The GBQ Restaurant Team had the pleasure of attending the Restaurant Finance and Development Conference from November 7th through November 10th in Las Vegas. We were thrilled to be able to attend the event once again after the year hiatus due to the COVID-19 pandemic and to once again connect with numerous operators and professional resources throughout the country. We kicked off the conference Sunday evening when GBQ joined forces with C-Squared Advisory Group, Huntington Bank, and Hylant Insurance to host the second annual “Eve of RFDC” happy hour. We were honored to have over 70 attendees at the event from all restaurant segments as well as numerous consultants in the restaurant industry. We once again thank everyone for attending and we look forward to welcoming you again in 2022!
Monday kicked off the conference which had two overarching themes: labor and innovation. Following are our most significant takeaways from the conference:
Labor, Labor, Labor
It is no secret that labor is the bigger concern facing a majority of operators. No matter what is done, attracting and retaining talent while providing an exceptional customer experience is becoming a nearly impossible task. Here were a few ideas heard at the conference which have proven successful for some:
- Offer shift differential or holiday pay for hard-to-hire shifts.
- Think outside the box for hiring initiatives. Streamline the application process through the use of an employment application through your online app. Use the appropriate social media to target those you want to hire.
- Create a “no red tape” rewards system. Allow GMs to immediately recognize an employee’s efforts by providing gift cards or other perks.
- Let employees know that there is a career path in the restaurant industry and lay out the career path and opportunities on day one.
- Prioritize culture over compensation. Make your restaurant the best place to work. Is your store a positive work environment or do negativity and overworked employees create a grind atmosphere? Examples include closing down your location for a day or early for a team outing or providing more robust PTO or sick leave policies.
- Include your team members in important decisions. For example, when implementing a new POS system, include individuals from all roles in the restaurant to test and provide feedback as they are the end-users of the product. Listen to things that will make their life easier.
Supply Chain and Inflationary Pressures
Getting product now is more expensive and takes longer than in the pre-pandemic days. In order to offset the inflationary and supply chain pressures, operators offer some of the insights that have helped in their operations:
- Upsell higher-margin products (i.e. salads) when a customer orders a low margin product (i.e. any protein product).
- Use digital menu boards or digital menus (through a QR Code) to quickly remove menu items when an ingredient is not in stock or to implement a price change when warranted.
- Adjust product prices based on the customer’s delivery method. For example, a customer who gets delivery through a third party is willing to pay for convenience and will likely pay a higher price than someone ordering curb-side or dine-in.
- Use promotions to push products with less inflationary pressure.
Continual Focus on Off-premise Sales
Most agreed that the push to more off-premises sales is here to stay post-pandemic. The first piece in driving off-premises sales is the digital experience. Conveying the dine-in customer experience has been paramount (i.e. the use of pictures when ordering menu items versus a radio button and description) as well as a seamless ordering experience including the selection of the delivery method. Delivery has also pivoted through the use of dedicated drive-thru lanes for mobile ordering. Some concepts have introduced small lounges for third-party delivery to use while they wait for food. In conjunction with data-driven decisions through loyalty programs, some concepts are requiring registration into loyalty programs in order to use any digital platform used in the off-premise experience.
Another significant uptick is the genesis of ghost kitchens. Since a ghost kitchen is mostly an intangible concept, the barrier to entry is low along with the risk of any failure of the concept due to the low amount of capital expenditures required. A ghost kitchen can drive a new experience to a customer through the development of a digital app while using the same resources and space as an existing concept. Ghost kitchen concepts have been popular as an add-on for single concept operators but are currently being explored as an idea that can be franchised as well.
Data Analytics and Loyalty Programs
By some estimates, technological adaptation within restaurants was five to ten years behind other industries prior to the pandemic. Due to the impacts of the pandemic, many concepts are beginning to take a more in-depth review of how they use technology, specifically within the data analytics arena. Through the use of loyalty programs, restaurants are able to capture more details on the habits of their customers including their purchasing frequency, ticket size, and items purchased. This data can empower concepts to up-sell (primarily through a digital ordering platform), tailor promotions, and implement price increases based on customers buying habits and buying history.
Data analytic tools and teams are a significant investment and dedicated teams exist within much larger concepts. For smaller concepts, developing data analytic tools and writing customer loyalty programs can be much more difficult and expensive. One idea heard at the conference was to team with local colleges to have data analytic majors assist in writing these programs and monitoring the data points.
Re-think Social Media
Facebook and Twitter are now considered by some as the “dinosaurs” of social media. The younger generation gravitates to Instagram and, more recently, TikTok, which is currently one of the fastest-growing social media platforms with leading engagement rates. Use the newer social media platforms to your advantage to create buzz when opening a new location or touting your culture for new hires. One speaker at the conference indicated he did interviews with The New York Times and The Wall Street Journal for the opening of a new concept in Manhattan. Meanwhile, his daughter was creating buzz for the new location on TikTok. On opening day, roughly 90% of the customers had heard about the new location through TikTok versus the traditional, and now old school method of periodical promotion.
Overall, while the pandemic had a significant negative impact on the industry, it has spurred a new (and likely a significantly delayed) innovation revolution that will have positive impacts on the industry for years to come.
Article written by:
Ryan Kilpatrick, CPA
Senior Manager, Tax & Business Advisory Services