Restaurant Operators Must Lean Into Off-Premises Opportunities
Prior to last year, David Portalatin noticed it all the
In his hometown of Houston, restaurant customers sought "Instagrammable
moments," in which they snapped photos of tasty-looking food and friends with
whom they were enjoying an evening.
Then, the coronavirus rendered those moments few and very
far between. But the restaurant "experience" – in which consumers are seeking
memorable moments while dining out (or at least getting takeout food) – is
coming back. Portalatin, The NPD Group's industry advisor for the food
and foodservice industries, certainly thinks as much.
"We've seen all kinds of evidence that fine dining has come
roaring back," Portalatin said during a webinar hosted by DMA in conjunction
with The Food Institute, which examined consumers' current experiential
spending and attitudes amid the lingering pandemic.
Prior to 2019, countries like the U.S. noticed a clear shift
toward experiential spending on categories such as travel, live events, and
in-person experiences, with such activities generating over $470 billion in
annual consumer spending. And, while much of that spending ground to a halt
over the past 18 months or so – and challenges remain – Portalatin highlighted
a few reasons for optimism.
Portalatin noted that consumers have increased spending on
entertainment this year. According to NPD research, average spending over the
past six months rose to $858, compared to $715 during the same period a year
ago. Plus, the group's research signaled that 90% of Americans are entertaining
themselves this year by watching TV and movies.
That, Portalatin indicated, offers an opportunity for restaurants
to take advantage of modern consumers' habit of "home-centricity."
He said that between now and the end of 2022, NPD's outlook
"is that there will be continued recovery for the restaurant space." But he
added: "the American consumer is engaging restaurants, especially quick-service
restaurants, differently than before. Pre-pandemic, it was usually one person...Now, that same occasion is more about a complete meal-solution for everybody
that's in a home."
And that, he noted, is driving a shift toward more purchases
of premium-price menu items, more main entrée items, and fewer beverages.
An NPD survey from September showed that 63% of respondents
said they were comfortable dining out. NPD's research also showed that,
throughout 2021, consumers have slowly but steadily returned to stadiums and
bowling alleys in addition to restaurants.
Still, several factors could limit foodservice's recovery
according to Portalatin, including factors such as:
Inflation: Food away from home is increasing faster than
retail, making the relative cost of a grocery basket more affordable, according
to NPD findings.
Restaurant unit count: From the start of lockdowns in
March 2020 to December 2020, the net unit count for commercial restaurants
declined more than 41,000 units.
That said, one of the final slides shared by The NPD Group
during the webinar predicted that restaurant traffic will recover to 98% of
pre-pandemic levels by the end of 2022.
So, while issues like labor shortages are giving restaurant
operators headaches now, the year ahead should be a more enjoyable experience,
"Many quick-service restaurant operators are already back,"
he said. "There are many that are double digits ahead of where they were in
2019." And, for those fortunate restaurants, he added, it's largely because
"they've really leaned into these off-premises occasions and the home
meal-replacement opportunity." Food
Distributors Face Challenges Despite Better 2022 Outlook
Although the 2022 prospects for foodservice distributors are
on the rise, the industry still faces several challenges, according to Technomic
Principal Wade Hanson.
Hanson, speaking on a webinar hosted by the International
Foodservice Distributors Association (IFDA), said these challenges will
force distributors to form closer relationships with their customers.
Prospects for Recovery in 2022
Hanson expects to see continued recovery in 2022, with
foodservice distribution to senior living facilities, supermarket foodservice
outlets, fast casual concepts, and quick service restaurants showing the
strongest gains. Meanwhile, he sees weaker recovery in recreation, fine dining,
caterings, and transportation.
The Challenge of Finding Workers
Hanson said there was an 81% increase in distribution job
openings in June 2021 when compared to March 2020, showing just how difficult
it's been filling positions since the start of the pandemic.
More telling, he noted that employees appear to have the
upper hand in the current environment. In March 2020, 28% of total employee
separations from a distribution company were initiated by the employee and by
June 2021, the number jumped to 73%.
Hanson said warehouse technology improvements could help
bridge this gap, with a special focus on robotics. However, this change won't
happen overnight, and in the near-term, employers need to continue searching
for human workers.
Labor Challenges for Operators Affect Distributors
Hanson said foodservice distributors are also aware of the
challenges foodservice operators face in the current business environment.
Among restaurant operators, employee recruitment, retention,
and training are top of mind, according to Hanson, who noted labor costs were
also becoming more prevalent.
Two-thirds of surveyed operators noted the stress level
among restaurant staff was high, with 56% saying it was difficult for employees
to take time off. Fifty-five percent of employees are worried co-workers would
leave the job, and 35% reported they were looking to leave the job themselves.
In short, employee morale is low, and operators are
exploring a variety of ways to combat low staffing. Thirty-nine percent reduced
operational hours, while 35% reduced seating capacity, according to the survey.
Sign-on bonuses were also popular.
Product shortages are also a major challenge, with operators
citing shortages of poultry (47%) and beef (45%), among other products.
Hanson also addressed rising costs on menu prices, which
were up 4.7% month-over-month in August – representing the highest rate since
1980. Although consumers accepted the increases, Hanson said many in the
industry were wondering how long consumers would absorb higher costs before pushing
Technomic research showed 55% of restaurant operators
reported a change in distributor sales representative (DSR) behavior, with
visit frequency declining. Seventeen percent of surveyed operators noted their
DSR was replaced, reemphasizing Hanson's earlier points on the labor situation.
Insiders: Time to Rethink Compensation Packages in Hospitality Sector
Recently released October statistics from Indeed Hiring
Lab indicated fewer people are looking for jobs in the hospitality-tourism
sector – nearly 24% fewer than in February 2020 when the pandemic first took
Even with restaurants promising higher wages and more
benefits, the number of searches fell nearly 10% from September to October.
Drilling down to food preparation and service, interest was off 18.3% compared
to February 2020 and nearly 5% from September.
Even among those without jobs, active overall job searches
fell nearly 4 points from September to October as people reassessed priorities
and decided to move to other industries.
Here's a look at the factors at play...as well as a few
possible solutions for the food industry:
Workers Seeking Online Options
The restaurant industry has developed a reputation for
employing people just part-time to avoid paying overtime and bestowing
benefits, and for erratic schedules. Though such jobs traditionally have been a
starting point for many, the pandemic has highlighted online options that often
pay more with less exposure to the public.
So, the question is: What can the food service and
preparation industries do to attract new workers and ease the crunch?
"A lot of organizations have been focused simply on the
monetary aspect of their wellbeing: Are we paying them enough? Do we need to
give them better benefits?" Claire Brummell, a human resources consultant with The
Universal Needs, told The Food Institute.
"But if you want to lure people back to an industry that
they have chosen to walk away from, you need to look at all aspects of their
needs." This includes safe working conditions, training, opportunities for
growth and a way for them to feel they have some control over their lives.
Hope, Transparency Sought
PeopleFinderFree co-founder Eden Cheng said the one
thing employees value more than higher pay and improved benefits is the chance
for career development, something that is especially important to low-wage
"They want to be confident that there is a chance that they
can grow their skillset and climb up quickly, whether it be through on-the-job
mentoring or training initiatives," Cheng said.
Restaurant consultant Mark Moeller suggested part of the
problem lies in the way jobs are advertised, saying ads should be written to
make sure the right people are being targeted.
"Do you really need a line cook? Or is it really a short
order cook for breakfast? Small changes in language can make a difference," he
Security Sought, Too
Chad MacDonald, a 20-year veteran of the restaurant industry
said it's no wonder interest in low-paying food industry jobs has tanked
considering the behavior of some customers.
"While a rude or demanding guest wasn't rare before, since
the pandemic, the number of people who feel entitled to harass and attack
restaurant and retail workers has increased exponentially," MacDonald said. "The sheer amount of vitriol directed at service workers these days is off the
In addition to reassessing their priorities, hospitality
workers may have been scared off by the realization their industry could be
shut down arbitrarily by the government, said John Frigo, ecommerce manager for
"I think a lot of people are going to move to jobs that may
not pay much more but are better work environments, e.g, someone who worked in
food service maybe goes to get a job working in a call center for the same
money but at least they have a 9-5 schedule, don't work holidays, and will get
a steady 40 hours per week," Frigo said.
Key Option to Consider
If there simply aren't enough workers available, reducing
the number of outlets may be necessary for some restaurateurs, said Andrew
Fiebert, founder and CEO of Lasso.
But here's another option:
"I talk to pizza operators from all over the country. The
solution is this – smaller restaurant footprints, tighter menus and larger
delivery areas," said Eric Baum, vice president of sales and marketing for Perfect
"The employees are not coming back, and restaurants need to
adapt," he added. "Consumers, due to COVID, have changed the way they dine, and
restaurateurs haven't quite adapted yet." Food
Panera has made a
climate-change pledge to become "climate positive" – removing more carbon from
the environment than it emits – by 2050.The chain said it'll set
regular, smaller goals to meet between now and then, with several short-term
targets to achieve by 2025, reported Restaurant
Business (Oct. 20). Full Story
company Brinker International is raising prices by 3% to 3.5% to combat
higher labor and food costs. The owner of more than 1,600 casual-dining
restaurants will institute the hikes for fiscal year 2022 in hopes of improving
operating margins that fell by more than a percentage point in the first
quarter, reported Restaurant Business (Oct. 20). Full
Firehouse Subs was acquired by Restaurant Brands International (RBI)
for $1 billion, expanding RBI's portfolio which already includes Burger King,
Popeyes Louisiana Kitchen and Tim Hortons. Following the acquisition,
Firehouse is expected to maintain its headquarters in Jacksonville, Florida, and
CEO Don Fox and CFO Vincent Burchianti are expected to remain with the company,
reported CNBC (Nov. 15). Full
Piper Pizza acquired
10 of its franchise locations in Arizona and will open two new locations in San
Antonio, next year. Full Story
signed seven development agreements during Q4 2021 to open a total of 47
restaurants. Full Story
will open 15 more locations in Singapore over 10 years. Full Story
Buffalo Wild Wings is
testing a wing-making robot.Dubbed "Wingy," the automated fry-cook
innovation will debut at the sports bar chain next year, reported Restaurant
Business (Oct. 21). Full Story
Salad chain Sweetgreen,
which filed to go public on the New York Stock Exchange, plans to double its
footprint over the next three to five years, reported CNBC (Oct. 25).
Chipotle Mexican Grill is
becoming the first restaurant brand to open a virtual location on Roblox,
an online platform and storefront where users go to play games. Full Story
Subway is set to
become the first QSR to offer a one-net carb bread option. The sandwich chain announced
new zero-sugar bread will be tested in a handful of markets soon. Customers
will be able to order artisan Italian bread that also has 12 grams of protein,
and 26 grams of fiber per 6-inch sandwich. Full Story
Popeyes will open 90
restaurants in Romania over the next 10 years via development deal with Sterling
Cruise. Full Story
DIG raised $65 million in a Series F funding round,
which will enable the restaurant group to reopen locations closed due to
COVID-19 and double its portfolio to 60 restaurants over the next three years. Full
McDonald's is partnering with IBM to develop
artificial intelligence technology for its drive-thru lanes. IBM will acquire McD
Tech Labs as part of the alliance, reported CNBC (Oct. 27). Full
FAT Brands will pay $130 million to acquire
Fazoli's, adding the largest premium QSR Italian chain in the U.S. to its
Burger King is
giving out cryptocurrency to loyalty members. The chain will give out mostly
dogecoin, but some etherium or even bitcoin, to BK Royal Perks members who
spend $5 or more, reported Restaurant Business (Nov. 1). Full Story
Wingstop's CEO said the price of chicken wings is "trending in
the right direction." Charlie Morrison noted that wing prices have come down 40
cents per pound since their peak. Still, Wingstop is raising menu prices by
another 4% to 5% on supply constraints, reported CNBC (Nov. 3).Full Story
open 65 locations in Quebec and Saskatchewan, Canada over the next five years
and remodel 60 existing restaurants. Full Story
entered Saudi Arabia with seven kiosks and will add three more in coming weeks.
Inspire Brands announced the launch of a
multibrand ghost kitchen in Atlanta that will serve customers from its
portfolio of fast-food companies including Arby's, Buffalo Wild Wings,
Jimmy John's, Sonic Drive-In and Rusty Taco. The concept,
dubbed Alliance Kitchen, will allow customers to order from both
third-party aggregator platforms and the brands' apps, reported CNBC (Nov.
Shake Shack is
planning for its largest expansion to date, with up to 50 units in 2022,
reported eatthis.com (Nov. 6). Full
In-N-Out may expand to Florida after owner Lynsi
Snyder-Ellingson spoke with Governor Ron DeSantis. Although the company's
supply chain is West Coast-centric, DeSantis made the argument that the state's
farms and cattle ranches could supply the company if they decide to expand into
the state, reported SF Gate (Nov. 10).Full
Khaled, the Emmy award-winning producer and record executive, has partnered
with ghost kitchen operatorReef Technology Inc.to create
Another Wing. The delivery-only modelis launching simultaneously with more
than 150 kitchens in five countries: the U.S., the U.K., Canada,
France, and the United Arab Emirates, reported Bloomberg (Nov. 11).Full Story
Partners is acquiring Pacific Bells, one of the biggest Taco Bell
franchisees in the U.S.with over 250 locations. Full Story
on the Move:
Walk-On's Sports Bistreaux hired John Gordon as
director of real estate. Full
Zaxby's appointed Bernard Acoca as CEO. Full
Dave's Hot Chicken promoted Jim Bitticks to president
and COO. Full
Torchy's Tacos CEO GJ Hart is retiring effective
immediately, prompting founder Mike Rypka's shift to interim CEO, reported Restaurant Business (Nov. 5). Full Story
QDOBA Mexican Eats promoted Karin Silk to Chief
Marketing Officer. Full
Advancing Across Foodservice, Delivery, Agriculture
What seemed like something straight out of science fiction
just a few years ago is quickly becoming a reality for the food industry.
Robots are now doing everything from picking, preparing and delivering
With that, The Food Institute decided to
take a closer look at some of the companies making inroads in the food robotics
Walmart has started
using fully driverless trucking in its online grocery business, aiming to
increase capacity and reduce inefficiencies. Walmart and Silicon Valley
start-up Gatik said that, since August, they've operated two autonomous
box trucks — without a safety driver — on a 7-mile loop daily for 12 hours,
reported CNBC (Oct. 8). Full
Additionally, hundreds of robots are now navigating college
campuses and city sidewalks. While robots were being tested in limited numbers
before the pandemic, the companies building them say labor shortages and a
growing preference for contactless delivery have accelerated their deployment,
reported ABC News (Nov. 2). Full
Some recent developments include:
Starship Technologies, which has more than 1,000 robots in its fleet, says
it will deploy hundreds more soon. The bots currently deliver food on 20
U.S. campuses, with 25 more on the way.
Kiwibot, now has 400 robots making deliveries on college
campuses and in downtown Miami.
Google was a surprise investor in autonomous driving platform
Nuro during a recent $600 million Series D fundraising round,
according to a Forbes report (Nov. 2).
Serve Robotics, an autonomous sidewalk delivery company, announced a
partnership with Uber Technologies. The on-demand robotic delivery
service will be available to Uber Eats customers starting
in Los Angeles early next year.
Robots are taking over restaurant kitchens, too.
Miso Robotics – a
foodservice automation startup – unveiled the newest model of Flippy, its
robotic kitchen assistant. Full
Based on learnings and feedback from White Castle, which
deployed the original Flippy to a location the Chicagoland area in 2020,
Flippy 2 takes over the work for an entire fry station and performs more than
twice as many food preparation tasks compared to the previous version including
basket filling, emptying and returning.
In addition to White Castle, Miso Robotics has several
other pilot agreements with national brands in place, including one with
Inspire Brands which is testing a wing-making version of the robot for Buffalo
Wild Wings, dubbed "Wingy," at its Innovation Center in Atlanta,
reported Restaurant Business (Oct. 21). Full
Wingy will be installed in an Inspire ghost kitchen before
making its way into an actual Buffalo Wild Wings next year, according to the
Iron Ox has unveiled a new robot for moving and monitoring
indoor farming crops, reportedâ€¯TechCrunch (Nov.
The mobile robot, named
Grover, is capable of lifting and moving up to 1,000 pounds of
Dutch robotics company Priva unveiled Kompano,
a pruning robotâ€¯that can be deployed in a greenhouse alongside human
employees, reportedâ€¯Fresh Fruit Portal (Oct. 19). Full
The company says it is the first
robot in the world that offers an economically viable alternative to de-leafing
tomato plants by hand. The company plans to expand the Kompano line with a leaf
cutting robot for cucumbers and picking robots for tomatoes and cucumbers. Food Institute Focus
November Sales Expected to Slow
Off-premises orders continued to drive sales growth in
October, but sales are expected to slow in November, according to Black Box
Intelligence. Black Box reported comparable sales were up 5.96% in October when compared to the month in 2019, but that comparable traffic dropped 6.36%
during the period. Full
Meanwhile, The NPD Group reported total restaurant
visits rose 5% during the year ending in September compared to a year earlier
and dropped 6% from September 2019. While restaurant visits continue to improve
overall, dine-in or on-premises traffic continues to struggle compared to
pre-pandemic levels. Full
lunchtime restaurant visits are recovering, according to new data from The NPD Group.
Online and physical visits increased by 4% in the year ending
September 2021. Full Story
Chipotle Mexican Grill reported quarterly earnings that crushed Wall Street's
estimates as its menu price increases helped the chain weather higher costs.
Net sales rose 21.9% to $1.95 billion, beating expectations of $1.94 billion.
Same-store sales climbed 15.1%, topping StreetAccount estimates of 14%,
reported CNBC (Oct. 21). Full
McDonald's reported quarterly earnings and revenue that topped
analysts' estimates as its international sales bounced back, despite Covid-19
resurgences in some markets. Net sales rose 14% to $6.2 billion, topping
expectations of $6.04 billion. Worldwide, same-store sales climbed 12.7% from a
year ago and 10.2% on a two-year basis, reported CNBC (Oct. 27).Full
Yum Brands reported quarterly earnings and revenue that
topped analysts' expectations, fueled by strong demand for KFC's fried
chicken. Net sales rose 11% to $1.61 billion, topping expectations of
$1.59 billion. Across all of its chains, same-store sales increased by 5%,
reported CNBC (Oct. 28). Full
Odd Burger Corporation, one of the world's first
vegan fast-food chains, saw a 41% increase in sales over the previous month
in October. The openings of new locations in Canada contributed to
the success, according to the company. Full
Did you know that shipments of plant-based proteins to
U.S. restaurants and foodservice outlets grew by +16% in April 2021, compared
to April 2019?
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Source: The NPD Group, Press Release, June 9, 2021
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