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]

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]

 

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

Restaurant Tech Trends – 2015

Restaurant operations will be tapping technology with greater gusto in 2015 in both the front and back of the house.

“Technology will perhaps be the largest arena to see some rapid innovation in 2015,” said B. Hudson Riehle, senior vice president of the National Restaurant Association’s research and knowledge group. “Technology is just another tool in the operator tool belt, but 2015 is poised for a much more substantial integration of the technology into the typical restaurant operation.”

The restaurant industry will see some tech items become more affordable as prices dip, such as tablets for line-busting in quick service to tabletop devices for ordering and payments.

“Individual’s basic expectations for a restaurant experience includes technology,” Riehle said, from smartphones to websites to front of the house and back of the house. “As the price points come down, there will be much more substantial integration of technology into the basic restaurant experience.”

After 2014’s data breaches at restaurant concepts as varied as Dairy Queen, Jimmy John’s and P.F. Chang’s China Bistro, 2015 may push many restaurant companies in the U.S. to finally adopt point-of-sale systems compatible with the EMV standard that is widely followed outside of the United States.

EMV, named after its developers (Europay, MasterCard and Visa), requires cards that have embedded microprocessor chips that store and protect encrypted user data and is aimed at better protecting merchants and issuers from fraud losses at the point of sale. More U.S. banks and credit card companies are issuing the chipped EMV cards to their users.

In addition, a 2015 POS Software Trend Report from Hospitality Technology showed that 56 percent of restaurants say their top business reason for upgrading their POS is enabling new payment options such as e-wallet. Adding mobile capabilities and prepping for EMV is prompting 47 percent of restaurants to look at POS upgrades, according to the report.

“Yield management” or “dynamic pricing,” which means varying prices based on factors such as time, has been common in the hotel industry for years. Now, digital menu boards and sophisticated POS systems may pave the way for more restaurants to vary prices by day part to drive traffic.

“Restaurants can do really quick tests of not only pricing but menu substitutions,” Riehle said, noting that alternating pricing could generate incremental demand in the industry, according to NRA research.

“Ten years ago,” he said, “that capacity did not exist because menu boards and tablets were not there yet. Now, it does allow the average restaurant operator to step up their game to generate additional demand.”

Technology applications will also continue to help cooking equipment to save time and labor.

For example, winners of the NRA’s Kitchen Innovations Awards at the organization’s annual show in May included combination ovens that saved energy and reduced cook times by as much as 20 percent, ice machines that sanitized themselves with ultraviolet light oxidation, and dishwasher technology that reduced water use and sped drying times.

While the restaurant industry expects to see modest growth in 2015 and increasingly intense competition, operations will become more streamlined. The challenge for operators, Riehle advised, “is to remain high-touch in a high-tech environment.

* Abridged from an article by Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless

 

A New Building Meant To Spark Innovation

U.S. Cities are establishing “Innovation Districts” to foster entrepreneurship.

They should take note of Boston’s new District Hall. 

Silicon Valley may be the capital of the tech scene, but the geographical spread of the country’s innovation has expanded far beyond its borders. Cities all over the country, from Brooklyn to Charleston to Las Vegas, are making a concerted effort to take advantage of the creative bustle of the urban environment, creating dedicated innovation districts. In the words of the Brookings Institution’s Bruce Katz, these districts cluster “leading-edge anchor institutions and cutting-edge innovative firms, connecting them with supporting and spin-off companies, business incubators, mixed-use housing, office, retail, and 21st century urban amenities.”

In Boston, a fledging District Hall, a city-sponsored center with workspaces, classrooms, community rooms, and a restaurant. The center comes out of a public-private partnership between the city of Boston and Boston Global Investors. Opened in October, the sleek, modern building by Boston-based Hacin + Associates offers a gorgeous civic space centered around collaboration.

As Katz has argued, the innovation district model profoundly impacts the physical design of our offices and research labs:

Innovation Districts embrace the redesign of buildings and office spaces in support of collaboration and open innovation, and they provide the physical and social platform for entrepreneurial growth—incubator space, collaborative venues, social networking, product competitions, technical support, and mentoring.

District Hall’s design is firmly in this collaborative, open camp. As the flagship component of Boston’s emerging 1,000-acre innovation district, the center stands out visually, beckoning the public in and offering a peek of what’s inside. Hacin’s angular design was inspired by the former industrial nature of the neighborhood, which used to be a waterfront rail yard. The cantilevered roof gestures toward the harbor, and large glass panels and bright LED lights make it a beacon at night, a transparent advertisement for the bustling activity within.

The 12,000-square-foot facility also had to be flexible and dynamic enough to house a variety of different functions—networking events, casual gatherings, demonstrations of new technology, coworking. Inside, there are writable wall surfaces and roll-down partitions that allow the large assembly space to be subdivided into smaller spaces as necessary. The main gathering space is accessible from all the major surrounding streets, and the entrances are visually connected by colored lighting, “reinforcing the role of the building as a public place and path,” according to the architects.

If there was ever any doubt, Hacin’s design proves that, yes, innovation can be a beautiful thing. Burgeoning innovation districts, take note.

* Abridged from an article by Shaunacy Ferro, a Brooklyn-based writer covering architecture, urban design and the sciences, fastcodesign.com

Slow Food USA’s – National School Garden Program

Every child deserves to grow up knowing where food comes from, how to grow, cook and share it, and how to be healthy.

Slow Food USA local chapters, members and volunteers build and maintain school gardens, lead cooking classes and work to improve school lunches.

In doing so, they hope to grow a generation of kids who love and care about food. And by becoming informed eaters and food lovers, they will help make a positive impact on the larger world of food and farming well into the future.

School gardens sounds like a fantastic idea in theory: give a bunch of kids, many of whom have no idea where their food comes from, the opportunity to tend to crops and watch as carrots, kale, and peppers pop up, ready to eat. Voila, they understand the basics of food production.

In practice, school gardens aren’t so easy to maintain. Volunteers dwindle, new teachers who don’t care as much about the school garden program arrive as the passionate teachers leave, and suddenly a once-promising garden is neglected.

In a partnership announced this week, Slow Food USA and Chipotle are teaming up to support 100 school gardens in 10 regions–in places including Denver, Austin, Boston, Louisville/Lexington, Phoenix, and San Diego–with in-restaurant fundraisers, grants, and marketing. “For the first time, staff will be dedicated to building the leadership and capacity of volunteers and school communities to support growth and sustainability of these gardens,” says Richard McCarthy, Slow Food USA’s executive director.

Slow Food USA and Chipotle have worked together for a decade on various school garden initiatives, and Chipotle has worked with other organizations on school gardens as well. But this is by far the biggest effort. Chipotle’s support of nearly $500,000 will include funding to build gardens, in-store fundraisers where 50% of proceeds go towards a garden project; and a marketing team of 45 people across the country who will pull together school garden volunteers and co-ordinate activities.

In the past, Chipotle has help with projects “sometimes direct to school, sometimes through the city, but when we added it all up we’re really putting a lot of money behind it. We thought it would be better to consolidate our efforts behind one organization,” says Mark Crumpacker, Chipotle’s chief marketing and development officer.

One of the goals of the partnership, says McCarthy, is to come up with best practices for school garden projects. “We want to determine whether an army of volunteers can sustain gardens to change kids’ relationship with food whereby they become the advocates for their own food choices,” he says. “Where I am from in New Orleans, kids have no relationship with food because they don’t know where it comes from. When they pull a carrot out of ground, they see the connection between early investment and return on investment that tastes like no carrot they’ve ever had. It’s magic.”

For Chipotle, a fast casual restaurant chain that likes to highlight its sustainability bonafides, there’s also a marketing angle. According to Crumpacker, the more that kids understand where their food comes from, the more they’ll think about what they’re eating and how it was prepared. And the next time they want to go out for fast food, they’ll probably end up at Chipotle, because options elsewhere in the fast food landscape for food chain-conscious consumers are pretty bleak.

The Slow Food/Chipotle partnership will last for the next 15 months.

* Abridged from an article by Ariel Schwartz, Ariel is a Senior Editor at Co.Exist. She has contributed to SF Weekly, Popular Science, Inhabitat, Greenbiz, NBC Bay Area, GOOD Magazine and more. For story ideas: ariel[at]fastcompany.com 

 

Boosting Cocktail Sales With Simpler Menus

It’s a common belief that unique signature cocktails can help drive sales, but Omni Hotels & Resorts found benefits in scaling back creativity in the 60-unit hotel chain’s bar program.

A couple of years ago, David Morgan, the company’s vice president of food and beverage, came up with what he thought was an incredible cocktail menu, with all the complex flavor combinations and flourishes in presentation that have become popular. But there was a problem: “They took forever to make, so the bartenders didn’t want to sell them,” he said.

So he went back to basics and worked with beverage consultant Kim Hassarud to rehabilitate classic cocktails. The result: Cocktail sales rose 20 percent.

“When you’re developing your signature cocktails, you have to know who your customers are, and who your servers are,” Morgan said. He found that his customers wanted friendly bartenders who made good, consistent drinks.

That means detailed training manuals were developed that not only had precise measurements, but also the back story behind the ingredients that were being used, so bartenders can explain that the rye-based Polish vodka in the Ultimate Martini, which is made with Lillet instead of vermouth and is garnished with an orange peel, has subtle notes of vanilla, rye and lemon peel. The manual also explains that the drink is to be stirred (not shaken, which is why 007 had to specifically request that his martini be shaken) for 20 seconds.

The Dry Martini, on the other hand, is made with vermouth and a French vodka with an “elegant floral citrus aroma.”

Two gin martinis are on offer as well, as well as four Manhattans, each with a different whiskey and unique combinations of vermouth and bitters, and four margaritas — three made with different tequilas and one, the Smoky Margarita, made with mezcal.

The trendy but nonetheless classic Moscow Mule — vodka, ginger beer and lime — is also on the menu, as well as lesser-known classics such as the Knickerbocker and the Strawberry Basil Smash.

Morgan said the detailed instructions gave bartenders and servers the confidence to sell them. “The fact that they were easily made and had to be done correctly gave them a comfort level to sell them,” he said.

The customers like them, too. “When you look at the perfect Manhattan and use the proper bitters and the right vermouth and cherries, our customers seem to be happier,” Morgan noted.

Sales reflect different regional preferences, however. Martinis are the top-selling cocktails in the Northeast, while margaritas dominate in Texas and the Southeast. Meanwhile, in the West, brown spirits are hot.

“We do recognize the fact that the expectations of a customer in New York may be different from a customer in Texas,” Morgan said.

Because of that, Hassarud also developed four signature cocktails each for five regions: Northeast, Southeast, Midwest, Texas and the West. Each region has its own version of the gimlet, traditionally made with gin or vodka and sweetened lime juice. In the Northeast it’s a Salted Gin Gimlet, it’s a Basil Peach Gimlet in the Southeast, a Lemon Poppy Gimlet in the Midwest, a Salted Tequila Gimlet in Texas and a Passion Fruit Gimlet in the West.

The Old Fashioned — sweetened bitters with a brown spirit and sometimes fruit — has black walnut in the Northeast, Tiki fruits in the Southeast, hops in the Midwest, mole in Texas and figs in the West.

Whether the classics or the regional variations sell best varies from one property to the next, Morgan said.

* Abridged from an article by Bret Thorn at [email protected]

 

Why Restaurants Are Investing in Mobile Payments & Marketing

From restaurant chains like Starbucks, Panera and Wendy’s announcing mobile payment rollouts to smaller restaurant players getting on board with payment apps like Cover, the restaurant world is abuzz with mobile app news. But how widespread is the trend?

A new infographic, produced by mobile payment summit CONNECT 2014 and mobile payment startup Isis, illustrates the huge opportunity for restaurants to use mobile technologies to increase sales. Leveraging data from Google Shopper Marketing Council, Technomic, the National Restaurant Association and other sources, the graphic shares some fascinating statistics.

For example, 83 percent of smartphone users surveyed use their phones to make dining decisions while traveling, and 46 percent have tried a new menu item based on a mobile ad. People are also increasing interested in paying for meals electronically. Of those surveyed, 40 percent say they would like to for quick service meals via a mobile or wireless device, and 55 percent say they want mobile payments.

And restaurants are slowly but surely starting to catch on. Currently, 95 percent of independent restaurants do not have a mobile site and only 16 percent of restaurants have mobile apps. But 50 percent of limited-service restaurants say they plan to invest more resources in customer-facing technologies, like tablets and smartphone apps. Which is smart since, according to the infographic, mobile payment users spend twice as much through digital channels.

Looks like it’s time for restaurants small and large to start exploring the expanding mobile app ecosystem.

*Abridged from an article by Nina Meijers, foodtechconnect.com