In partnership with The LEE Initiative, a nonprofit organization that creates and implements programs to address diversity and equality issues in the restaurant industry, along with Southern Restaurants for Racial Justice (SRRJ), a coalition of bakers, chefs, manufacturers, and restaurateurs that raises funds for Black communities in the South, Heinz recently announced the start of its Black Kitchen Initiative.

The renowned food brand, which has been in business for more than 150 years, recognizes the critical way that Black-owned food companies in America continually shape the nation’s culinary culture.

Megan Lang, director of Brand Communications at Heinz, said in a press release:

The Heinz Black Kitchen Initiative aims to celebrate and preserve the legacy of Black food culture by helping to break down barriers that keep Black voices and cooking out of America’s culinary space.

ADDITIONAL RESOURCES

The program celebrates the additional investment of $1 million in grants to Black food business entrepreneurs across the country, bringing the brand’s total contribution to $3 million over the past three years.

The grants seek to preserve and enhance the legacy of Black-owned food businesses by providing much-needed financial assistance.

“We’re proud to continue our partnership with The LEE Initiative and SRRJ. We’ve heard from past recipients just how impactful the grants have been in supporting their businesses across the country, and we are thrilled to provide another $1 million in grants in 2023,” added Lang.

FOSTERING BUSINESS SUCCESS

Highlighting how in 2023, Black restaurants, food spaces and chefs continue to face serious financial obstacles and inequity in access to capital, Heinz Black Kitchen Initiative grants help to foster long-term business success.

The association revealed the results of a recent report highlighting how 37% of African American small business owners had difficulty accessing new capital and financing, 14 percentage points higher than their non-African American peers.

“Through our partnership with Heinz and SRRJ, we’re elated to have the chance to uplift so many talented business owners across the country and to empower diverse entrepreneurs in the hospitality space,” noted Lindsey Ofcacek, co-founder and executive director of The LEE Initiative.

Today, Brandwatch published what it calls its latest “temperature check” of global food and beverage trends. The verdict: restaurant items in bowls are red-hot and rising. The plant-based segment, meanwhile, has cooled somewhat.

The report monitored 165 million global, public online conversations over the past year to note the latest F&B trends. Brandwatch took note of consumer opinions on topics like grocery delivery, the plant-based category, and consumer sentiment regarding restaurants.

“It’s interesting to see that the changes consumers were forced to make during the [COVID-19] pandemic still influence consumer behavior. For example, more consumers are now comfortable eating alone in restaurants,” Brandwatch researcher Michaela Vogl told The Food Institute.

Assessing the Plant-Based Space

Plant-based hype appears to be slowing. Online conversations regarding plant-based foods were down 7% over the past year, Brandwatch found.

Conversations about the plant-based segment, however, are more positive than negative. The report revealed that 62% of all sentiment-categorized mentions were positive, while 38% were negative.

Alt-meat is the most discussed topic in plant-based online conversations, the report revealed, followed by pizza and chocolate.

The topics that most concern consumers in conversations about plant-based protein are taste, ethics, and price, Brandwatch wrote. Interest in plant-based chocolate remains strong, with online conversations up 64 percent, the report noted, adding that the global vegan chocolate market is expected to grow from $575 million in 2022 to $1.2 billion in 2028.

Consumers are speaking most positively about plant-based milk options lately, Vogl said, noting: “Many of the headlines mention the availability of plant-based milk at coffee shops and restaurants. This is often highlighted as a positive feature or a must-have for customers. There are references to different types of non-dairy milk alternatives, including almond milk, oat milk, coconut milk, and soy milk.

The Food Institute Podcast · FI Fast Break News – July 12, 2022

“The plant-based food industry still has room to grow,” the Brandwatch researcher added. “A great indicator is that while the online conversation has fizzled out, the overall sentiment of plant-based discussions remains positive. As long as companies pay attention to and adapt to consumer preferences, behaviors and trends, growth is achievable.”

Bowled Over

As many fast-casual menus suggest these days, bowls have taken the restaurant world by storm. So much so, in fact, that Brandwatch declared bowls “the reigning champion of food trends.”

The appeal of bowls lies in their versatility and the fact they’re not limited to any cuisine or daypart. The trend has captivated consumers judging by the 800,000 mentions of the topic over the past year. Chains like Rush Bowls and Playa Bowls have seized upon the movement, selling bowls that feature superfoods like acai berries, as noted by QSR Magazine.

Coffee Fading Among Gen Zers

Coffee is the most talked about non-alcoholic beverage among baby boomers and Gen X, Brandwatch found, but it’s also the least-mentioned beverage among Gen Z.

One of the report’s most interesting findings, Vogl said, “is how different Gen Z drinking behaviors are compared to other generations. They don’t like traditional morning coffee; they want iced coffee from a coffee shop. They prefer energy drinks to stay energized, and they’re more conscious about drinking alcohol.” The researcher added:

“[Gen Zers’] consumer preferences are very different, and it will be interesting to see what trends they set in the coming years.”

Brandwatch’s report research also noted the following observations:

• Mentions of dining-out fell 33% year over year in the 12 months prior to June
• There has been a surge of conversations about high-protein products (+32% YoY)
• Conversations about online grocery delivery were down 4%
• The top food influencer on TikTok is Lookcatchu (edging out Notorious Foodie and Gordon Ramsay), while Betul Tunc is the top food influencer on Instagram

• More states are joining the trend of letting minors legally serve alcohol and bartend.
• In April, Iowa’s senate voted to pass a bill that would allow teenagers to serve alcohol.
• Legislators in Wisconsin are pushing to lower the alcohol service age from 18 to 14 years old.

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Bars in various states across the country may be staffed by high schoolers as more lawmakers and businesses push to lower the legal age to serve alcohol and bartend.

There are at least nine states — including Iowa, Michigan, Ohio, Kentucky, West Virginia, New Mexico, Alabama, Wisconsin, and Idaho — that have enacted or introduced laws that would allow minors ages 14 to 17 to serve alcohol, according to a report from Economic Policy Institute.

The trend has been gaining traction since 2021 as businesses and lawmakers seek solutions to an ongoing labor shortage. In April, Iowa’s Republican-led state senate voted 32-17 to pass a bill rolling back child labor laws in the state. The bill would allow teens to work until 9:00 p.m. during the school year and until 11:00 p.m. over the summer and serve alcohol.

The restaurant industry is backing legislators in their efforts to loosen child labor laws, according to the left-leaning Economic Policy Institute. The National Restaurant Association — representing over 100 restaurant corporations — have reportedly lobbied support for the growing pattern. However, there are risks to putting minors around alcohol, analysts say.

“Laws that lower the alcohol service age will subject more young people, at younger ages, to potentially dangerous working conditions at low wages — all in service of employers’ pursuit of cheap labor,” Nina Mast, an analyst at the Economic Policy Institute, said in the report.

As businesses struggle to hire and keep employees, fast food franchises and factories have faced backlash for unlawful labor practices involving children. In February, Pennsylvania McDonald’s locations were accused of breaking child labor laws after seven restaurants were found to have 154 minors employed at inappropriate times, per the US Department of Labor.

Earlier this year, sanitation company Packers Sanitation Services Inc. was fined $1.5 million in penalties for employing at least 102 children ages 13 to 17 in “hazardous conditions,” according to the DOL.

In the age of digitization, the world has witnessed technology and innovation reshape numerous industries, with the restaurant industry standing out as a prime example. The traditional food and beverage establishments that have thrived in recent times have invested in restaurant technology or they faced the peril of being left behind.

This article delves into the intersection of investing in restaurant technology, providing an insightful guide on how to invest in a restaurant that effectively leverages technology for growth and efficiency.

Checkout The Insightful Guide on Investing in Restaurant Technology

The Present: Understanding Restaurant Technologies

Today’s restaurant technology landscape has been molded by rapid development and innovation.

Through digitization, restaurant operations – from ordering and reservations to supply chain management and customer relationship management – can now be streamlined for optimal efficiency.

During the global pandemic and amidst labor shortages, those restaurants that invested in transformative restaurant technologies were the ones that flourished.

With the investment in restaurant technology, restaurant owners were able to ensure customer satisfaction by meeting customers where they were comfortable – be it online, curbside, or through self service kiosk technology, thus maintaining service standards while prioritizing safety.

Moreover, the vast digital intelligence and data analytics gathered through these technologies enable more personalized and enhanced customer service.

Investing in the Restaurant Industry: A Technological Perspective

The once technology-averse restaurant industry is now a hotbed of innovative startups. With offerings from robot chefs to cloud-based architectures, investments in restaurant technology can yield substantial returns.

Investing in a restaurant startup that has a technological edge could give you an advantage in an intensely competitive industry.

During the global pandemic and amidst labor shortages, those restaurants that invested in transformative restaurant technologies were the ones that flourished.

These startups use technology to scale, improve their bottom line, and provide a better customer experience – factors that hold appeal to potential investors. Ghost kitchens, which operate exclusively via mobile and online ordering with no physical storefront, are perfect examples of this new tech-forward restaurant archetype.

Must Read : The Applova Smart Kiosk – Powered by AI

The Future: What Lies Ahead for Restaurant Technology?

Looking into the future of restaurant technology, we see a clear potential for further transformation. Expectations suggest that technologies such as AI and Machine Learning, which are already making significant impact, will cause even more disruptions.

For example, AI and Machine Learning power predictive analytics. These technologies are likely to become more sophisticated, improving their ability to accurately forecast and optimize resources.

Must Read : More than Just Numbers: Five Ways Restaurant Analytics can Help You Make Better DecisionsMoreover, restaurant operations are set to become even more digitized. Blockchain technology could be used for traceability of food sources, providing transparency and boosting customer confidence.

Virtual Reality (VR) and Augmented Reality (AR) can be employed to provide immersive menu experiences for customers.

Why Should You Invest in a Restaurant?

Given the rate of technological advancement, investing in a restaurant, particularly one that harnesses technology, can be a lucrative move. Technology increases efficiency, decreases operational costs, improves customer satisfaction, and ultimately, increases profitability.

The potential for technological innovation in the restaurant industry is far from exhausted. As technologies continue to evolve, there will be new opportunities for restaurants to differentiate themselves, improve service, and expand their customer base, which in turn, provides promising prospects for investors.

In conclusion, investing in a technologically adept restaurant could offer a high return on investment. This unique blend of food service and technology bridges the gap between traditional hospitality and the digital age. As always, thorough research and understanding of the business are key to success in this exciting, technology-driven investment landscape.

Click to Revolutionize Your Restaurant’s Technology With Applova

Restaurant insurance is complicated. Just as owners have to play many roles in management, marketing, and menus, their insurance has to protect their finances, patrons, and employees. And who has the time to read a 100-page insurance policy?

According to a recent survey by Wakefield Research, 90 percent of business respondents said they lack confidence that their business is adequately insured. Half the respondents (53 percent) said the most significant barrier to obtaining insurance was understanding what coverage they needed to protect their business.

Here are some insider tips to help avoid overpaying for coverage, prevent claims that drive up premiums, and make sure your business is covered properly.

1. Safety Measures Protect Employees and Your Finances

Strong safety measures are essential to reduce claims – especially for workers’ compensation. Ensure that all safety precautions are being followed, such as having a non-slip mat behind the bar or counter, servicing stove hoods, and inspecting fire extinguishers annually. Security devices such as surveillance cameras and central station alarms also help reduce premiums. 

Be sure to train employees properly about injury prevention, especially if they are new or inexperienced. “Restaurant workers can face high-stress levels, especially with staffing shortages,” said Matt Zender, Senior Vice President, Workers’ Compensation Strategy at insurer AmTrust. “Restauranteurs should lean on their onboarding experience to ensure employee safety.”

Inexperienced staff that are not adequately trained can also cause foodborne illnesses. According to the Johns Hopkins University Bloomberg School of Public Health, a single foodborne outbreak can cost a restaurant lost revenue, fines, lawsuits, legal fees, and insurance premium increases.

In addition to safety measures, restaurants can avoid increases in workers’ compensation costs by ensuring employees are correctly classified, and payroll is accurately reported. A careful review ensures the business pays the minimum amount necessary to enforce the policy. 

2. General Liability Insurance Doesn’t Cover Everything 

All general liability insurance policies have exclusions. Owners should consider added coverage for liquor liability, food spoilage, or equipment breakdown. These are often excluded from standard policies and be potentially costly. If a restaurant has a refrigeration malfunction, for example, it can be an expensive out-of-pocket cost if they do not have spoilage coverage.

In the restaurant industry, general liability policies often have exclusions for assault and battery. If the coverage you are offered has a low premium, make sure that you have that coverage. That could be a significant and costly difference when comparing one general liability policy to another. 

If you are a family restaurant that is not open late at night, that may not be a big concern. If you are a nightclub open late hours with high liquor to food sales, then assault and battery coverage is something you want to maintain. If you are hiring security staff, you want to make sure you have a reputable security company that has its own insurance coverage. 

3. How to Protect Your Business if an Employee, Patron, or Job Applicant Sues You

Employment Practices Liability is another general liability exclusion. Even before the pandemic, the hospitality industry had more employment discrimination complaints with the U.S. Equal Employment Opportunity Commission (EEOC) than any other industries. Plus, the EEOC has more harassment complaints from restaurant industry workers than any other business sector. 

In 2022, the U.S. Department of Labor’s Wage and Hour Division brought over 4,000 enforcement actions against hospitality employers, recovering over $30 million in back wages for over 25,000 employees.

Employment Practices Liability Insurance (EPLI) coverage can protect businesses from employee-related claims such as discrimination, wage and hour disputes, or sexual harassment, whether the claim is against an owner or another employee. Legal fees alone can add up to tens of thousands whether the case is won or lost.

4. Even Minor ADA Violations Can Lead to Large Lawsuits

Owners need to comply with the Americans with Disabilities Act (ADA). Ignorance of the law is not a defense if the business is sued or fined. General liability insurance would apply if someone were injured, but it would not cover the cost of a fine if the restaurant is found at fault. Depending on your policy terms, EPLI insurance may cover ADA lawsuits.

One area that may be overlooked and lead to a lawsuit is website compliance. Check with your website designer to make sure you are compliant with ADA standards.

5. Cybersecurity Is a Mission-Critical Business Risk Often Overlooked in Food Service … 

As restaurants’ systems transform digitally, new components to systems make them more vulnerable to cyber-crime,” according to a 2022 report by consumer market research company GlobalData.

Computer systems can be compromised whether a restaurant has an older or brand-new setup. Cyber insurance coverage helps owners protect their businesses if they are hacked. 

Cyber insurance can cover recovery costs, including business interruption costs, ransomware protection, plus support to prevent attacks from happening. Most General Liability policies do not include cyber insurance coverage. 

Additional coverage options can include notification of your customers in the event their identity is compromised and repairing damaged computer systems. If a cyberattack results in a lawsuit against you, your coverage can include attorney and court costs, settlements and court judgments, and fines. 

The type of cyber insurance you need depends on the number of customers you have, regulatory requirements, and how your restaurant computers are used to conduct business.

6. If Your Business Changes, Let Your Insurer Know so You Don’t Overpay or Go Unprotected

Owners need to be sure their property coverage keeps up with their investment in the business. If a restaurant has been renovated, its property coverage may not reflect that investment or consider the cost of inflation. It may have cost $100 000 to do a renovation ten years ago, but it will cost more to replace that today if there is damage.

Restaurants often overpay for their general liability insurance because they are not rated properly. Insurance carriers may increase their premiums because they don’t receive accurate annual information. 

An annual review is one of the best ways to keep premiums down. An independent insurance agent has access to many carriers instead of just one. If you have a premium increase, accessing different carriers helps you get the best available coverage at the lowest available price.

Restaurant premiums may be mistakenly based on a much higher revenue than actual revenue. Another cause of overpaying premiums is that food to liquor sales are incorrectly calculated. The higher the percentage of liquor sales, the higher the cost of insurance. If your restaurant revenue is derived more from food than liquor, then your premium should be less than a venue that’s primarily liquor sales. 

Should you report every claim? Some restaurant owners feel that it is the insurance carrier’s responsibility to cover any type of loss. It may be best to pay it yourself if it is a small claim just slightly above your deductible. You may submit a small claim, and a couple of months later, a larger claim happens. Two claims during one policy period will affect your renewal. 

To be clear, it is important to submit claims when it is appropriate. That’s what insurance is for – to protect you. But it is also important to be cautious about the claims you submit. 

The best way to reduce your insurance costs is to take measures to avoid claims and to make sure the insurance you have covers the potential claims you may have based on your specific operation

Now that the cultivated meat industry has achieved the long-awaited milestone of going on sale to consumers in the US, the focus will increasingly turn to whether it’s possible to make meat outside the animal more affordably. After all, it’s cool to make meat using a process that sounds straight out of pages of a science fiction novel, but most of us can’t afford to dine in restaurants run by some of the world’s most famous chefs.

So how do we go from prices that rival the world’s most expensive cuts of meat to a more approachable price per pound? According to a new techno-economic analysis (TEA) from bioreactor startup Ark Biotech, using current methods – in other words, with technology and processes primarily developed by a pharmaceutical industry where drugs can cost thousands of dollars per ounce – we can get to about $29.5 per pound for cultivated meat. That’s (kind of) progress, but when you consider that’s what you’d pay for a pound of filet mignon at a butcher, it’s clear that that price per cut will not cut it.

To navigate from filet mignon prices to something closer to that of ground chuck, Ark outlines four ways to do that in the analysis:

1. Reduce the cost of media
2. Improve biomass yields
3. Optimize the bioprocess
4. Reduce capital spend (depreciation), primarily through larger bioreactors

The TEA breaks down how much each lever currently contributes via the legacy production process:

From there, they analyze how to cost-optimize the price along all four cost levers:

Reduce the Cost of Media

Media is the most significant cost driver today. Ark believes that the price can be reduced by “decreasing media production costs (e.g., procurement, recipe), and (2) increasing the cell mass per unit of media (growing more meat with the same amount of media).” They also explore further cost reductions through other methods, including recycling media and developing ‘fit for purpose recipes’.

Improving Cell Mass

Increasing the cell density and growing more mass per liter of input is another way to decrease the overall cost per pound or, in other words, improve the overall production yield. Ark’s analysis goes into significant technical detail on how to do so, including by optimizing cell lines naturally or through genetic modification.

Optimizing the bioprocess

Another significant lever to reduce the overall cost of cultivated meat is to optimize the bio-production process, which means selecting the optimal mode in which nutrients are supplied to the cells in the bioreactor. According to Ark, there are four primary methods for providing nutrients to cells in the bioreactor (batch, fed-batch, perfusion, and continuous), and the choice of the technique involves tradeoffs in capital expense vs. ongoing cost of goods sold.

Bigger Bioreactors

The most significant capital expense in cultivated meat production is the bioreactor, those giant metal vats which grow cultivated meat. While larger bioreactors have larger price tags, the capital cost per unit of cultivated meat decreases as production volume increases. Factoring in that the costs of running a bioreactor are largely fixed, the short-short is that bigger bioreactors mean lower prices per pound of meat produced.

The analysis concludes that to get to pricing that approaches the commodified price of traditional ground beef, a combination of improvements (i.e., lever adjustments) is needed. Exhibit 1 shows how much progress each lever will contribute to reducing the cost per pound of cultivated meat.

It goes without saying that Ark has a significant amount of self-interest in arriving at these conclusions. Still, from what I can see, the analysis is a reasonably thoughtful assessment of what drives the costs of cultivated meat and where the industry needs to go to lower the price per pound.

Of course, they go into much greater detail in the full report, so I’d suggest those interested check it out.

The “metaverse” is a general term used to describe any of the virtual universes where people can interact with one another in a shared, immersive environment.  With the growth of both virtual reality and augmented reality technologies, more and more people are engaging with the metaverse to do things like play games, shop, and even get married.  

For businesses, and particularly franchise businesses, the metaverse presents some cutting-edge opportunities.  But like most things, it’s not without some pitfalls. This article takes a closer look at some of the risks associated with franchising in a virtual world and what businesses should be doing to prepare.

IP Infringement and Brand Dilution

Inherent in the novelty and excitement of the metaverse is some uncertainty and risk.  Chief among the risks for franchisors is the possibility of IP infringement and damage to the brand.  Even with well-established rules and procedures, protecting and policing IP is challenging in the real world, and doing so in the metaverse adds a new and unique layer of complexity. 

While franchisors will benefit from the extensive and accessible reach of the metaverse to increase business digitally, it is paramount that they first ensure that their trademarks, logos, and other valuable IP are registered for use specifically as digital goods and services.  While existing registrations in classes like restaurant services (class 43) are helpful in the real world, they likely won’t do much to protect the sale of pizza or taco NFTs.  For the latter, applications should also be filed to extend protection to classes important for the digital world, including computer and software products (class 9), retail services (class 35), and computer and software services (class 42). 

Businesses will also need to actively monitor — and potentially solicit franchisee assistance to monitor — the wide expanse of the metaverse for any unauthorized uses. Cybercriminals operating behind fake identities to usurp and declare content ownership are a threat to businesses and can lead to customer dissatisfaction and distrust. A failure or delay in catching and stopping unauthorized uses of IP could mean that the brand is associated with low quality or inappropriate content, which could damage its reputation.

Implementing technologies such as private blockchain for asset ownership tracking is one way brands can oversee content ownership activities. Franchisors should also consider subscribing to trademark monitoring services to build a system within their virtual place of business to monitor market trends and catch trademark violations before they impact the brand. 

Another issue franchisors should keep in mind is the developing concept of ownership and control of IP used in the metaverse. The definition of “data controller” varies by jurisdiction, but it generally refers to the person, company, or other body that determines the purpose and means for data process and storage. How the metaverse delegates data control responsibilities remains to be seen, but there will be risks present no matter how they are divided.

For example, if metaverse creators take the position that they, rather than the franchisors, own the IP used on their platform, this could have problematic consequences for the franchisors. On the other hand, when a user consumes a franchise’s services in the metaverse, the business may be considered a data controller who is responsible for implementing security measures appropriate to the risks present. 

Data Privacy and Cyber Attacks

As a shared virtual space reliant on interoperability and portability of data, the metaverse collects massive amounts of highly personal information. This means that users’ personal data may be vulnerable to exploitation, particularly when that data is transported from one metaverse to another.

With the emergence of GDPR in Europe, the CCPA in California, and several more recent US state laws, the privacy and protection of customer data is very much in the spotlight, and franchisors considering operating in the metaverse should be keenly aware.  

While franchisors will benefit from greater access to customer information and the ability to track and record a user’s behaviors, actions, and communications, this level of access comes with the important responsibility to protect users from data misuse. From the outset, franchisors should design their services to address applicable data privacy, security, and government access laws. A proactive approach will also put franchisors in a position to dictate which metaverse platforms they select based on compatibility with their own privacy principles.

Most franchisors operating in the real world will likely already have some type of privacy policy that governs the types of data they collect from customers and what they can do with that data.  An easy first step would be to review that policy and supplement it for use in the metaverse.

Franchisors should also review the privacy policies and practices of the platform owners hosting their metaverse properties.  It will be important for franchisors to understand and ideally reconcile any discrepancies between their own privacy policies and those of their hosts.  In the unfortunate event of a privacy incident, even one caused by the platform owner, it may be more likely that customers blame the franchisor.

Finally, because some metaverse users will be minors, there is an imperative need to prevent abuse in user-to-user communications on brand property. The onus is on business owners to ensure that the unauthorized collection and sharing of data is not permitted on their virtual property and that noncompliance is penalized.

Regulatory Uncertainty

It is still unclear if, when, and how the metaverse will be regulated. There is already a lack of adequate resources when it comes to enforcing data privacy laws, and the challenge becomes even greater in the metaverse, where multi-sensory experiences significantly expand the scope of data privacy. In the data-laden future of the metaverse, owners, users, and creators must remain alert to regulatory developments. 

Only time will tell how the metaverse and its regulators will decide between efficiency, pragmatism, and protection of privacy rights for individuals, although the emergence of ghost kitchens and virtual brands a few years ago may provide some indication of what we can expect. As franchisors began implementing those business models, some regulators and legislatures revisited their stances on registration and disclosure rules. It is possible we’ll see similar developments in the metaverse context. 

One challenge for regulators worldwide will be deciding how user information is subject to existing privacy and data location laws. There may also be complex conflicts between the requirements and regulations in different jurisdictions, making it crucial for companies to understand what privacy rules apply to which parties and data. As jurisdictional differences in data privacy and protection schemes continue to develop in the metaverse, franchisors should consider including a privacy law selection clause in the terms of service for any given metaverse.

The metaverse is a digital land full of promise, but businesses need to remain alert to potential peril.  Franchisors that are able to capitalize on brand expansion opportunities, drive engagement with customers and franchisees, and unlock new revenue streams could reap benefits.  However, they’ll need to successfully navigate risks around IP infringement, cyber mischief, and regulatory uncertainty to maximize those benefits.

Tori Andrew contributed to this article.

Mo Alturk

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Based in Dallas, Mo Alturk is a partner at global law firm Baker McKenzie. He represents several leading casual dining, fast casual and quick service restaurants in their international franchise, joint venture and other international initiatives. He has assisted multiple major restaurant brands in conducting brand protection initiatives, including market testing events and pop-up stores. Alturk would like to thank Tori Andrew for contributing to this article.

Running a quick-service restaurant is quite the juggling act. You’re constantly balancing customer satisfaction, order volumes, pricing, staff management, and, of course, profitability. The key to thriving in this industry? Revenue management coupled with operational efficiency. Now, this may sound like corporate jargon, but let’s break it down in a manager-friendly way.

At its core, RM is about selling the right product to the right customer at the right time, for the right price, through the right channel. It’s about creating win-win scenarios where your customer feels valued and your profits rise. This involves strategic pricing (like dynamic pricing), optimizing your menu to drive higher-margin sales, and managing different distribution channels efficiently.

MORE FROM THE AUTHOR: Driving First-Party Orders: Lessons from the Hotel Industry

Firstly, let’s talk about the menu. Your menu isn’t just a list of offerings; it’s a powerful sales tool. By highlighting higher-margin items and creating appealing combo offers, you can guide customers towards choices that boost your revenue and their satisfaction. This might involve upselling or cross-selling techniques like suggesting meal upgrades or add-ons.

But there’s more to RM than your in-house operations. In today’s digital world, your quick-service restaurant is linked to various third-party delivery platforms like UberEats and DoorDash. These platforms increase your reach but also bite into your profits with their commissions. Your RM strategy needs to balance this dynamic by effectively managing orders across channels and driving more first-party orders, i.e., orders directly from your customers.

More direct orders mean more control over customer relationships, improved profitability, and a direct line to customer feedback. How can you drive this shift? Consider exclusive benefits for direct orders, like special items, discounts, or perks. Leveraging your loyalty program can also be a strong motivator, rewarding customers with points or exclusive deals for their direct orders.

This brings us to operational efficiency. With multiple channels to manage, from in-house dining and pick-up orders to various delivery platforms, the operations can become a whirlwind. Keeping your kitchen and staff ready to handle this multifaceted demand is crucial. Technology can be a big help here, streamlining processes and improving efficiency.

More than that, efficient operations play a significant role in customer experience. Imagine a customer waiting too long for their order because your kitchen is overwhelmed with deliveries from a third-party platform. Or worse, the dreaded mix-up of orders. Operational efficiency directly affects customer satisfaction and, in turn, your reputation and repeat business.

The backbone of successful RM and operational efficiency is quality data. Having accurate insights about customer preferences, order habits, peak hours, and more allows you to make informed, strategic decisions. Investing in systems that capture and analyze this data effectively is a non-negotiable.

And while third-party platforms may take a slice of your profits, remember they also bring visibility and new customers. So, use them as customer acquisition tools. Provide superior food and service to these customers, making their first interaction memorable. Over time, with consistent quality and strategic promotions, these customers can be converted into first-party orders.

The world of RM offers an array of tools and methodologies, but the challenge lies in identifying the best approach to sell the right product to the right customer at the right time, for the right price, through the right channel. In future articles, we’ll delve into how to select the RM tools best suited to your restaurant.

In conclusion, the dual strategy of RM and operational efficiency can significantly enhance profitability for your quick-service restaurant. It’s a game of strategic pricing, effective menu design, efficient operations, and savvy management of multiple distribution channels. It might require upfront investment in technology and data analysis, but the long-term profitability gains make it a worthwhile journey. After all, satisfied customers and a thriving bottom-line are the dream of every restaurant manager, aren’t they?

Sherri Kimes is an Emeritus Professor at Hotel School at Cornell and specializes in pricing and revenue management. She is passionate about helping restaurants increase profitability. She can be reached at sk@sherrikimes.com.