yourself. This sort of tipping functionality reduces the hassle and wasted time associated with calculating the right tip amount. If the restaurant is part of a chain, or has a large enough following, QR codes can also be used as an effective channel for customers to build loyalty points, strengthening the establishment’s customer retention.

Cut Costs & Improve Employee Gratification

While there are several reasons to employ QR codes at a restaurant for customers’ benefit, they can also help to cut overall costs and improve the morale of employees such as waiting staff. With QR codes for menus and payments, there is a need for restaurants to maintain physical menus and the extensive receipt paper associated with traditional point of sale (POS) terminals. This helps reduce expenses and the restaurant’s bottom line overall.

Another important consideration for a restaurant looking to implement QR codes and mobile technologies is the positive impact on employees. It’s no secret that many restaurants and food service establishments have struggled with staff shortages over the past few years. From ordering to settling bills, QR codes and mobile payments allow restaurant owners to streamline the workloads of their waiting staff. By having other methods and tools that make their job functions simpler and easier, servers and other staff might be more satisfied and could be more likely to stay on-staff for longer.

The streamlined customer experience associated with mobile POS systems ensures that diners are also more likely to leave larger tips. After all, there is far less friction around paying and tipping itself, when a customer only needs to click a button as opposed to doing the math to leave an appropriate amount of tip.

Broader Mobile Payments Adoption

At a time when small businesses like restaurants face significant pressure to acquire and retain customers, it’s important that restaurants can create better overall dining experiences, alleviate difficulties for their staff, cut costs, and set themselves with loyal customers for life. Mobile payments and QR codes help enable this opportunity.

More broadly, the growth of QR code payments in U.S. restaurants could serve to stimulate handheld mobile POS adoption by establishments eager to meet their clientele’s changing expectations. Could pay-at-table soon become the norm for American diners, as it already is in Canada and Europe?

Posted By: Restaurant Technology News

Inflation forces mom and pop restaurants and big chains to lean on their unique strengths

Restaurant Tech Editors
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Inflation forces mom and pop restaurants and big chains to lean on their unique strengths

As the restaurant industry battles inflation, the large size of chains and their access to cash gives them the upper hand, but independents have advantages of their own when managing higher costs.

Feeling the pressure on their budgets, consumers have been cutting back on their restaurant visits in recent months. Monthly same-store restaurant traffic has been shrinking compared with the year-earlier period for eight consecutive months, according to industry tracker Black Box Intelligence. In response to that drop-off, both chains and independents are working to address the cost factor without alienating diners.

Prices for food consumed away from home have risen 8.6% over the last 12 months, as of October, according to the Bureau of Labor Statistics, as restaurants raise menu prices to address the soaring costs for ingredients, labor and even energy.

Aaron Allen, founder and CEO of restaurant consultancy Aaron Allen & Associates, compared restaurant chains to oil tankers and independents to speedboats. Chains have bigger budgets, broader scale and other tools like advanced technology. But they’re also often slow to act and mired in bureaucracy.

A mom and pop restaurant, on the other hand, doesn’t have the same access to cash or the benefits of size but can move more quickly to make changes.

Scale matters

When it comes to inflation, restaurant giants like McDonald’s and Starbucks have some obvious advantages over independent burger joints and coffee shops. Their massive size helps chains lock in prices early when buying ingredients from suppliers, and they can often apply pressure to receive more favorable contracts.

“If you’re a chain, you’ve got the power of bargaining strength and leverage with suppliers, which is what’s happening,” Allen said. “Independents don’t have a lot of wiggle room to switch suppliers, except for non-core things.”

Of the more than 843,000 restaurants, food trucks and ghost kitchens in the United States, roughly 37% are part of chains with more than nine locations, according to food analytics firm Datassential.

Noodles & Company, which has more than 450 locations, recently signed a deal for its 2023 chicken supply. The company expects the contract will help it save about 2% relative to its third-quarter margin for cost of goods sold.

“As you look through all of the disruption in the supply chain environment, vendors want some level of certainty in terms of purchase quantities, not just price,” Noodles CEO Dave Boennighausen said.

Because chains are placing larger orders, suppliers typically prioritize their orders over those for independent restaurants. Adam Rosenblum, chef and owner of Causwells and Red Window in San Francisco, said uncertainty securing ingredients has caused him to buy two or three times what he normally would when they’re available. And carrying that higher inventory puts more pressure on his razor-thin profit margins.

“I don’t have the buying power, I don’t get to set my prices annually, and I’m just not going through enough product to matter to some of the bigger companies,” Rosenblum said.

In the United Kingdom and other European markets, which have seen even higher inflation than in the U.S., large franchisors have said that they’re providing financial assistance to operators who are struggling to cope with higher costs. For example, McDonald’s executives said in late October that the fast-food giant may offer “targeted and temporary support” to European franchisees who need it.

Independent operators don’t have the same luxury. Kate Bruce, owner of The Buttery Bar in Brooklyn, said she’s been facing higher costs for everything from labor to cooking oil to energy.

“It’s expensive to run a restaurant these days, and ours is small. So these costs matter, and everything is very tight,” she said.

Nimbler and more flexible

On the other hand, independent restaurants have the advantage of speed. If a mom and pop notices much higher prices for a key ingredient in an entree, the restaurant can quickly change prices, slim down the portion size or even remove the item from the menu.

For example, Bruce said that if she raises the price on one item, she likes to add something else to the menu that’s cheaper.

“Yes, we have Wagyu beef, but [we] also have some salads that are a little more affordable and chicken entrees that aren’t going to scare somebody away from coming in,” she said.

Portillo’s restaurant chain CEO Michael Osanloo said independents do have greater flexibility when it comes to changing prices. Fast-food customers expect the same prices at every location, but menu prices can vary based on where the location is and if a franchisee or the company owns that restaurant. “There’s a little bit of price shock,” Osanloo said.

Consumers care more about prices when they’re visiting a chain restaurant, according to findings from a survey of roughly 2,400 U.S. consumers conducted by PYMNTS. More than a third of respondents said everyday prices mattered when picking a chain restaurant, while just 22.5% said it factored into their decision making when selecting an independent eatery.

And while beloved chains have brand recognition and the pricing power that comes from that, independents also earn goodwill from some consumers by virtue of being a small business.

“There’s this perception of authenticity, like a family Italian restaurant versus a big chain like Olive Garden,” Allen said. “That sentiment has started to hurt chains.”

Published By: CNBC

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