Commodity Costs Start Helping Restaurants

Food costs have been on something of a roller coaster in the post-recessionary environment. Unfortunately for restaurants, so have sales. And the coasters have largely coincided. So if sales were up, so were costs. When costs fell, sales fell too.

That has changed this year. Costs have started coming down at the same time that sales improved for the first time since 2006.

Consider the third quarter of this year. According to the latest benchmarking report from the consulting firm BDO, prime restaurant costs fell 0.4 percent in the quarter, to 59.1 percent of sales from 59.5 percent. Restaurant same-store sales in the period averaged 3.4 percent and increased for every sector.

Food costs have started to ease, and beef costs in particular have started to decline after years of skyrocketing prices. Beef costs fell 5 percent on average in the third quarter, according to the benchmarking report. They rose nearly 24 percent in 2014.

Labor costs, the big fear at the moment in the industry, have yet to appear as a major problem on chains’ profit and loss statements.

“We’ve been waiting for commodities to come down,” said Dustin Minton, a partner with BDO. “And beef was huge.”

To be sure, traffic remains a problem in the industry. Plenty of chains saw their sales grow, but traffic decline, suggesting that perhaps consumers are turned off by higher prices.

“The consumer is only going to take so much,” Minton said. “At some point, do you just shift where you spend your money?”

But for the most part, restaurants managed to see improving sales at a time when costs are down.

The benchmarking report compiles operating results from publicly traded restaurant chains, and uses the averages to give companies an indication of sales as well as labor and other costs.

Cost of sales averaged 29.3 percent of revenues for chains, down 0.5 percent on average from 29.8 percent in the third quarter last year, according to BDO. Cost of sales ranged from 25.9 percent for pizza chains to 31.2 percent for quick-service concepts.

All sectors saw decreases in cost of sales except for fast casual, where costs increased 0.2 percent.

At the same time, labor costs aren’t going up, at least not yet. Labor costs were largely flat, increasing only slightly to 29.9 percent of revenues from 29.8 percent. Much of that increase can be attributed to Domino’s Pizza Inc., which handed out performance bonuses this year.

Companies have effectively managed labor costs. “Different companies are doing a nice job of keeping it stable,” Minton said. “They’ve had very effective labor management.”

While traffic remains hit or miss, sales were still good, on average. Same-store sales increased 3.4 percent in the third quarter. Pizza (up 6.7 percent) and fast casual (up 5.6 percent) were the top performers. Casual dining (up 2.4 percent) and upscale (up 2.2 percent) were at the bottom. Sales improved for every sector.

* Abridged from an article by Jonathan Maze, On the Margin blog

Fast Casual Taps Sales Opportunity With Self-Service Beer

Zpizza International Inc. may have cracked the code on boosting alcohol sales in the fast-casual segment by putting bartending in the hands of customers.

The Irvine, Calif.-based chain is one of a growing number of fast-casual concepts experimenting with self-service beer technology. Other concepts on the West Coast include gourmet hot dog purveyors Dog Haus and Brätworks, as well as Blast 825 Pizza.

The model is based on relatively new technology that some contend could be a game changer in attracting craft-beer-loving Millennials.

Many fast-casual chains carry craft beer and wine in bottles and cans, but the limited-service model can inherently hinder alcohol sales beyond one drink. Customers are less likely to get back in line for a second drink, and workers are often too young to handle alcohol, or are not trained to upsell. As a result, few concepts within the segment have put much effort into alcohol sales.

Zpizza, however, has transformed three units into Zpizza “tap rooms,” which feature a beer wall with 10 to 20 taps. Each restaurant offers a unique collection of local craft brews on draft, said Chris Bright, president of Zpizza.

After their IDs are scanned, customers can open a digital tab and pour their own draft, paying by the fluid ounce. That allows them to taste an ounce or two of different options before they settle on a “long pour.” If they want a second drink, they can get it themselves without having to wait for a server or table runner.

Some traditional Zpizza units offer beer and wine in cans and bottles, as is relatively common in fast casual. But those units typically see only about 2 percent of sales from alcohol, Bright said.

“It’s very difficult to generate liquor sales in a fast-casual environment because consumers are reluctant get in line again to order a second glass of wine or beer,” Bright said.

The self-service format eliminates that obstacle, he said.

At tap room locations with the beer wall, alcohol sales have reached as high as 20 percent, Bright said. “It’s a big winner in that sense.”

And where traditional Zpizza locations do about 75 percent of sales in takeout and delivery, tap room units see 75 percent to 80 percent of sales from dine-in business, he added.

The 95-unit Zpizza has three tap room locations and six more in development. “It’s our growth platform,” Bright said. “Going forward, our focus will be on building tap rooms only.”

The tap room concept has given the brand a jolt of growth at a time when build-your-own pizza concepts with flash-baking ovens are stealing the fast-casual limelight, Bright said.

Zpizza has long offered healthful pizzas, pastas, salads and sandwiches with all-natural and preservative-free meats, organic tomato sauce and mozzarella made with milk from grass-fed cows. Customers order at the counter, but the chain uses deck ovens that cook pizzas in about eight minutes, slower than the new build-your-own-pizza upstarts.

But now the extra time is beneficial, as it gives Zpizza customers a chance to explore the beer wall. In some locations, wine on tap will also be an option.

Zpizza uses the iPourIt system, but there are a growing number of self-service beer options for restaurant operators.

At a recent National Restaurant Association conference on technology, Josh Halpern, vice president of national retail sales, on-premise and military, for Anheuser-Busch in the U.S. said his company is going after the fast-casual segment in a “big way” with self-service equipment.

Anheuser-Busch partner DraftServ is working with sports arenas and cruise ship companies around the country to install self-serve taps.

Full-service restaurants are adopting the technology as well, but the trend is particularly ideal for fast casual, where concepts have limited square footage, and consumers embrace the opportunity to control their dining experience, said Joseph McCarthy, co-founder of iPourIt.

How it Works ?

Self-service beer offers a revenue boost without the need for more labor, McCarthy said.

With iPourIt, once a customer gets their ID checked, they can open a tab tied to a credit card. Typically, users must preload a certain amount to get started, and they can add to their tab as they go. Customers then receive a wristband or card that uses radio frequency to recognize them at the tap and measure their pour. They can try as many beers as they like, and they only pay for what they pour.

Since the iPourIt system is digital, McCarthy said there is a huge opportunity for collecting data about customers, their age and purchase habits. There is also an opportunity to link with loyalty programs to let users know what’s on tap at their local unit.

Fundamentally, the trend is being driven by the explosion in craft beer, which represented close to $20 billion in beer sales in 2014, McCarthy said.

“There are now over 4,000 craft brewers in the U.S., the highest point ever, and there has been a huge explosion in the products and styles of beer available,” he said.

At Dog Haus, the wide craft beer selection was a perfect match for its gourmet hot dogs, said Quasim Riaz, a partner in the Pasadena, Calif.-based chain.

“Beer goes so well with our food. It’s great that we can take our beer as seriously,” Riaz said.

Two units within the 11-unit chain have the iPourIt system, and franchisees are watching to see how it goes.

The first location with the system opened in Santa Ana, Calif., about six months ago. The second, in Fullerton, Calif., opened in early November, so it’s relatively new, he said.

Traditional locations offer beer and wines in cans or bottles. Some pour draft beer in the back of the house, he said.

But the self-service model offers the potential for improved throughput, with customers pouring their own beer as they would a soda.

The model also has a built-in opportunity for upselling, Riaz said.

As customers try three or four options, those tastes offer incremental sales opportunities that inevitably lead to the selection of a higher-priced product. Customers are more likely to buy a more expensive beer that they know they like rather than taking a risk on an unknown, he said.

“Having a happy customer is something we all strive for in this industry, and if the consumer is able to sample a beer and decide if they want it, they’re happier,” he said.

One consideration: In addition to the investment in the system, which for iPourIt is about $1,200 per tap, operators are required to pay a fee of 1 cent per ounce to iPourIt, which amounts to about 16 cents per 16-ounce beer, cutting into margins.

No Tipping

Tobi Miller, co-founder of the Brätworks build-your-own hot dog chain, said customers like the fact that they don’t have to tip at self-service beer concepts.

Brätworks is opening a unit in Redlands, Calif., with a 12-tap craft beer wall this winter. The original Brätworks opened in San Bernardino, Calif., with beer in bottles and cans, and two more units are in development in Southern California, Miller said.

Miller, who is also a franchise operator of Yogurtland, the self-serve frozen yogurt concept, said he loved the fact that self-service beer allows him to get just the amount he wants, even if it’s just a taste.

The Redlands location will be the brand’s first standalone unit, and a bit larger, at 2,500 square feet. The company is in the process of launching a franchising program, so self-serve beer could become a component that could attract potential operators, Miller said.

For Blast 825, a fast-casual pizza concept operated by Fresno, Calif.-based Milano Restaurants International Corp., self-service beer is also in test.

The company is scheduled to open a new Blast 825 Tap Room prototype in the coming weeks in San Luis Obispo, Calif., with about 20 taps of craft beer, along with four or five wines on tap.

“We have to evaluate it,” said John Ferdinandi, CEO of Milano Restaurants International. “But we think it will enhance the overall experience for the customer.”

Ferdinandi said the key will be whether the model will work in a setting with faster service, where table turns are vital to unit economics.

“We have to balance the idea of sitting and enjoying a few beers, maybe while watching a game, with patrons who are in to get a quick pizza,” he said.

One benefit Ferdinandi sees is that the onus of a bad pour is on the customer.

“If you have a server that isn’t pouring correctly or wastes beer, that’s on the owner’s side to absorb,” he said. “But if the customer doesn’t pour it correctly, it’s on them.”

Bright of Zpizza said they give customers who pour incorrectly, with too much foam, an opportunity to top off.

Zpizza’s first tap room location opened in Sacramento, Calif., about a year ago. So far, customers love the interactive nature of the beer wall, he said.

“It’s a very communal environment, where people come together and talk about what they’re tasting,” he said. “That really keeps them coming back to the beer wall, as opposed to the somewhat mundane act of going up to the counter.”

Will self-service beer and wine become as ubiquitous as self-serve soda fountains?

Bright said it depends on the concept.

“I don’t know that fast casual will go to that format in droves. There has to be a culture around craft beer that fits with the concept. It can’t be an afterthought,” he said. “You have to be committed.”

*Abridged from an article by Lisa Jennings at [email protected]

How Smart Companies Get Employees to Brag About the Business

Your employees can provide the strongest, most passionate endorsements of your business — if they’re engaged.

An astronomical 96 percent of employees who are engaged in their jobs try their hardest at work. If that many of your employees are giving it their all, day in and day out, your company will certainly go the distance. But tapping into that engagement is another story entirely. Here are the five most important strategies that will make your employees want to brag about your company:

1. Put employees first:
Put your employees first by providing flexible scheduling and letting them choose work assignments for select shifts. Make sure they know you have their backs.

According to acclaimed author and public speaker Shep Hyken, great companies will train their employees both technically and on how to deliver the best service possible. However, treating your employees with the dignity and respect that every human being craves is at the core of this process. In doing so, you will create a positive domino effect that trickles down to the customers your employees serve.

Employees will care more about how your customers are treated once you’ve demonstrated that you care about how your employees are treated.

2. Connect with your team:
All too often, there’s a divide between executives and hourly employees. Make yourself accessible, and connect with employees on the floor. Consider trading places with an outstanding hourly employee for a day to recognize good work while demonstrating that you’re willing to do all of the things you ask of your employees. Building camaraderie among your teammates will help them see your company as an establishment that values its people.

3. Recognize good work:
A recent survey shows that while 81 percent of respondents’ employers offer some form of recognition, just 46 percent report that their employers offer recognition on an individual basis. Only 51 percent of respondents feel valued by their employers.

Honest, sincere recognition is much more powerful than a tacky “Employee of the Month” award plaque or a canned company wide congratulatory email. Give your staff members immediate feedback when they meet and exceed your expectations. Instant gratification is powerful. It encourages employees to continue developing positive behaviors at work that lead to better customer service.

4. Give employees a voice:
No matter how well you treat your employees, giving them a platform to discuss issues in a constructive manner will make them feel like they have a say in how they do their jobs. Your platform may be a simple suggestion box or a monthly team meeting at which everyone is invited to speak openly.

Whether your employees want more supplies to do their jobs better or an extra break on busy days, providing solutions to small concerns voiced by your staff members demonstrates that you’re listening and sincerely want them to succeed. In turn, they’ll sing your company’s praises whenever they get the chance.

5. Create career paths and goals:
Employees who see a future with your company are more likely to be engaged with where they work. Provide challenging, rewarding work and advancement paths. If you can help your employees see their work as a career as opposed to simply a job, they’ll be proud to evangelize your company culture. Partner with HR to devise plans for how you can help your staff reach career goals and benchmarks.

Employee engagement isn’t the mystery it’s cracked up to be. Show you care by implementing these simple strategies, and you’ll have a hardworking team of employees by day and passionate brand advocates by day and night.

* Abridged from an article by Sam Bahreini @Entrepreneur.com

Sophisticated Breads Rise On Menus

With many Americans now avoiding gluten, and a growing number of people eschewing most carbohydrates as they follow the paleo diet, bread is less of a meal staple and more of an indulgence. Consumers are also more sophisticated and discriminating, so when they do decide to have bread, they want it to be something special.

Jana Mann, senior director of menu research firm Datassential, said she’s seeing consumers gravitate toward breads that evoke a sense of freshness, that seem premium or are ethnically inspired.

Variety and choices are also important, observed Mark Mears, chief marketing officer of Schlotzsky’s Franchise LLC, which continues to expand beyond its classic sourdough bread to offer other varieties as well.

“Bread is the undisputed foundation of every great sandwich,” Mears said. “Guests are more discriminating than ever before. They know more about food and want to explore new flavor options.”

Apart from adding gluten-free rolls to the menu, Schlotzsky’s has added ciabatta, which Mears said is more suitable than sourdough for cold sandwiches, and thus appeals to some customers who order catering.

The 337-unit Schlotzsky’s, a subsidiary of Focus Brands, also is experimenting with focaccia, flatbreads and pretzel rolls which have enjoyed a rise in popularity in recent years.

Here’s a look at how restaurants are incorporating pretzel breads and four other fast-growing bread types onto menus:

Pretzel rolls:

Other than the catchall term “artisan,” “pretzel” is a fast growing bread descriptor on menus. Pretzel bread not only has an ethnic heritage that appeals to diners; it also has a nice combination of salty flavor offset by mild sweetness that can work across proteins.

Pretzels are traditionally dipped in a lye solution that causes the outside to brown deeply and more quickly while leaving the inside soft, moist and chewy.

Talera Rolls:

The appeal of ethnic fare also appears to be at the core of the recent growth of telera rolls, the soft, thick carrier for Mexican sandwiches called tortas. Telera rolls are on 245 percent more menus now compared with four years ago — the fastest growing bread in that time period — and 17 percent more menus in the past year, according to Datassential.

Chef Torano of CBD Provisions in Dallas says telera rolls classify as comfort food among Dallas’ large Mexican-American population.“Telera rolls are used here a lot in Dallas because of the demographic,” he said. “It’s very simple to create, but on top of that I think everyone is looking for something they grew up with, something that’s easily approachable and recognizable, and telera is one of the prime examples of that.”

The straightforward roll is made simply with flour, yeast, water and a little sugar and salt, although Torano adds some shortening to his for a softer crust.“It’s great on the griddle, too,” he said.

Los Angeles-based La Brea Bakery has seen so much demand for its telera rolls that it recently introduced a miniature one-ounce version.

Datassential’s Mann said other ethnic breads, from bao buns to Indian breads such as roti and naan, are being used to add slightly exotic character to familiar foods.

“Consumers can’t eat two things they don’t know, but pairing something unfamiliar with something familiar grounds it,” she said.

Conversely, she said some restaurants take familiar breads, like pizza dough, and top them with “all types of crazy ingredients,” whether it’s cheeses or veggies or sauces.

Brioche:

When it comes to premium bread, brioche rules the roost.

This rich, buttery egg bread from France is sprouting up with increasing frequency as a burger bun. But it’s traditionally a breakfast bread in France, according to Lionel Vatinet, chef of La Farm Bakery in Cary, N.C.

He said that although he used to only make this bread — which typically has a minimum butter-to-flour ratio of 50 percent — on special occasions, demand is now so high that he keeps it on the menu regularly.

Doug Taylor, the new corporate pastry chef of three-unit Salty’s Waterfront Seafood Grills, with locations in the Seattle area and in Portland, Ore., said he was hired in part so the restaurants could start baking its own bread.

Taylor said that although brioche is expensive to make because of the high butter content, it’s relatively easy to make and also easy to switch up its flavors. Most bread develops its flavor through slowly rising and fermenting, Taylor explained. But brioche is flavored directly by the fat, and since many flavor components are fat-soluble, brioche absorbs them easily.

Vatinet of La Farm normally flavors his with lemon zest, although for Mother’s Day he also adds dark chocolate and white chocolate. For savory brioche, he often adds thyme, rosemary or puréed garlic.

Lavash – Flatbread:

Relatively new to the trendy bread scene is the Middle Eastern flatbread lavash, which was on 20 percent more menus at the end of 2014 than at the beginning of the year, based on Datassential figures.

Although the term can refer to a variety of different breads, including soft, pliable ones, the type that seems to be catching on is more cracker-like.

Lavash was one of the first bread types Taylor began baking for Salty’s, along with brioche and multiseed, because it can be adapted easily.

“It’s an easy thing to change flavors,” he said. “You roll the dough out paper thin, which gives you a high yield. You can put sesame seed on one, peppers on another, different kinds of salt, poppy seeds [and] mustard seed,” he said. He bakes it in a 24-inch by 12-inch baking pan and then tears it into shards.

CBD Provisions’ Torano also makes lavash, but said that rolling it out is an arduous, labor-intensive process. Instead of including it in the restaurant’s tableside bread offerings, he has relegated it to his charcuterie board.

Rebecca Isbell, pastry chef of Betony in New York City, puts a fusion-style twist on the item, with her pretzel lavash.

“I wanted to give our guests something super delicious — crunchy, salty, kind of sweet and a little bitter, and earthy from a quick spray of lye,” she said.

She uses regular pretzel dough, lets it rise until it doubles in size, then rolls it out on sheet trays flipped upside down. She lets it proof until it triples in size, stretches it paper thin, allows it to dry a bit and sprays it with a 4-percent lye solution. She sprinkles it with fleur de sel and bakes it at 325 degrees Fahrenheit until it’s golden brown and crispy.

“They are pretty epic,” she said.

Walnut bread:

Walnut bread is spreading fast, too: Its menu presence has risen 92 percent in the past four years, according to Datassential.

Part of that spread might be due to the growing popularity of cheese and charcuterie boards. That’s where Florian Wehrli, chef of Triomphe at the Iroquois hotel in New York City, uses it. Triomphe makes a dense rye bread studded with walnuts.

He makes a dense rye bread from the Swiss canton of Valais, for which he uses his own starter and no other yeast. He uses 100-percent rye flour with no wheat added. He kneads it briefly and then adds walnut halves, forms it into loaves and bakes it. He serves it thinly sliced.

“I like it with a little plain butter on top, but with cheese or some charcuterie, with some fat content on top, it’s also good. In Switzerland, we have a lot of good cheese, so it’s perfect.”

Rabii Saber, executive pastry chef of the Four Seasons Resort Orlando in Orlando, Fla., makes a cranberry-walnut bread for his cheese plates. He makes dense bread out of whole-wheat flour and cracked oats, sweetened with a little honey. “It’s a very rustic, country-style loaf of bread,” he said.

“Walnuts are a little bit different than other nuts because they have a little more fat content, so when you mix them in the dough they give it a rich flavor,” Saber said. Like most chefs who add fruit or nuts to their dough, Saber adds the walnuts and cranberries after the bread has risen, so it doesn’t affect the bread’s development.

* Abridged from an article by Bret Thorn at [email protected] , Follow him on Twitter: @foodwriterdiary

Restaurants Need To Improve Labor Productivity

Labor costs are a growing concern for the restaurant industry. Numerous restaurant company executives are saying that labor costs are an increasing problem. And more operators are saying they’re struggling to find good workers.

Hudson Riehle, head of the research and knowledge group at the National Restaurant Association, said that employee recruitment is a growing worry for operators. According to the NRA, 12 percent of operators in April said that recruiting employees was their top concern.

A year ago, he said, only 4 percent of operators considered recruitment was their top concern.

Employee recruitment concerns have come as restaurants have expanded and added new employees. The industry has been adding jobs at a rapid clip in recent months as operators add new units and expand existing locations.

But that expansion is coming with a price in the form of higher wages. In addition, it has drawn activists pushing for higher wages. State governments are raising minimum wages. And it’s possible, albeit unlikely, that Congress could get in on the act.

The answer for the industry may be labor productivity.

Riehle, at the NRA Show, noted that restaurants average $84,000 in sales per worker. By comparison, grocers average $304,000. Gas stations average $855,000. Both of those industries compete with restaurants for food away from home.

“Going forward, this will have to change,” Riehle said. “If you look at the history of labor productivity in the industry, it has not been good.”

It’s not easy for restaurants to increase labor efficiency. The industry has a significant service element. Many restaurant consumers are looking for high service levels that they won’t get eating at home. Reducing labor can risk that. In addition, the industry has also been generally shy about adapting technology.

But there are emerging technologies that can make restaurants more efficient. Tabletop tablets making their way across the casual dining sector could enable restaurants to ultimately reduce wait staff.

Perhaps kiosks, or smartphone apps, or some other technologies we don’t know of yet could finally improve labor efficiency in the industry. Indeed, McDonald’s executives note that as they work to improve speed of service in their restaurants, they can use technology to accomplish that even while keeping the company’s enormous menu.

If the industry can find ways to improve productivity, it could pay higher wages even while keeping labor costs under control by employing fewer, better workers.

*Abridged from a story in Nation’s Restaurant News, May 2015 , nrn.com

Study: Restaurant Dine-In Traffic Rises

According to the latest research from The NPD Group, dine-in, or on-premises, visits to restaurants grew 2 percent in 2014, in addition to 1-percent growth in 2013. Meanwhile, takeout, or off-premises, traffic declined 1 percent for each of the last two years. The new research was presented at NPD’s Foodservice Summit 2015 Get Growing Again—Inspiring Consumer Visits, held in Chicago on April 15.

Although the growth in dine-in traffic is small, the opportunity for restaurants is huge, officials at Port Washington, N.Y.-based NPD said.

Takeout has been the growth driver for years,” NPD analyst Bonnie Riggs said. “To see dine-in grow, it’s quite a turn.”

It’s better for the bottom line when consumers dine in, NPD found. Dine-in visits account for 39 percent of industry traffic and generate more than $233 billion dollars a year, compared with take-out occasions, which account for 61 percent of traffic but only bring in $200 billion dollars a year.

“We want to get more of that dine-in business. It’s more profitable,” Riggs said. “When you dine in the restaurant sales are much higher, you order more items.”

Quick-service restaurants experienced the largest growth in dine-in traffic, increasing dine-in visits by 5 percent in the year ended December 2014. Dine-in visits at casual-dining restaurants have been holding steady for the last year following years of decline.

No matter the segment, Riggs said the improved economy is driving consumers to dine in more.

“We want to be out and about,” Riggs said. “That’s not just young people.”

According to NPD’s Foodservice Summit Dine-in Study, consumers of all ages are eating out to get out. For some consumers, dining in is a chance to get out and be social. For others, it’s a chance to spend time with family. Younger consumers want the convenience of avoiding meal cleanup, while those over 50 seek the pleasantries of eating away from home, including not being rushed.

Of all the segments, consumers surveyed ranked casual-dining restaurants strongest when it comes to meeting the dine-in demands of good tasting food, good service and convenience.

While there’s a big opportunity for growth in dine-in traffic in casual dining, operators’ responses to consumers’ new dine-in needs has been varied, ranging from some brands that have made minor menu tweaks or begun offering a heavy rotation of combo deals, to others that have completely evolved the restaurant experience.

*Abridged from an article by Fern Glazer, nrnews.com

 

Energy-Efficient Restaurant Trends

The fact that energy-efficient equipment reduces energy costs is a given, but it can also improve food quality and consistency, according to equipment experts who shared their insights on a webcast entitled, “Amp Up Productivity, Turn-Down Energy Costs: Cooking Equipment Technology Revisited.”

In the presentation, hosted by Nation’s Restaurant News and Restaurant Hospitality, and sponsored by Vulcan Equipment, featured speakers — Ann Lovecik, foodservice energy efficiency consultant for CenterPoint Energy in Minneapolis, and Richard Young, senior engineer and director of education for PG&E Food Service Technology Center in San Ramon, Calif. — discussed the variety of ways energy-efficient equipment can save money despite the higher initial cost.

Lovecik said combination ovens — which combine the abilities of a convection oven and a steamer — are among her favorite types of kitchen equipment. Developed in Europe, where space is tighter, these ovens arrived in the United States in the 1980s and were mostly used for institutional cooking, but are becoming more widespread in restaurants. With their ability to bake, steam or cook with moist heat, these multitaskers take up less space in the kitchen. That means restaurants can install smaller ventilation hoods, which on average cost around $1,800 per linear foot.

Lovecik said that modern combination ovens also can be labor savers, because multi-step cooking instructions can be programmed into them, adjusting the temperature and steam ratio over the course of the cooking, allowing, for example, for a quick sear followed by low-and-slow cooking.

“It speeds up cook time and allows for retention of juice and less shrinkage of proteins,” she said.

They also can be programmed to roast meats overnight and then hold them at a safe temperature for use in the day. Most of them have probes that can be inserted into the meat so they can be cooked to a precise internal temperature, she added.

Many of them also record cooking times that can be transferred via their USB ports to computers for easier food safety HACCP documentation.

Young noted that modern Energy Star convection ovens and combination ovens can reduce operating costs by nearly 50 percent.

Lovecik also noted that high efficiency fryers with heat exchange baffles recover lost heat faster, making them more productive and also improving the quality of the fried food, which ends up spending less time in the oil.

Demand control ventilation systems were discussed as well. Unlike typical hoods, which turn on at full power whenever any equipment is turned on, Lovecik said these systems have sensors that monitor equipment use and ramp up or slow down exhaust as needed, resulting in less energy use. That is particularly important with ventilation systems, since they generally account for about 20 percent of all energy use in a kitchen.

Young looked at how some classic equipment has evolved. Broilers, for example, traditionally are just grates over flames.

“They’re not thermostatic — they’re like your backyard grill,” he said. “You turn them on and they run all day with very limited controls.” They’re such energy guzzlers that one year of operating them can be equal to their purchase price, he said.

However, after a decade of development, better designed lidded broilers are available with lower input rates and radiant heating that make them more energy-efficient.

Griddles, too, now have infrared burners that transfer heat better and result in savings. Young noted that even simple advances such as finned-bottom pots increase energy efficiency and can reducing cooking times for items like pasta, because water comes to a boil faster in them.

Young noted that energy efficient equipment can be a lot more expensive to begin with: an inexpensive, but also inefficient fryer, can cost around $800, while a high efficiency one will be closer to $1,500. High efficiency fryers recover their heat faster, which means they’re better for high-volume environments, and oil in them also tends to last longer than in conventional fryers.

He said that, assuming a fryer is used 12 hours per day and that 125 pounds of food is cooked in it each day, a high efficiency fryer will save more than $13,000 over the course of five years in energy and oil costs.

Lovecik addressed the benefits of energy efficient conveyor ovens, which have conveyor belts that run food through a heated cavity at a set pace.

Lovecik said new versions have sensors on the belts that slow the belts down and lower the temperatures during times of no activity.

Although it’s common knowledge that energy will be saved if ovens are turned down when they’re not being used, it’s difficult to follow through on that, especially since you want the ovens to be hot as soon as your restaurant gets busy. The new conveyor ovens take care of that automatically, which Lovecik said can result in a 40 percent reduction in energy use.

Young said there also are new cold preparation tables that are kept cold using chilled liquid rather than chilled air. The result is more even temperature and 20 percent energy savings.

Similarly, better griddles with more uniform heating can result in faster cooking times, easier use and lower energy use.

* Abridged from NRN, Bret Thorn at [email protected]

 

Waste Not, Want Not, Profit More

It’s a simple fact of human behavior: People don’t want you to see their mistakes.

This is especially true in the food service business where mistakes become waste and lost profits. In our business, every morsel has been bought and paid for, and its value lies in its resale, not its position at the bottom of a trash can.

That is why waste is so very bad for restaurants. So, what happens when food prep doesn’t go as planned? What happens when you are not getting the maximum yields? Where does that money go?

It goes down the drain. According to some estimates, Americans waste 40 percent of the food that is produced. Restaurants may only account for a small portion of that waste due to better management. But in restaurants, every bit of food should reap a gain.

What is the cost of burning a steak? Overcooking the vegetables? Forgetting to rotate the sauces? Or not following recipes correctly? Management and employees need to be aware of inappropriate waste. How can we control the waste if it is human nature not to look bad?

It can be simple:

Remove all garbage disposals. No garbage disposal, no way to hide mistakes. Plus, no clogged drains.
Substitute those black garbage bags with transparent ones, and use a metal frame bag holder. If waste can be seen there will be more care in handling and cooking.
Put all food waste into a clear tub and then have it approved before it gets thrown out.
There are many new technologies to help with waste. Whatever your system, be sure track your food consumption-to-sales in order to get the yield you expect. Profit in the restaurant industry is thin and built on running the appropriate food cost so that diners get value, and management receives a return on their investment.

In my many years consulting on operations, without a doubt, most of the conversations center on what distributors charge versus the yield extracted from raw materials. It is ironic that management looks to get the last penny out of their vendors, yet fail to see the nickels and dimes they throw in the garbage. No operation is perfect, and while waste may be a necessary part of your costs, you must find consistent ways to expose it, track it and account for it.

* Abridged from an article by John Krebs, www.fastcasual.com

Operators Sharpen Their Focus On Purchasing Practices

Challenging economic conditions are prompting foodservice operators to sharpen their focus on the purchasing side of their business in an effort to save money and enhance quality.

However, proprietary studies conducted by Consolidated Concepts, an Allston, Mass.-based full-service purchasing partner for multi-unit restaurant companies, reveals that many operators are not maximizing their opportunities when it comes to reducing spending, sourcing products or positioning themselves for expansion in this competitive economic environment.

Bruce Reinstein, Chief Operating Officer of Consolidated Concepts, which currently partners with more than 100 chains and supports some 20,000 restaurant locations across the United States, says current economic conditions are, in many ways, more difficult for operators than they have ever been before.

It’s clear that margins are shrinking — they’re razor-thin right now,” Reinstein says. “Labor costs are up, insurance costs are up, commodities are extremely volatile — we’ve had volatility before, but not to this extent. Beef prices are not coming down anytime soon.”

At the same time, he adds, many midsize, multi-unit concepts lack the leverage and the expertise to exploit their buying power compared with the larger chains or companies like Consolidated Concepts, which currently commands about $14 billion in purchasing power.

As margins shrink, some chains opt to reduce their infrastructure, often shifting more responsibility on to the backs of executives who are already struggling to keep up with a chain’s growing needs. “A lot of chains just don’t have the infrastructure to do everything,” Reinstein says.

For example, in a survey of 20 chains representing 400 locations, Consolidated Concepts found that only 30 percent of respondents have produce contracts that protect them from price fluctuations, compared with 55 percent that do not. Ten percent of those respondents reported that they had some protection while five percent were not sure.

“The misconception about purchasing is that you just go out and get the best price,” he continues. “But there’s much more to it than that. A lot of operators just don’t have the time to figure out whether they are using the correct product for its intended usage. At the same time, they don’t always know whether they should order a larger or smaller amount of a particular product — you have to understand what the market is doing. Should you buy 90-days’ worth of oil or a year’s worth? Some chains just don’t have the resources to make decisions like that.”

Fifteen percent of those polled said they work with third-party companies to manage produce compared with 80 percent who do not.

In another survey finding, 75 percent of those participating operators said they did not keep a produce spec book in their restaurants, versus 20 percent who did. Five percent said they were not certain. Experts note that this can be a mistake given the importance of having a good spec book. “Without a spec book, operators don’t know whether their produce meets the quality standards for which they are paying,” Reinstein says.

In addition, a comprehensive produce spec book can help to ensure food safety and provide for traceability — critical factors that few operators have the infrastructure to fully address. However, he adds, “operators need to know where their produce comes from and be aware of safety and quality issues.”

The survey also asked operators how often they audited their produce. Ten percent said they conducted daily audits, while 15 percent audited weekly, 15 percent said monthly and 10 percent said annually. Twenty-five percent said they didn’t conduct produce audits at all while 20 percent said they weren’t sure.

The study also touched on the food-safety issue, which has become increasingly important to restaurant operators, particularly those working with large quantities of fresh produce. The survey found that 80 percent of respondents relied on their produce provider to find out about produce recalls, compared with 30 percent who found out through the news media and 20 percent who learned about recalls through the Internet.

“We learned that most companies that buy their own produce do not have a food safety and traceability program,” Reinstein says.

A second study conducted by Consolidated Concepts delved into other purchasing practices within the foodservice industry. The study found that more than 84 percent of respondents have signed a master distribution agreement (MDA), compared with only 16 percent who have not.

In addition, the study said operators sometimes can find themselves in over their heads with master distribution agreements by negotiating them on their own rather than seeking help from experts. Only about 11 percent use a third-party negotiator, according to the survey. Commenting on the complexities of negotiating a contract, one chain executive wrote, “There is a lot more to it than I realized.”

When asked to identify the most important part of negotiating an MDA, operators’ verbatim responses included “consistent pricing,” “getting the best prices and not committing to volumes,” “pricing structure,” and “flexibility.”

Responses were roughly even when operators were asked whether their MDA was based on a percentage markup or a fee per case — 47 percent versus 42 percent, respectively. Reinstein says this reveals that many operators “are moving to fee-per-case, which is our recommendation.”

Reinstein calls the MDA the most important contract that can be negotiated in the supply chain, “… and probably it’s where operators lose the most money. They should rely on a third party to do it.”

He observes that some chains still like to shop around for the best price, “but that is the worst thing they can do. At one time we all shopped and got quotes from others. But that’s an old-school method. You wind up saving quarters but spending dollars that way.”

Meanwhile, Reinstein advises operators to focus on all aspects of their purchasing decisions. When the markets are up, for example, an operator must find savings not in the top 20 percent of spending — which includes the higher-priced proteins — but in the bottom 80 percent, which encompasses products like paper towels.

However, he says, “When there’s not enough infrastructure, you may work very hard on the top 20 percent and make good deals. But then you don’t have a lot of time to spend on the bottom 80 percent. As a result, you’re probably overpaying there. Sometimes you need to obtain support from others when it comes to purchasing.”

Reinstein says third-party companies like Consolidated Concepts offer time-strapped chains not only leveraged buying power and the ability to negotiate contracts, but also a wide range of supply chain expertise, including a full produce management program and a full line technology program. “We negotiate and provide operators with information needed to make their decisions,” he says.

“In this environment, operators need to know their priorities, look at how they spend their time, and then seek support from others,” he says, adding that many are already overwhelmed by their MDA. “It would make sense to at least explore the feasibility of partnering with a third-party expert.”

*Abridged from an article in National Restaurant News, www.nrn.com

Loyalty Can’t Wait: Why Your Business Needs a Loyalty Program

Loyalty programs are intertwined with our daily routines, even if we don’t always recognize it. When you stop by your favorite coffee shop on the way to work, you pick up a free latte because you bought ten others over the last month. After work, you swing by the grocery store to pick up ingredients for dinner, but you always go to “your” grocery store and buy “your” brands for a variety of reasons. Before heading home, you stop by Nordstrom to exchange a new shirt with no penalty for the return, and end up purchasing two more shirts because their service is “just so great.” And before bed, you find yourself engaging with your favorite sitcom online as you watch the show, earning points along the way.

Loyalty programs are everywhere. Our decisions to purchase and interact with a brand depends on the ability to be rewarded for our time and money spent, even if we don’t always recognize it.

It’s clear that loyalty programs are here to stay, and if your brand doesn’t thank its customers for their business by rewarding them, you’re missing out on a serious opportunity that your competition may be capitalizing on. Let’s look at a few reasons why your brand needs a loyalty program in order to stay competitive and win your market.

Loyalty Programs Grow Your Business
While we might not all wake up with revenue on the brain, all for-profit companies have one common goal: to make more money than is spent. Although positive cash flow is not the only reason we’re in business, it’s always a great proxy for success. Loyalty programs are one of the best ways to help your business achieve this bottom line because they encourage your existing customers to boost their loyalty toward your brand, and ultimately purchase more frequently.

In a recent retail study, it was shown that only 12-15% of customers are loyal to a single retailer, but they represent between 55 -70% of total sales (Center for Retail Management, Northwestern University). Put simply, this means over half of your current business is likely coming from a small percentage of your total customers, and those customers are making loyal purchases on a regular basis. Additionally, loyalty programs can increase a brand’s market share by 20% and improve customer acquisition by up to 10% (Aimia).

Not only do loyalty programs increase the number of repeat customers your brand receives, they also increase the amount of repeat purchases that those customers make. In a survey recently conducted by Clickfox, 54% of respondents said they would consider increasing the amount of business they do with a company for a loyalty reward, and 46% said they already have. Talk about driving sales through loyalty!

Loyalty Programs Attract New Business (and Save You Money!)
Bain & Company’s famous metric still holds true today: it costs the average business 6-7 times more to acquire a new customer than it does to retain a current one. Loyalty programs are all about keeping your current customers happy and engaged, which lowers a brand’s need for new customer acquisition while doing wonders for its retention.

Take a moment and think about how much money you currently spend on acquiring new customer through channels like PPC, PR campaigns, content marketing, social media, and others. Is it in the thousands? Hundreds of thousands? Maybe even in the millions? I’m in no way saying traditional channels are obsolete as they are still critical to customer acquisition, but I am saying that many brands will benefit by spending less on the above when a loyalty program is added to the mix. When brands take a portion of their existing budget and put it behind a loyalty initiative, the acquisition machine will begin to feed itself, which is evident across other channels.

And the acquisition benefits of a loyalty program don’t stop there. A study by ClickFox revealed that 62% of consumers don’t believe that the brands they’re most loyal to are doing enough to reward them, which increased the chances of altering their behavior to maximize loyalty benefits by 57%. Today’s customers expect more from the brands they love, and when they don’t receive a well deserved “thank you” for their time and money spent, they take their business elsewhere. Loyalty programs open the door to easy, real-time opportunities for companies to say thank you to their customers, and are an attractive perk for customers in the market for a new favorite brand.

Loyalty programs help brands say “thank you” to their customers.

Loyalty Programs Keep Your Customers Happy
Happy customers = brand advocates, and we all know how powerful brand advocates can be. Positive reviews from brand advocates can do more for your brand than many marketing campaigns can, and the more they are rewarded for their loyalty, the likelier they are to share their great experiences on your behalf.

Brand advocates also do more than share positive brand interactions; they make up the majority of a brand’s “loyal” customer cohort (check out customer cohorts in more detail here). Most customers who will refer their friends and family come out of your “loyal” customer cohort, and loyalty programs give brands a way to directly affect this cohort’s growth. Through rewards for incentivized actions, program members have the opportunity to earn points that can be redeemed for products and services that will continue to drive their loyalty. The more customers are rewarded through a loyalty program, the likelier they are to become repeat customers and move into your “loyal” customer cohort.

Additionally, happy customers tend to stick with a brand for long periods of time, and are more likely to be consider lifelong customers as the years pass. Whether you’re driving latently loyal customers who purchase infrequently but always from your brand, or premium loyal customers who purchase at a consistent, high frequency, these groups tend to thrive and multiply when a loyalty program is offered. Loyalty programs are a great way to keep your brand’s customers happy and retention metrics high.

Loyalty Programs Help You Do Better Marketing
The best marketers know that in order to drive loyalty, they must have a thorough understanding of customers at a personalized level. Customers are normal folks like you and I, and the desires and expectations needed from your brand are different for each person. If you have limited insight into who your customers are, it’s challenging to market to them effectively. Loyalty programs give marketers a way to gather large amounts of granular data around customers user paths, purchase patterns, demographics, and more in order to create complete individual profiles. Once you have a better idea of who your customers are, you can match them with personas and group them into segments and market to them more efficiently, which offers both the brand and customer a better holistic experience.

Insight gained from loyalty program data is also an opportunity for your brand to reach customers across all of the devices they’re engaging on. When brands invest in offering an omni-channel experience, shoppers have the opportunity to engage with the company wherever they go, whenever they want. This opens up the door for new ways to reward customers for their purchases and actions depending on their device(s). Through geo-targeting, in-app messaging, and unique user quests for different devices, customers can experience your brand in a variety of ways, wherever they are.

Those are just a few ways loyalty programs will help your brand achieve success. Retailers and publishers alike are participating in the loyalty building game at a rapid pace, and it’s up to your to make sure your brand enters the ring in order to win.

*Abridged from a blog-article on www.bigdoor.com