Ghost Kitchens, Abandoning Third-Party Delivery Partners and More Challenges Operators Will Face in 2019

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While there is a lot of discussion surrounding cannabis within the restaurant space in addition to new spotlights on fermentation, craft ‘tea bars’, farm-to-table (2.0,) breakfast day-parts, and plant-based food – there are also some ‘trends’ we should expect to see from the operations side as we celebrate the beginning of 2019.

Each individual venue, whether it is a restaurant, bar, cafe, food truck, or lounge etc. has their own distinct problems to solve, but the one constant among successful operators that we see today is their ability to adapt to change.

This means adapting to a change in consumer behavior, cost structure, supply chain dynamics, labor dynamics, and their hyper-local market & competition, to name a few.

Striving to manage the ‘unknown’ within these categories, however, can be quite scary for many new or seasoned, independent restaurateurs.

Operators must innovate to adapt efficiently to the ever-changing external & internal economic conditions – something that is incredibly important, and is arguably more important than ever, as we shift focus into this New Year.

Let’s have a look at the most critical changes operators should be adapting to:

Third-Party Delivery Pushback

There’s no question, delivery, and off-premise dining has disrupted and caused havoc on much of the restaurant industry over the past couple of years – and more so in 2018. The economic models and regulations surrounding third-party applications have recently come under scrutiny by consumers, restaurateurs, governments, and even the delivery drivers themselves.

While delivery and off-premise dining as a revenue channel shows no signs of slowing down – expect independent restaurant operators to change focus and develop their own strategy (online ordering + delivery) to effectively control costs and improve profitability (no more 20-30% commissions) while protecting their brand (through better quality control and customer service) and keeping that invaluable consumer data in-house.

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The Rise of Ghost Kitchens

While independent operators are adjusting to the change in delivery logistics and off-premise dining – they also need to keep in mind another ‘disruptor’ that is starting to emerge. It is what’s referred to as the "ghost kitchen."

These ‘restaurants’ (we use that term loosely) are delivery only and have no typical restaurant venue; where guests can walk in, sit at a table or even pick-up their own takeaway order.

What’s the business model? Their food is only accessible online or through a mobile app, and is exclusive via home delivery.

Thanks to the data that has been made available now to tech giants such as Amazon and the leading third-party delivery platforms (UberEats, Foodora, Skip the Dishes etc.) – expect to see more of these ghost kitchens serving unique dishes with flexible menu options that they know guests will be eager to buy and pay more for due to its level of convenience.

Smaller Foot Prints

Coinciding with the increase in delivery, off-premise dining, and on-demand consumers, expect to see both traditional restaurant start-ups and even already established brands looking to operate out of a smaller footprint.

To maximize a small space that will also drive a high-profit percentage per square foot, restaurateurs need to truly understand their concept inside and out. Operators need to create a variety of financial scenarios and menu choices (and sizes) and determine the absolute minimum needed to execute the concept in terms of space and financial projections.

Smaller spaces utilize minimal expenses in rent, staffing, and other fixed costs - however, smaller spaces often bring in a smaller portion of customers in relation to its size. This is where the right balance in menu prices, menu options, productivity, and the understanding of one’s concept, demographics, and potential flow of traffic throughout its dayparts, is crucial; whether dine-in, take-out and/or delivery.

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Tablet Hell

How many restaurants are operating with the view of a cockpit at its point-of-sale? It seems every data provider, mobile ordering system, and POS solution provider needs to have their own tablet or screen, creating a nightmare for both front-line staff and management alike.

To ease operations as we roll into 2019 – expect to see further partnerships and all-in-one solution providers to hit the scene, consolidating all of the technology into one, easy-to-use platform.

As we know, communication is fundamentally important in the restaurant space, so it only makes sense that operators should be looking to combine their accounting, inventory, sales reports, labor management, vendor management, online ordering, catering, and delivery logistic communications into one database.

Every operation has a different way of doing business with different uses for data. That being said, while having consumer & restaurant data might seem like the goal, finding ways to turn analytics into actionable items for a restaurant should actually be the mindset; something that needs to be a focus in 2019 to remain scalable, sustainable, profitable, memorable, and consistent!

Labor Consolidation

With smaller spaces in addition to the ongoing changes in how we operate today, and not to mention the always increasing wage structure within the industry – it only makes sense for operators to consolidate their labor. This doesn’t mean burning out employees or giving them more tasks then they can handle. It means finding ways to maximize efficiencies.

As you can see so far, smaller is becoming better. With the increase of open concept kitchens in the smaller foot-print restaurants, why can’t cooks cross-over to be service staff when the meal is ready? Why can’t mixologists and bartenders help out in the kitchen and also close out food orders?

Expect to see more of a blended FOH & BOH operations or a ‘one-house’ approach in cross-training to control labor costs, lower turnover, and maximize efficiency.

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With all of this said, are dine-in restaurants or your neighborhood pub a thing of the past? Not necessarily, if the operators create differentiation and memorable experiences while they focus on their own branding.

Restaurants today have to compete with supermarkets, food halls, food trucks, meal kits, ghost kitchens, and other third-party applications. The time is now for operators to innovate and adapt to the ever-changing external & internal conditions of this cut-throat industry.

It is possible to be profitable with a strategic mix of dine-in, take-out, delivery, and catering revenue channels if they’re in fact - open to change!

The Biggest Threat to Kitchen Success

The Biggest Threat to Kitchen Success

Employing a crew of trained kitchen killers means you need brain power as much as cooking firepower.

So how do you get your cooks to think, troubleshoot, and work critically? Or do you?

Asking members of the biz for their insight on how they get their cooks to think, the responses fell shockingly silent. This quiet is surprising because we ask our kitchen crews to work harder, work faster, work cleaner.

“Work smarter, not harder” is cliche and familiar. But what are we doing as leaders in the kitchen to be a catalyst for thinking?

Historically - and depending on with whom you are talking to - restaurant failure rate within five years is somewhere in the neighborhood of 80%. Poor product? Sometimes. Location? Maybe. Fiscal mismanagement? Now you are getting warmer. Off-mission? A resounding yes.

Having a mission and actually understanding how to keep the train on those tracks requires intellect. And that is where we aren’t stirring the pot.

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Enough Already! 3 Things About Restaurant Profits You Need to Hear

Enough Already! 3 Things About Restaurant Profits You Need to Hear

How are the profits in your restaurant? Great? Amazing? Is it your best year ever or are your profits on life support? Wherever you are now, it can be said that you want more. It’s human nature to want to climb to the top. 

The restaurant business can be very brutal on people at times especially when it comes to the area of making money. How do you beat the odds and maximize your profit potential? Here are 3 things that are getting in the way of you and your profits:

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5 Unwritten Rules Anyone Working in a Restaurant Should Know

5 Unwritten Rules Anyone Working in a Restaurant Should Know

You’ve been in the business for awhile. Maybe seen a few things that are sure to go in your memoirs one day that will turn into the next Kitchen Confidential by Anthony Bourdain. That A-List celebrity dragging his foul-mouthed girlfriend through the kitchen to escape out the back door to avoid the paparazzi. That Hollywood socialite who made you stop cooking a five-course meal because she wanted Coco Puffs. Yeah, it’s a wild ride at times.

Just remember that like any industry there are certain unwritten rules for conduct. Call it a code. There are many of these unspoken rules in our business. You might be a little shocked that we are even talking about them! Welcome to the new frontier. Time to let the cat out of the bag! Actually, I’m not sure why people would want to put a cat in a bag in the first place, but work with me here... I’m on a roll.

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Incorporate These Seating Strategies to Improve Your Restaurant Revenue Management

There are many tactical elements to operating a restaurant business and Restaurant Revenue Management (RRM) is one of them.

RRM can be defined simply as selling the right seat, to the right customer, at the right price, and for the right duration of time.

As property and overall restaurant operating costs continue to increase, so does the desire to maximize seating and guest turnover. This goes for either a full service or quick service restaurant environment. There is, however, a science to restaurant seating strategies— the essence of RRM.

First and foremost, restaurateurs need to understand their intended guest experience and their ideal customer profile — including guest behaviours — to maximize their seating potential.  

private seating fine dining

With the right seating strategy, a restaurateur will position themselves to increase guest spending, increase turned tables, and contribute to a more positive guest experience. Consequently, this will greatly affect the operator’s revenue and profit potential.

An award winning seating strategy will include the following planning steps and thought processes.

Here are six factors to think about:

1. Room Size

The general rule of thumb for a restaurant is to allocate 60 to 70 percent of real estate to the dining area with the remaining percentage allocated for kitchen, storage, and washrooms etc. Ideally, a restaurant wants to keep approximately 20 to 25 square feet per seat, to offer the most comfort and flexibility for guests and the most adequate flow for staff including traffic aisles, server stations, and beverage bars/counters.

For example, a 5,000 square foot property will provide approximately 3,250 square feet (65 percent) for the dining and/or service area, resulting in an average of 144 optimal seats (22.5 square feet per seat).

2. Table Size

As with the above room size, there is a general rule of thumb for table size as well. Ideally, guests should be given a minimum of 300 square inches of space (per guest). For example, a 24 inch by 30 inch table will offer 720 total square inches of space or 360 total square inches per guest for up to two guests, often enough space for traditional plating, utensils, and glassware.

table guest space

Table size can fluctuate based on concept, menu, plating style, and service sequence. Make the tables too small, and guests will feel uncomfortable and leave more quickly. Make the tables too large, and your property will lose valuable real estate. In this case, size does matter!

3. Table Optimization

A profitable interior design combines a variety of table sizes to meet the demand of different sized parties in addition to maximizing Sales Per Minute (SPM), an essential key performance indicator of Restaurant Revenue Management. For a restaurant to be successful, it needs to live in the moment by maximizing every day, every hour, and every seat.

Optimizing table sizes and their positioning, will improve traffic flow and turnover while reducing noise and accidents within the restaurant. Utilize point-of-sale reports to understand typical party sizes, average duration of stay, and dollars spent to ensure the restaurant is not wasting any seats or opportunities.

4. Guest Positioning

Depending on the concept, we know guests either sit themselves or wait to be seated. If one were to sit back and watch how guests were to seat themselves in a full service restaurant, a high percentage of guests would rather choose to sit near a window, featured wall (near fireplaces or wine racks, for example), or a partition wall. This is because these elements create a level of comfort.

modern seating arrangement

When planning a floor layout, it is important to keep this in mind and create multiple “levels of comfort” that guests will connect with and want to be seated near, allowing the restaurant to maximize the space and not have undesirable seating areas that lead to quick visits and less spending.

5. Seating Styles

Without getting into specific details on chair styles (that’s another article), there are three key seating arrangements that are known to either keep guests in their seats and/or keep them spending more money.

Banquette tables (a bench along a wall with an opposite chair), often reduces sales per minute because it keeps guests sitting longer (which can be a great thing). This results, however, in a requirement for the restaurant to up-sell coffees, desserts, and/or other profitable items throughout the meal. This is a critical communication point to all service staff.

booth seating

Booths on the other hand, are the number one option for guests and users of these booths are known to spend more in both time and dollars, as they feel highly comfortable and often feel a higher sense of privacy. Unfortunately, most restaurants cannot offer a space consisting 100 percent of booths, nor is it ideal for single diners. The right table and seating mix is required, but more booths than others, is a more desirable approach.

Traditional tables, those with two or more seats, often lead to quicker visits, unless strategically positioned near levels of comfort and appropriately spaced apart — offering a more intimate experience and ultimately leading to longer stays. It is essential this setting is truly mixed for seating of two and four (or more) to maximize potential and to reduce the risk of a single diner, for example, sitting at a table for four.

6. Guest Duration

By now, we understand that the longer a guest stays, the more they need to spend to maximize the seat and space. As a restaurateur who knows their concept and ideal customer profile, one must decide whether to focus on longer stays and higher revenues per table or to focus on volume of guests (resulting in volume food and beverage production). What is needed to not only breakeven, but be profitable long term while having a highly productive, but not overrun kitchen and bar?

Every concept and every location will be slightly different, but once you know the average meal length, one can determine many other aspects of the restaurant such as full potential for each day of the week which will then correlate to improving other financial management components including optimal staff schedules and food and beverage preparation.