FALL/WINTER 2021
INSIDE: GEN Z | RESTAURANT OF THE FUTURE | GHOST KITCHENS | AND MORE...
RESTAURANTCSUITE.COM
Restaurants are gaining back their sales, and we can fast-track their recovery: • Fueling demand for clients’ menu offerings • Profit optimization program when every penny counts • Recipe costing program for improved food & paper margins • Marketing solutions, including coaching and loyalty programs
ADVERTISEMENT
resurgence@arel7consulting.com | arel7.com
TABLE OF CONTENTS
FALL/WINTER 2021 04 Editor’s note 06 Trend pages 10 Engaging Gen Z 14 The Restaurant of the Future report 17 Ghost kitchens fueling expansion 21 Text marketing statistics 23 2022 Menu trends
BUSINESS Executive Editor Rick Zambrano contactrick@eaterypulse.net Eatery Pulse Director of Photography Anthony Torres Assistant Editor Margaret McConnell Editorial Designer Ashley McCarty
About Restaurant C-Suite Magazine Restaurant C-Suite Magazine is distributed by Eatery Pulse Media. Eatery Pulse is a primary source of national restaurant industry news and content, providing information services, consulting and a creative, customcontent studio for business. This digital magazine was specifically created for multi-unit restaurant executives. It delivers the most highly-impactful news for the restaurant industry’s top leaders and visionaries. Today’s C-suite executives and their managers need information that is carefully selected, meaningful and delivered in a seamless, cohesive fashion. Stay updated with all our content at subscribe.restaurantcsuite.net. Copyright 2021 - 2022 Eatery Pulse Media.
Contributor Eric Nomis To place an ad in any of our publications, contact sales@eaterypulse.net
Powered by On the cover: Photo by Anna Sullivan. Photo left: Photo by Louis Hansel.
RESTAURANT C-SUITE 3
CONSUMER
EXPLORATION
GLOBAL FARE APPEALS TO RESTAURANT PATRONS What new foods do consumers want to try when eating out? As it turns out, on-premises diners are attracted to “food from around the world”— according to trend-tracking firm Datassential. Global cuisine requires a higher amount of preparation skill and offers distinct flavors that pique diners’ interest. What is the lesson here? Global-fare restaurant operators hold an advantage in attracting consumers on their special night out. Americanfare restaurants are wise to diversify their menus and incorporate authentic foods from other parts of the world, and/or from farther afield within the melting pot that is the United States.
Source: Datassential “Simply Smarter Webinar”.
Photo by Louis Hansel.
RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 8
Entrees comprise the most global fare consumption 39%
Meat entree
24%
Noodle/rice dish
10%
Sandwich
6%
Appetizer/side dish
5%
Snack
4%
Soup Salad
2%
Condiment/sauce
2%
ADOPTING
TECHNOLOGY
‘RESTAURANT OF THE FUTURE’ Deloitte’s The Restaurant of the Future: “People want to feel safe eating food.”-
food to instill confidence in the dining experience,” says the Deloitte report.
—It’s that simple. But the pandemic has created a whole new paradigm surrounding consumers’ sense of safety inside businesses, particularly in restaurants.
In keeping with these trends, operators can use their safety protocols to help bring back customers and keep them. They may even be able to charge a premium for these practices. A total of 55% of respondents are willing to pay between 10% and 50% more to feel secure about the safety and cleanliness that surround the preparation and transport of their food. These practices must be transparent.
Enhanced cleaning and safety protocols are paramount: a total of 33% of consumers indicate that enhanced cleanliness and safety protocols are important to returning to on-premises dining sooner and dining out more frequently. Detailed cleanliness is predominantly an expectation of Boomers (32.3%), GenX (23%) and Millennials (25.2%); it receives less attention from Gen Z (4.9%). “Consumers must visibly see the procedures taken to protect the preparation and transport of their
“Safety is and will remain a prominent factor in the modern restaurant experience.”
Consumer demographics of those who prefer enhanced cleanliness and safety
4.9%
25.2%
23.0%
32.3%
14.5%
Generation Z
Millenials
Generation X
Baby Boomers
Silent Generation
Source: The Restaurant of the Future: A Vision Evolves.
Photo by Chipotle Mexican Grill.
RESTAURANT C-SUITE 9
How to attract, engage Gen Z consumers By Eric Nomis
It requires multidimensional planning
Understanding the Gen Z consumer is paramount to restaurant operators’ survival in this now-digital-heavy world. In this new era, accelerated by COVID-19, consumers of all ages are embracing technology adoption; however, Gen Z consumers will be the most demanding when it comes to convenience and technology. To attract and market to the Gen Z consumer, restaurants must adapt with strategies that make convenience their first priority, and keep menu innovation as a top imperative. RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 10
Gen Z: a generation accustomed to the ultimate convenience, underpinned by technology. Photo by Lucas Clarysse.
Attracting Gen Zers through creative, relevant menu offerings
Future of Plant-based Snapshot: The Evolution of Plant-based Continues”.
Menus will need to show diversity and creativity. According to researchers, Gen Z consumers (typically, those born in the midto late-90s through 2010) are adventurous in their dining habits, but also tend to skew toward flexitarian, vegetarian, and generally healthy foods. This puts culinary creativity in the forefront, as restaurants incorporate international influence in their kitchens.
Consumer demand for plant-based foods has remained consistent even through the pandemic, due mainly to Gen Z and Millennial consumption. According to NPD’s report, one in five adults indicate they want more plant-based foods in their diets—a trend that continued throughout 2020. The International Food Industry Council notes that 52% of consumers aged 18 to 34 are more likely to have tried a diet of some kind. Plant-based diets are the 7th most popular regimens overall, following the Ketogenic or high-fat diet and flexitarian diets.
Gen Z and Millennials are almost singlehandedly driving the trend toward meat and milk analogues, reports NPD, a food research firm based in Chicago. These younger generations are making choices that are sustainable for the planet, healthy for themselves, and socially conscious for causes such as animal welfare, NPD reveals. “As consumers continue to prepare more meals in the home and younger generations cook more, plant-based foods and ingredients will be a part of their repertoire,” says Darren Seifer, NPD food industry analyst and co-author of “The
Gen Z has become a key target audience of WOWorks, the parent of Saladworks, Frutta Bowls, Garbanzo Fresh Mediterranean, and The Simple Greek. As Gen Z consumers and Millennials comprise 60% of the US population, these consumers are an appealing customer base. The company says this demographic seeks food that is healthy, nutritious and satisfying. Gen Z consumers tend to be more adventurous eaters, while at the same time valuing simplicity and clean-label foods. Many RESTAURANT C-SUITE 11
‘The Restaurant of the Future’— convenient, digital, clean By Eric Nomis
Deloitte report reveals medium- to long-term changes in consumer behavior in wake of pandemic
RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 14
Marketplace restaurant formats can carry grab-and-go meals, designed for convenience and perfect for carryout. Photo by Ella Olsson.
A new report from Deloitte suggests restaurants need to respond to consumers’ digital adoption and desire for off-premises dining due to their experiences with the COVID pandemic. As a matter of fact, the ongoing pandemic has permeated consumer perceptions of dining at restaurants and ordering their food. The Restaurant of the Future: A Vision Evolves notes that although dining out is on the table, frictionless ordering tops the menu with respect to consumer needs. Restaurants that implement cleanliness and safety protocols in transparent ways will best engage customers looking to return to on-premises dining.
Adapting to consumer desire for convenience, safety According to Deloitte, 64% of consumers do not plan to return to pre-pandemic levels of on-premises dining within the next six months. This means that restaurants will need to embrace and deploy convenient, off-premises dining options. Consider the latest statistics:
• 61% of consumers now order carryout or delivery at least once per week, up 29% from one year ago and 18% prior to the pandemic. • 67% or about two thirds of on-premises diners prefer to order food through digital channels. • 33% of consumers consider enhanced cleanliness and safety protocols important in returning to dining more frequently and sooner. COVID has driven many of these changes, notes The Restaurant of the Future. The report uses data from a survey of 1,000 Americans conducted in September 2021. Respondents had ordered food from restaurants within the last three months. Jean Chick, principal, Deloitte Consulting LLP, and US restaurant and food service leader, commented, “It’s been said that the only constant is change, which holds true for the restaurant industry today. The pandemic has RESTAURANT C-SUITE 15
initial capital outlays as the traditional verticals. The same is true if those operators traditionally outside of franchising choose to expand by launching new corporate locations, internally. The reduced cost and time savings for expansion through ghost kitchens can fast-track corporate growth.”
Yet, a model that needs further testing The economics and operational feasibility of the ghost kitchen model are still in question. The model represents different cash flow opportunities, depending on the vantage point. Many ghost kitchens utilize third-party restaurant delivery services; those costs can be excessive, reportedly more than 30% as a starting point. For larger operators, who can negotiate lower fees and have stronger restaurant unit economics, the fees aren’t as great a concern. While younger generations may have grown accustomed to fees as part of the convenience of delivery, many consumers may still hesitate to pay such a steep price to have a meal delivered. Ironically, this sentiment could hold the off-premises model to a slower growth rate than that generally touted in industry and media circles. ClusterTruck provides a model that doesn’t add fees to the check and has no middleman in the process. This particular ghost-kitchen model also boasts an incredibly fast delivery experience of hot food within minutes of ordering, along with the diverse food selections of its multiple-menu format.
Saladworks is bringing its healthy meals to new markets via nontraditional units, including ghost kitchens. Photo by Saladworks.
RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 20
If there’s a lesson to be learned about the challenges of the ghost-kitchen model, operators may want to review the latest analyses of REEF Kitchen’s operations. According to reports from The Wall Street Journal and Restaurant Dive, the operator has amassed multiple health and safety violations in more than one market. In addition, its economics are somewhat upside down, suggests reporting from Restaurant Dive. Daily costs can exceed daily revenues by about $600, although it’s not clear if clients are footing that particular bill.
Text message marketing the right fit? By Rick Zambrano
New report shows effectiveness of text message marketing programs for restaurants
Text message marketing subscribers visit 44% more frequently than nonsubscribers, according to a report from Mobivity. Based on data from millions of transactions from 2018 to 2021, Mobivity saw spend increase 23% once consumers joined. In addition, over a six-month period, text subscribers were valued at an additional $12.15 on average in incremental revenue, although some brands saw an amount as high as $16.59, based on the findings of the Mobivity 2021 Restaurant Text Marketing Benchmarks Report. RESTAURANT C-SUITE 21
Text messages are getting a significantly higher open rate than email marketing. Photo by Omid Armin.
The retention of text subscribers is also much higher than that of email subscribers, notes Mobivity. Surprisingly, 96% of text subscribers remain in the program after 90 days, and after two years, 90% remain in the program. This is twice the retention rate of apps and three times compared to email subscribers. The average six-month spend rises within a range of $5.37 to $16.59. Restaurant operators can apply the 23% increase in spend to their average check to determine the incremental benefit of a text marketing program. Given the high retention rate of text subscribers, the incremental revenue opportunity per customer is tremendously high.
messaging open rates 5X-20X better—and often with higher adoption rates—than other owned media channels, this lifeline helps restaurants connect with guests and offer them valuable offers that drive traffic and spend.” Data from Mobivity show that 60% of redemptions occur within the first 24 hours, and 39% of redemptions happen on the same day that the subscriber receives them. There is a greater immediacy in text messages as more than 30% of redemptions occur within the first three hours after receipt; and nearly half of those within the first hour.
Mobivity found that the open rate of text messages is 98%, which is much higher than both the email open rate of 20% and the app open rate of 5%. Given the high open rates of text message marketing programs, they are ideal for restaurant operators who want to rise to the forefront of consumers’ attention.
During the pandemic, the Papa Gino’s and D’Angelo Grilled Sandwiches brands, a client set of Mobivity, saw their mobile messaging program deliver an average return of marketing spend of 440%. The two brands have also seen much higher opt-in offer redemptions than the average, with Papa Gino’s having a 50% redemption rate and D’Angelo averaging a 47% redemption rate.
“Restaurants of every kind were particularly hit hard at the onset of the pandemic and continue to experience staffing, supply chain and traffic issues. The No. 1 takeaway they’ve learned is that building an efficient, direct to consumer owned media channel is critical — and text messaging enables that,” said Dennis Becker, Mobivity Chairman and CEO. “With text
Becker noted that traditional mass marketing techniques are becoming less effective because consumers expect messaging to be more personalized and authentic. Based on their online habits, consumers will engage more with first-party-data and brands will have more control of their successes as they generate oneon-one messaging with consumers.
RESTAURANT C-SUITE | Restaurant news that’s fresh, informed, inspired (by you) 22
2022 Culinary Forecast By Rick Zambrano
National Restaurant Association reveals top trends in partnership with chefs from American Culinary Federation
The 2022 What’s Hot Culinary Forecast predicts a more health-centric future: healthful and plant-based foods are trending; global and non-traditional flavors are impacting breakfast and snacks, and better packaging is becoming key. The National Restaurant Association publishes the forecast annually, using insights and survey responses from hundreds of professional chef members of the American Culinary Federation. RESTAURANT C-SUITE 23