Learn why experts are predicting a strong 2015 in this article from the Nation’s Restaurant News, written by Jonathan Maze. Lower gas and commodity prices, coupled with high valuations and low debt costs, have generated some optimism for the restaurant industry heading into 2015.
That is the early takeaway from the Restaurant Finance & Development Conference, held in Las Vegas this week. A series of speakers gave an optimistic view of the economy, as well as the industry’s prospects to improve sales and profits.
“The past few years have required good operators to get better — and they have,” said Trey Brown, senior managing director and sales leader at GE Capital, Franchise Finance. “The people left standing are, almost without question, the best of the best. They’re operating profitable stores. They’re positive and upbeat.”
The annual conference is a gathering of operators, investors and lenders. It often provides a good indication of industry sentiment because attendees generally want to expand and build new units. So when they’re more optimistic, it can signal an industry in growth mode.
The industry is showing signs of improved sales and traffic after years of weakness. Traffic grew 0.4 percent in October, according to Black Box Intelligence, the first monthly traffic increase since February 2012. Sales should continue to grow next year.
John Barone, president of Market Vision Inc., noted that falling oil prices should result in lower gas prices next year. According to AAA, the national average price of gas has dropped for 46 consecutive days, the longest consecutive decline in gas prices since 2008. Currently, a gallon of gas is 20 cents cheaper than it was a year ago, and 30 cents lower than a month ago.
That should yield stronger sales at restaurants, according to Barone. “It’s putting extra income directly into the hands of lower and middle income consumers. Lower gas prices are like an instant tax cut. If gas prices stay low, 2015 could be the happiest year since 2007,” he said.
That, coupled with lower prices for many commodities, could make life easier for operators, after years of balancing demand for low-priced menu items and rising food costs.
Prices for cheese, chicken and hogs have all risen more than 20 percent over the past two years, but the economics have recently shifted in favor of producers, Barone said. Low corn prices have reduced the cost of feed, and suppliers are also benefitting from lower gas prices.
“There are strong incentives in favor of expanding production,” he said. That should drive food costs lower. Hog prices, for instance, are expected to decline 14.5 percent next year.
The exception is beef, because it takes two and a half years to rebuild a herd, Barone said. That means prices for steak and hamburgers should rise in 2015, but prices for other proteins should ease.
Much of the optimism at the conference has come from economists, who told attendees not to expect another recession, and that economic growth should accelerate.
The biggest reason: Corporate profits.
“Corporate profits aren’t good. They aren’t great. Corporate profits are flat-out phenomenal,” said Peter Ricchiuti, finance professor at Tulane University.
Corporations have had record earnings for each of the past five years. That’s helping to move the market, which itself is reason to believe that economic growth will speed up.
“The stock market is a leading economic indicator, and the stock market is at an all-time high,” Ricchiuti said.
In addition, he said, companies have $2.2 trillion in cash on their balance sheets, which will eventually need to be spent. So far, the cash has been spent on acquisitions, share buybacks and dividends. Companies will eventually need to spend that money on capital expenses that generate jobs.
“It’s got to go to work,” Ricchiuti said. “If you’re an individual who is scared, you can hoard cash. If you’re a company, you can’t hold that cash forever.”
Another source of optimism is the valuations that franchisees and restaurant companies are getting on the open market. Those high valuations are being driven by low debt costs, fueled by low interest rates and intense competition among lenders. Brown characterized the valuations as “record levels.”
Likewise, restaurant stocks are also trading at high valuations. This has led to a series of concepts that are considering or planning to go public.
Recent IPOs in the restaurant industry have had an average growth rate of 20 percent on their first day of trading, said Michael Hoffman, managing director and head of consumer investment banking at Piper Jaffray.
“It’s been a very, very fertile couple of years in the market,” he said. “There’s a tremendous amount of investable dollars coming into the market and looking for companies that can outperform the indices — that means newly minted IPOs.”
Contact Jonathan Maze at firstname.lastname@example.org.
Follow him on Twitter: @jonathanmaze
Restaurant owners and operators have a lot to be thankful for with a bountiful feast of marketing ideas in November.
For food related marketing, restaurants can explore traditional and contemporary recipes for Banana Pudding Lovers Month, Georgia Pecan Month, Peanut Butter Lovers Month and Vegan Month.
The month also provides opportunities to help children nationwide, and to show appreciation for veterans and active duty military.
November is National Adoption Month and includes National Adoption Day. Your restaurant can make a difference in young lives by collecting donations for and by raising awareness of the more than 100,000 children in foster care waiting to find permanent, loving families.
America celebrates Veterans Day on Monday, November 11th this year, and many restaurants will be offering discounts and free food to both veterans and active duty military in appreciation for their service.
Each year, more restaurant chains are opening on Thanksgiving Day to serve family and friends. Opportunities include dine-in and carryout holiday meals. Thanksgiving is also a great time to promote special items such as pies and cakes.
On Black Friday, even the most hardcore deal seekers will be worn down after camping out in front of retail chains and living off of trail mix and potato chips. Knowing that Black Friday warriors are hungry for a great deal, many restaurants will be serving up tasty deals of their own.
Don’t forget to encourage local customers to dine with you on Small Business Saturday.
For beverage marketing, November offers Cappuccino Day, Carbonated Beverages with Caffeine Day, Espresso Day and Harvey Wallbanger day.
November also serves up special days for Cashews, Cranberry Relish, Deviled Eggs, French Fried Clams, French Toast, Homemade Bread, Nachos, Sandwiches, Sardines, Scrapple, Spicy Guacamole and Stuffing.
Restaurants can also sweeten things up a bit on days celebrating Bavarian Cream Pies, Cakes, Candy, Indian Pudding, Lemon Cream Pies, Mousse, Parfaits, Peanut Butter Fudge, Sundaes and Vanilla Cupcakes.
And don’t forget Cook Something Bold and Pungent Day, and National Fast Food Day.
Other days of the month lend themselves to unique and fun discount and contest opportunities for in-store and social media promotions. A Facebook photo contest would be fun for guests dressed accordingly on King Tut Day. Let guests show off their creative side with a video contest on YouTube for Tounge Twister Day. Restaurants can also promote on location events for their communities on Guinness World Record Day, Celebrate Your Unique Talent Day and Square Dance Day.
Here’s your restaurant marketing calendar for November:
Banana Pudding Lovers Month
Georgia Pecan Month
National Adoption Month
Peanut Butter Lovers Month
1 – National French Fried Clam Day
1 – Vinegar Day
1 – World Vegan Day
1 – Authors’ Day
2 – National Deviled Egg Day
2 – Zero Tasking Day
2 – Daylight Saving Time Ends
3 – National Sandwich Day
3 – Housewife’s Day
4 – National Candy Day
4 – Use Your Common Sense Day
4 – King Tut Day
4 – Election Day (USA)
5 – National Doughnut Day
6 – National Nachos Day
6 – Saxophone Day
6 – Men Make Dinner Day
7 – National Bittersweet Chocolate with Almonds Day
7 – National Eating Healthy Day
8 – National Harvey Wallbanger Day
8 – Cook Something Bold and Pungent Day
8 – International Stout Day
8 – National Cappuccino Day
9 – National Scrapple Day
9 – International Tongue Twister Day
10 – National Vanilla Cupcake Day
10 – Sesame Street Day
10 – World Orphans Day
10 – Forget-Me-Not Day
10 – USMC Day
11 – Veterans Day
11 – National Sundae Day
11 – Origami Day
11 – Young Readers Day
11 – Singles Day
12 – National Pizza with the Works
13 – National Indian Pudding Day
13 – World Kindness Day
13 – Sadie Hawkins Day
14 – National Spicy Guacamole Day
14 – National Pickle Day
15 – National Spicy Hermit Cookie Day
15 – Raisin Bran Cereal Day
15 – Guinness World Record Day
15 – America Recycles Day
16 – National Fast Food Day
16 – Button Day
17 – National Baklava Day
17 – Homemade Bread Day
17 – International Student Day
18 – National Vichyssoise Day
18 – Entrepreneurship Day
19 – Carbonated Beverage with Caffeine Day
19 – International Men’s Day
20 – National Peanut Butter Fudge Day
21 – National Stuffing Day
21 – World Hello Day
22 – National Cranberry Relish Day
22 – National Cashew Day
22 – Go For A Ride Day
22 – National Adoption Day
23 – National Eat A Cranberry Day
24 – National Espresso Day
24 – National Sardines Day
24 – Celebrate Your Unique Talent Day
25 – National Parfait Day
25 – Shopping Reminder Day
26 – National Cake Day
27 – Thanksgiving Day
27 – National Bavarian Cream Pie Day
28 – National French Toast Day
28 – Maize Day
28 – Black Friday
29 – Throw Out Your Leftovers Day
29 – National Chocolates Day
29 – National Lemon Cream Pie Day
29 – Electronic Greetings Day
29 – Square Dancing Day
29 – Small Business Saturday
30 – National Mousse Day
30 – Computer Security Day
This article was originally published by RestaurantNews.com which offers an affordable restaurant marketing solution for owners and operators.
This article from SmartBlogs.com written by Rebecca Pollack Scherr, reports that the National Restaurant Association predicts that 20% of Americans will order takeout or delivery from a restaurant on Halloween, and 16% will go out to celebrate at a bar or restaurant. NRA recently surveyed about 1,000 American adults about their plans for Halloween.
- 32% said they will look for happy hour or other pricing specials.
- 22% will pick establishments that are costume-friendly or have competitions.
- 7% say restaurants with Halloween-themed items and decorations are their top choices.
It’s not too late to drive more foot traffic into your restaurant on Halloween. Here’s some inspiration.
- Some McDonald’s locations will be handing out apple slices to trick-or-treaters younger than 12.
- Dunkin’ Donuts is offering its Boston Scream Donut, among other Halloween flavors, in addition to its branded treat bag.
- Vermillion is hosting a superhero costume party with cocktails named The Captain America, Green Lantern and Fantastic Four.
Fall is here, the kids are back at school, and the weather is crisp. Now what’s your Fall marketing plan?
Here are our top 10 ideas to pack your restaurant this Fall:
1. Football and other fall sports
It’s football season! Bring crowds to your place by sending out schedules announcing what games you’ll be showing when. Promote your restaurant as the place to celebrate before and after the game. Offer special take-out deals for customers hosting their own viewing parties. And while football is king in most many towns, don’t forget about the other sports fans!
2. Columbus Day
Columbus Day is Monday, October 13 and many will have the day off from work and school. Promote brunch or lunch specials – and don’t forget about Sunday specials.
Oktoberfest runs from late September to the first week in October. Have a great beer selection? Ask your customers which is their favorite with a Facebook Poll. Then during Oktoberfest, select the favorite as a special.
4. Kids in Costume Eat Free
“Kids Eat Free’ if they’re wearing a Halloween costume! Why limit kids to just one night to show off their costume? Host a “kids eat free night” on the Tuesday or Wednesday before Halloween to increase traffic and create guest loyalty.
5. Halloween Photo Contest
Put together a Facebook Halloween Photo Contest. Encourage guests to post a picture with their best Halloween costume. The winner gets a restaurant gift card!
6. Pumpkin and Apple and Squash, oh my!
So many great foods are in season during Fall. Is your famous pumpkin pie back on the menu? Have you created a pumpkin spice martini? Let your guests know about new seasonal menu items and cocktails.
7. One for You, One for Me
Get folks in the giving mood with a One for You, One for Me Facebook Sweepstakes. Customers will “Like” your Facebook page and provide their email address, and then be entered for a chance to win a prize.
8. Check in Deals
Bring in new business by utilizing check in deals on Foursquare, Yelp and GrouponOffers. All of these sites provide tracking and you can see when guests “unlock” and redeem your deal.
9. Holiday Catering and Party Space?
Do you cater? Or have a private dining space? Many corporate holiday parties and events are beginning to be planned now. Make sure your guests are aware of your capabilities and encourage them to make their holiday plans early.
10. Gift Cards
Early and often is the name of this game. If you offer gift cards for your restaurant, let your guests know in all your promotional efforts including in-store material, on email, Facebook, etc.
This content was provided by the Texas Restaurant Association and National Restaurant Association partner Fishbowl.
Restaurant food safety practices and procedures are no longer just the realm of supply chain executives or back-of-the-house employees. Learn tactics from the experts to help keep your restaurant and customers safe in this article from RestaurantNews.com written by Sarah E. Lockyer.
Food safety has become top of mind for consumers, and many of them are concerned, quick to judge and can be furious when natural disasters, water supply issues or outbreaks challenge restaurants. Conversations on social media, along with an increasing number of vocal food activists, are helping to feed what can quickly become a frenzy.
Tactics to keep restaurants and customers safe, both from an operational standpoint and a brand marketing perspective, were the key takeaways at this year’s Food Safety Symposium in Newport, R.I. The two-day conference is an invite-only event sponsored by Ecolab and produced by Nation’s Restaurant News.
Nearly 40 food safety professionals, as well as experts on supply chain, legal matters and social communication, discussed ways foodservice operations can build systems and communicate action plans aimed at keeping employees and guests safe.
Attendee and panelist Jorge Hernandez, senior vice president, food safety and quality assurance at US Foods, best summed up the changing environment for foodservice safety: “It used to be behind closed doors; now it’s in the public, and it can hit you hard.”
Opening keynote speaker Dr. Benjamin Chapman, assistant professor and food safety extension specialist at North Carolina State University, discussed where food safety and social media intersect.
“If you are sitting in the audience saying I don’t get social media, I don’t need to know about it, you are looking into the cannon to see if it’s loaded,” Chapman said. “The traditional media process does not exist today as it did in the past.”
Restaurants need to listen, not hide from mistakes, engage the audience and provide evidence of correction or safety — all via social media channels — when food becomes suspect or confirmed instances of sickness, food supply issues or safety issues arise.
A new breed of “food e-vangelists,” Chapman said, has become extremely active in spotting potential issues at restaurants or food brands and spreading the word through their own networks, some of which total in the millions. These socially committed consumers tend to be female, under the age of 35 years old, have families — and generate about 1.6 million conversations about food every week on Facebook and Twitter.
But this group is also open to conversations from food brands — especially if they shed light on practices, supply chain and employee or guest safety.
“They are looking for engagement,” Chapman said. “They do not see themselves as activists; it is not as simple as that. They are passionate about food. They want to be seen as someone who is passionate, who is trying to change the food system.”
Chapman highlighted the case of a mold outbreak last year in some U.S. containers of Chobani yogurt. The food manufacturer reportedly at first said the mold is unlikely to cause ill effects, but then undertook a voluntary recall of certain products after reports of 300 people getting ill were made public. Chobani has said all products are now safe and tests are completed often.
Chapman said the yogurt manufacturer and consumer-favorite brand missed an opportunity to drive trust and engagement among customers. “I would have immediately been a partner in the discussion. Instead of responding to complaints, I would begin to tell the story, and in detail,” he said. “You might as well steer the story. Don’t get me wrong, this isn’t a feel good discussion, but it helps you be part of the story.”
Outside of consumer branding concerns, which shouldn’t be downplayed, as they can lead to business failures or millions of dollars in legal fees, implementing back-of-the-house operations designed to prevent problems with restaurant food supply or safety is the best way to address challenges.
Attendees discussed how to source data and information to stay on top of potential health scares, from compromised water supplies to employee or guest illness, like cases of norovirus.
Dustin Dixon, corporate vice president, food safety and quality assurance, at Bob Evans Farms spoke about the importance of on-the-ready action and communications plans, staff training and solid relationships with suppliers, distributors and local health departments.
Bob Evans had faced a compromised water supply when a chemical spill in West Virginia affected areas where some restaurant locations operate. “Bob Evans has a check list; we had it in place before West Virginia, and we still learned a lot,” Dixon said. “‘Can open’ and ‘ready to open’ are two different things.”
When it comes to a virus outbreak, like that of norovirus, prevention is key — with standard items like washing hands and keeping sick employees home — but response is also critical.
“It’s not if, but when,” said Eric Martin, director of food safety at Texas Roadhouse. “It’s an anxiety attack.”
Beyond prevention, Martin suggests restaurant chains and foodservice providers identify and train first responders at the unit level, have access to the best tools to handle cleaning and disinfection, have a professional response team on speed dial, and use social or other online data to stay alert to health department alerts or social media chatter on outbreaks.
The cook line is, perhaps, the most volatile area for controlling food cost. Whereas theft can occur anywhere, and vendor prices and proper preparation practices certainly can have an equally negative effect on food cost, it usually is on the cook line that many restaurants lose their profits. Common issues include incorrect portioning, waste and overcooked or cold food resulting from the kitchen getting slammed with orders, items being prepared without a food ticket, or unrecorded sales, and communication failures between kitchen and service staff that can result in incorrect orders.
Review these proven tips to control your food costs:
No ticket, no food. This is perhaps the singularly most effective policy for controlling food and beverage costs. By employing a policy that all orders must be rung up on the point-of-sale system or cash register before they can be made, you eliminate the possibility of unrecorded sales. If your POS or cash register doesn’t have the ability to print orders to the kitchen and bar ‑ often called requisition printing ‑ then you may want to start shopping for one that does. It is common knowledge among POS vendors that restaurants using requisition printers typically enjoy as much as 5% or more in cost savings than those that don’t.
Keep a waste log. Every restaurant experiences some degree of waste, but it is a controllable expense. Create systems to both minimize and record wasted product, such as meals returned by the customer, kitchen mistakes and spoilage. Keeping an accurate accounting of the value of wasted product can help to account for variances between ideal and actual food cost.
Portion control tools. Poor portion control is one of the leading causes of food cost variances. Consider that your ideal food cost is based on the premise of exact portioning for each menu item, including the portioning of each ingredient within a menu item. If your prep and line cooks have gotten in the habit of “eyeballing” measurements rather than sticking to the exact recipes, chances are your food cost variance could be as much as 5% or more. Proven portion control strategies include the use of portioning scoops, scales and measuring spoons and cups. Pre-portioning can be effective in controlling costs by using portion baggies and a scale to pre-weigh product before stocking the cook line.
Recipe quick-reference charts. The fast-paced environment at most restaurant kitchens makes it impractical to use the recipe manual for every menu item. Characteristically, cooks are required to memorize the proper portions and steps for preparing each item on their station. The recipe “quick reference” is used as the name implies ‑ providing the cook with an at-a-glance list of ingredients, portion size and proper portioning utensil for each preparation step. Optionally, recipe references can be accompanied by photos of the finished product. Proper portioning and adherence to recipes, along with a visual reference of the properly prepared menu item help to ensure consistency in both taste and presentation.
This article is presented by the National Restaurant Association courtesy of RestaurantOwner.com, a source of operational and business resources for independent restaurant operators. For more information, visit www.RestaurantOwner.com.
In this article from RestaurantNews.com, learn more about the income gap and shrinking middle class and the impact that has on restaurants. The gap between high- and low-income groups is the widest it has been in 100 years, and the share of U.S. consumers who identify with the middle class has never been lower. Like other retail sectors, the restaurant industry is feeling the effects of this cultural and economic phenomenon, reports The NPD Group, a leading global information company. One of the effects of income bifurcation is that visits to quick service restaurants, which have an average check size of about $5, were flat in the year ending June 2014 compared to same period last year, and visits to fine dining restaurants, which have an average check size of $40, were up 3 percent. Total restaurant industry traffic was flat for the period.
The challenge is that about 80 percent of restaurant visits are at quick service restaurants and the growth in fine dining visits, which holds only a single-digit traffic share, isn’t enough to increase overall traffic, according to NPD’s CREST® foodservice market research. Low-income consumers, who are heavier users of quick service restaurants, were most adversely affected by the Great Recession and have less discretionary income to spend on dining out. With low-income visit cutbacks and not enough fine dining traffic to make-up for traffic declines, restaurant operators will need to appeal to the middle-class to fill the gap, says NPD.
“Although the percentage of consumers identifying themselves with the middle class is shrinking, this group still represents a large segment of the population and shouldn’t be ignored,” says Bonnie Riggs, NPD’s restaurant industry analyst. However, offering a good product at a fair price is no longer good enough. To attract them will take a deeper understanding of what they want when dining out.”
Consumer attitudes and behaviors have changed since the Great Recession began and may well have changed for good,” says Riggs. “But the fact remains that Americans still make billions of visits to restaurants each year, but they are more conscious of their spending and want to be certain that the return on their investment in a restaurant meal is a pleasurable dining experience that meets their needs and expectations.”
Increased minimum wages are a growing concern and unavoidable reality for many operators. Learn what you can do about them in this article from QSRMagazine.com by Juan Martinez.
Don’t you get tired of hearing about the impending minimum wage increase? It is no longer if it is going to happen, but rather when is it going to happen and what will the magnitude be? The reality is that nobody really knows, but if you look around, isn’t it already beginning to happen?
In some states there has already been action with hourly managers, minimum wage servers, and the hourly minimum being higher than federal minimum wage. In other states, there is quite a bit of legislation of one sort or the other pending.
So what can you do to survive and perhaps thrive through it?
Consider these top 10 ways to mitigate the impact of whatever minimum wage increase your business faces in the coming years.
1) Streamline the service process Look at how you serve your guests today and define ways to reduce the amount of guest service time it takes by applying a process reengineering methodology and lean principles. The trick is how you can do this without negatively impacting the guest experience. There are many examples of applications in this area—using kiosks, tablets, and even order and pay ahead and pick up in a designated area—that have basically transferred some of the work from the employees to the guests and not detract from the service experience.
2) Be ready for your rush Typically, you need a lot more labor during peak hours than non-peak, so try to minimize the peak labor requirements. Since you have to provide a minimum shift of hours to these employees, the labor impact is more than just the time at peak. So, strive to minimize the peak labor requirements. Even one person less could make a huge difference in the bottom line. Typical moves that can save time during rush are pre-portioning, pre-packing, and using the right tools.
3) Simplify food prep Analyze what is going on in the back by undertaking a back-of-house prep process re-engineering effort and determine options that can result in less labor needed to get this done. Develop a system that minimizes the need for prep during peaks and staff all-hands-on-deck, to do guest service. This would also minimize the peak labor requirements.
4) Consider value-added products Leverage your suppliers and ask them to suggest to you product components that could help reduce the prep or guest service labor that is required to get the products to your guests. It is likely that value-added products can increase the cost of food, but as long as the impact of the labor reduction is greater, then you should be better off.
“Labor schedules are all about having the right labor in the right place at the right time to drive the best guest and employee experience.”
You may ask, What about quality? After all, a fresher product is a higher quality product. While this is true, if you cannot deliver consistently at the unit level, then your quality is worse. Consider the consistency impact to your business.
For example, a restaurant may get chicken raw, marinate it overnight, bake, refrigerate, cut, and serve. Instead, you can have the supplier provide pre-marinated and pre-cooked chicken. Quality is about consistency as well and value-added product are typically more consistent than products that are processed in the store, since they were done by a machine under highly controlled environments.
5) Objectively define the labor requirements To know where labor should be spent and where the opportunities to reduce them are, it is important to understand how much labor it takes to do any activity. Once you have this information you can then provide the stores with the right amount of labor to get this work done. Although restaurants are in existence to provide shareholder value and make money, scheduling labor based on a financial metric alone is dangerous. If it takes a certain amount of time to deliver a product to the guests, then the schedule should reflect this time, regardless of how much you sell it for. If this amount is too high and in aggregate not affordable from a financial perspective, then refer to some of the prior suggestions and re-engineer the processes to reduce the labor needed. Not giving the stores the right amount of labor may provide the right level of profit, but it is likely not providing the right level of hospitality.
6) Schedule systematically You have to have a system to manage labor in a systematic way; otherwise the use of this very expensive resource can be compromised. The best labor management systems are those that are based on work content, activity, and product mix.
After you know the right amount of labor time to do each task, using the information provided by the labor management system to develop a schedule that maximizes the available labor. During peak times, all the labor should be geared to serve guests and prep should be done before and after the peaks, to use the available labor and minimum shifts better.
Labor schedules are all about having the right labor in the right place at the right time to drive the best guest and employee experience. It is important to spend time analyzing the projections and schedule to ensure a good schedule efficiency rating.
7) Increase throughput for different hourly volumes Labor costs would immediately go down, if the hourly throughput were increased. So figure out where your throughput bottlenecks are at and resolve them. For example, reducing window time by 10 seconds in the drive thru will not only result in a total customer time reduction of a minute or more, with a car stack of six, but will also increase the sales in that period by nearly 18 percent, resulting in a similar labor efficiency improvement.
8 ) Leverage equipment and technology Similar to leveraging the product suppliers, equipment suppliers can offer tremendous insight to drive labor cost reductions. For example, tending to a product on a grill, takes more labor than placing it in a conveyor oven that when the product comes out of the other side, it is done.
Information management can also simplify the employees’ work, resulting in less time to get things done, which in turn can drive labor reductions. As an employee is going about doing their duties, look at the amount of information they have to deal with and watch their eyes roll around the screen, looking for what pieces of information to execute on first, when it is too much. If the screen gets full, matters get worse, since they just won’t see what they need to act on until sometime later on, impacting the throughput capacity, and by de-facto, increasing labor cost for that period, since they can end up selling less.
9) Eliminate complex menu items If you can’t re-formulate some menu items to require less labor by re-engineering the processes, and or leveraging value added components or equipment, then consider eliminating them. Examine your menu from 10 years ago and compare it to now—you might realize that complexity has just gotten out of hand.
10) The last resort should be increase prices This option has a risk of impacting traffic, resulting in lower sales, and then subsequently lower profits. It should be done as a last resort and done very carefully. Think about what you can offer the customers, as the prices are going up. Maybe you can tie it with some other initiative that adds value to their visit, like a full menu and menuboard revamp.
Although the prior suggestions have been focused on hourly labor, let’s not forget to keep our eyes on simplifying the manager’s job as a means to minimize the impact of the hourly wage increase. Not only will this enable the manager to run a more efficient restaurant, but, as appropriate, this can also make time available for the manager to perform some hourly duties, resulting in a flattening of the required staffing during peak hours. There is always a position in the restaurant that provides the managers a vantage point to run the show, while doing some hourly labor duties.
So how should you start dealing with this issue?
First things first, you need to truly understand how your labor is being utilized and be more analytical on the way you manage the labor resource. One recommendation is applying the principles of industrial engineering, such as time and motion and activity analysis, including an overall operations and investment study that will provide you the objective information that will drive the initiatives that make sense for the business. Once you are armed with this type of objective information, you can start doing battle to the issue of minimizing the impact of the hourly wage increase. So don’t be afraid, but also don’t sit idly waiting to happen, since by then, it may be too late.
A substantial number of operators are practicing sustainability, new National Restaurant Association research shows. According to the NRA’s new survey, restaurants are interested in implementing environmental practices into their plans.
Conducted earlier this year among 1,000 fullservice and quickservice operators, the survey found that nearly three quarters of operators recycled used fryer oil, fats and grease. More than six in 10 recycled their cardboard and paper, used compact fluorescent lighting and bought products made of recycled materials. About three in 10 installed faucet aerators to conserve water.
Key findings determined that:
74 percent recycled their used fryer oil, fats and grease
66 percent recycled cardboard and paper
63 percent used compact fluorescent lighting
61 percent purchased products made of recycled materials
48 percent installed low-flush toilets or waterless urinals in the back- and front-of-the-house
41 percent purchased products that can be composted
29 percent installed aerators on faucets
22 percent donated leftover food to food banks or similar organizations
17 percent composted food waste.
“More operators are looking at ways to increase efficiency – environmentally and fiscally,” said Scott DeFife, the NRA’s executive vice president of policy and government affairs. “Restaurateurs today know a lot more about how sustainability can reduce utility costs and, in some cases, increase profitability.”
The survey also asked restaurateurs about composting, food donation, energy efficiency and how they handled their used fryer oil.
Download the full report.
The rising costs of coffee and protein-based foods, including bacon, eggs, ham and beef, are creating concern among industry experts and chains specializing in the breakfast day part who say the prices, historically, are higher than ever before, reports a recent news article from the National Restaurant Association.
Food cost pressures are building, said Hudson Riehle, senior vice president of research for the National Restaurant Association. “Operators have watched carefully what’s going on with staple breakfast items like eggs, bacon and coffee. Some will consider operational adjustments as cost pressures are sustained.”
According to the NRA’s monthly Restaurant Industry Tracking Survey, operators once again cite food costs as their top challenge. Last month eight in 10 operators said their average food costs are higher now than a year ago. Among family-dining restaurants, many of whom focus on breakfast, nine in 10 operators report higher food costs.
“Price fluctuations of commodities can have a significant impact on the operator’s bottom line, especially if the items in question are essential to a specific concept or menu. Breakfast has been a growing day part over the last several years, as restaurant operators explore new avenues to build business and more consumers live life ‘on the go’,” Riehle said.
John Barone, commodities analyst and CEO of MarketVision Inc., says prices eased over the summer but remain high, almost across the board. A drought in Brazil this spring continues to drive up coffee costs, he noted.
“Coffee prices dropped 20 percent between April and July, but have regained most of that drop and look to be headed higher over the long term,” he said. “Brazil has a multi-year coffee problem. The bottom line is breakfast chains are really feeling the heat.”
Some larger restaurant companies were able to negotiate contracts before costs started climbing. Corner Bakery Cafe, right now is in a good position on its coffee contract, although that could end sometime next year, said Ric Scicchitano, senior vice president of food and beverage.
“We did a lot of forecasting and booking on the contract side to manage risk for all of 2014 and into 2015 as much as possible,” he said. He said the company locked in a good coffee contract when it saw favorable prices in the last half of 2013, but will have to reset that contract for 2015. “We haven’t been exposed to the spike in prices, but I’ve been telling everyone that headwinds are brewing for next year because we don’t have positions to carry us all the way through 2015.”
Dunkin’ Brands, parent of Dunkin’ Donuts, indicated it is exploring the possibility of raising prices on its coffee beverages to offset the surging cost of coffee.
“We are currently holding conversations with our domestic franchisees about a modest increase in coffee prices,” spokeswoman Michelle King said. “We have not taken any significant price increases on coffee in the last several years and even with a modest increase, we continue to offer a great value to our guests every day.”
Coffee isn’t the only commodity causing headaches.
Barone said prices on pork bellies, or bacon, are down about 20 percent from year-ago levels but remain historically high due to potential supply issues related to the outbreak of PEDv, or porcine epidemic diarrhea, which affects newborn piglets. Even after recent drops, the prices of ham and pork trimmings, or sausage, remain 30 percent higher than last year.
PEDv disease is expected to reemerge this fall, when the weather cools, Barone says. “There’s really no end in sight because no one has any real information on when the virus will be under control or how much damage it will do to supplies.”
Dennis Lombardi, executive vice president of strategies for foodservice consultant WD Partners, says he expects more restaurants, especially small operations and independents, will update and re-engineer their menus to feature alternative items that aren’t as costly to serve.
“For independents, there really seem to be few choices available,” he said. “They basically can endure the higher food costs, change their menu prices accordingly, or update and re-engineer their menus, which they do three or four times a year anyway. A lot of the big chains are locked into supply contracts, which allow for more price sustainability.”
Scicchitano said his company is still in good shape regarding food costs, but 2015 could be another story.
“We took 95 percent of our risk off the table last December,” he said. “We’ve kind of been exposed to the cheese market a little bit, but for the most part we’ve been pretty insulated where pricing is concerned. I do think we have a little bit of a correction coming in some protein areas. I’m worried about that more than anything else ‑ and dried fruits and nuts. Those are the things that are going to keep me awake now for next year.”
In this article from the National Restaurant Association, learn how to save money in the long run by investing in energy-efficient appliances and equipment. While they might cost more at the start, they can help you achieve your sustainability goals, says Richard Young, education director, Food Service Technology Center.
“Efficiency is saving you money,” he said. “It impacts sustainability. Sustainability is money. The market wants it, and it’s the right thing to do … It’s good business.”
Here are some tips for choosing energy-efficient equipment:
Do the math. How much will a $700 standard fryer cost you in electricity? A $1,400 energy-efficient fryer could save $600 a year in utility costs, Young says. That means you break even in just over a year.
Bonus: The more expensive fryer operates better, which extends the life of the oil, providing additional savings. Add in rebates from your utility company for the more efficient fryer, and the appliance quickly pays for itself, Young says. That makes your investment “worth every penny in the long run.”
Go high-tech. At this year’s NRA Show, Young and restaurant designer Tarah Schroeder explained how to create a modern, sustainable kitchen. Their advice: Adopt induction cooking, efficient fryers and griddles, and variable-speed hoods that adjust to the level of heat on the stoves and ovens underneath them.
“Foodservice is very energyintensive,” Young says. “Purchasing and using sustainable equipment is the best thing you can do to create a sustainable kitchen.”
Set clear goals and reevaluate to stay on track. As a principal with Denver-based Ricca Newmark Design, Schroeder helped design a café for the Environmental Science and Forestry School at the State University of New York in Syracuse. The school’s goal was to reduce waste, and energy efficiency was critical to that goal, she says.
With Schroeder’s help, the school selected Energy Star-rated equipment, variable-speed hoods, and parallel refrigeration, which uses a single compression to power different refrigerators. Yet the kitchen’s energy output remained high despite the new equipment. Ultimately, Schroeder recommended replacing a char broiler with a griddle after meeting with the chef to discuss his menu plans.
The ROI: The school reduced the energy use for the cook line and the exhaust hood. “Eliminating a char broiler is not always going to be the best strategy for every project, but here it was the right thing to do.”
Most independent restaurants calculate their food cost only once a month, but virtually all of the major chains calculate theirs each week.
According to industry averages, chain restaurants ‑ before corporate expenses ‑ are two to three times as profitable as independent restaurants. While weekly food costing isn’t the entire reason for that profitability, it’s part of it.
To accurately calculate your cost weekly, you’ll need to take inventory weekly as well. The only method for computing accurate cost of sales is to take physical inventories and then calculate the value of inventory on hand. Many operators erroneously believe that what they spend on food and beverage purchases is their cost of sales. While this may be true in the long run, for specific-period analysis it is inaccurate.
The correct formula for calculating cost of sales for each category is this: Beginning Inventory plus Purchases minus Ending Inventory equals Cost of Sales.
Taking weekly inventories doesn’t mean you have to spend half the night to do it. Here are a few tips to help you take inventory quickly. Properly applied, these principals will help you to be more accurate and should reduce the time spent counting your food inventory to under two hours.
Get organized. It is virtually impossible to take an accurate inventory when the stock room or walk-in is in disarray. Be sure all store rooms, shelves and refrigeration units are organized and clean. Product should be easy to see and count. Labels should be used for hard to identify product. Don’t put items in incorrectly marked boxes or containers.
Count it on Sunday. Most restaurants are open seven days a week. A natural tracking period is from Monday to Sunday. Also, inventory levels will be at their lowest on Sunday evening. If you are closed Sunday, then count it on Saturday evening or early Monday morning.
Separate your inventory into groups. Group your inventory into cost categories, such as meat, seafood, produce, dairy, grocery, etc. This will make it easy for cost calculations and help to organize your inventory. Grouping your inventory also makes it easier to zero in on cost control problems.
Arrange items in shelf order. Some managers advocate arranging items on the inventory sheets in the order they count the inventory. If you are using an order guide, arrange your spreadsheet to match that of the order guide. You can then record your counts on the order guide and transfer them to the spreadsheet for calculating the total value.
Use two people for taking inventory. One counts and the other records; the one recording is also an extra pair of eyes so nothing is overlooked. Also, be sure to use a pencil to encourage correcting mistakes.
‘Paint’ your restaurant. Always conduct inventories by starting at one end of the building and counting everything in a contiguous order. This practice will help ensure nothing gets skipped. Jumping from one area of the restaurant to another and back again will almost certainly cause you to miss something. It is much easier to flip to the proper page several times for a particular item rather than try to visit all of the places that item may be stored.
Keep counted areas off limits. Some kitchen managers like to get a head start on the inventory counting process. This approach is fine as long as counted product isn’t subsequently sold that same day. Once you have counted an area, make sure nobody removes or adds product to that area. For instance, maybe you have already counted the freezer, but later find out that the cooks need another case of frozen hamburger patties you have already counted. Be sure you adjust your count before putting them into production. That case will end up in an area you have not yet counted and thus will end up being double counted.particular item rather than try to visit all of the places that item may be stored.
This article was originally published by the National Restaurant Association and is presented courtesy of RestaurantOwner.com, a source of operational and business resources for independent restaurant operators. For more information, visit www.RestaurantOwner.com.