The Restaurant Business Meltdown

Leaving or closing a business is challenging, and many operators wait long after their restaurant has stopped generating revenue to make a clear, though painful decision.

On this episode of The Barron Report, host Paul Barron sits down with author Kevin Alexander. Alexander is the recipient of the James Beard Award and the Mark of Excellence Award from the Society of Professional Journalists. Just released last month, Alexander’s book Burn the Ice: The American Culinary Revolution and Its End, discusses the culinary revolution that began in 2006. Barron and Alexander chat about the predicted recession and restaurant business meltdown coming for the industry.

“It’s the shark motto: move or die,” says Alexander. “I call this age the age of the operator. It’s the folks who are recognizing opportunities and are able to move quickly, do things efficiently, and have good management teams in place ready to jump on these opportunities that are succeeding.”

Companies that have a successful, air-tight concept can trust that that will be all the stronger for the expected recession. And, of course, money helps. “The operators that have enough capital [will] survive,” adds Alexander. For other restaurants, it is paramount that owners recognize when it is time to cut staff or close, and to quickly address a concept that is not working.

And in the move toward on-demand, customers are “caring less and less about where they get [their food] as long as it’s summer,” says Alexander. “It is really worrisome for independent restaurants who are trying to market themselves and stand out.”

However, as concerning as this trend can be for restaurant operators, he urges owners not to panic. “I don’t think it will all transfer over to this on-demand culture. If anything, you see the sustainability of places like movie theaters.” Much like watching a film, Alexander argues that most people will continue to seek the shared experience of dining regardless of what they can now have delivered to their front door.

Listen to the podcast to hear more about the problems of rent costs in major cities, the ever-changing Portland culinary scene, and the rise of ghost kitchens. And if you would like to keep listening, check out The Barron Report podcast on iTunes Now!

Produced by:

Paul Barron

Paul Barron

Editor-in-Chief/Executive Producer


VIEW BIO

Building a Menu That Differentiates Between Takeout, Catering, and Delivery

On this episode of The Takeout, Delivery, and Catering Show, podcast hosts Valerie Killifer and Erle Dardick chat with Tad Low to discuss the importance of menu differentiation within off-premise.

Tad Low is the Director of Off-Premise for Moe's Southwest Grill, an Atlanta based fast-casual restaurant chain with over 725 domestic and international locations. Low is leading a team that is working to bring delivery to the forefront of the guest experience.

When it comes to maximizing opportunity with off-premise, Low credits Erle at helping him understand the importance of recognizing the different revenue channels that exist within off-premise.

“We really have four main channels of revenue here. We have our in-store business, we have our catering business, we have our online business and we have now our third-party business. And understanding that each part of the business while representing a different percentage of our overall sales they each have a different impact to our bottom line,” says Tad Low. “And understanding that in order to maximize each of those channels we probably need to have a menu that is geared towards each of those segments.”

Learn how each menu for Moe’s Southwest Grill’s different revenue channels differ from each other along with more tips for off-premise success by listening to the podcast episode above!

Vanessa Rodriguez

Vanessa Rodriguez

Writer & Producer


VIEW BIO

Why Millennials are Still Willing to Pay a Premium for Food Delivery

We know that the Gen Y crew is using delivery services in massive numbers. So, what can restaurants do to hold onto sales? Or, better yet, grow those sales that are being driven around in the backseat of a Prius?

In some segments, delivered meals are hovering around 30% of top-line sales versus 10% just two years’ ago. The conversation is real and there are only semantic distinctions between sales within the brick-and-mortar and those that are on the road.

But why?

Looking for insight, go to the source. It’s not always having the answers, but merely asking the right questions.

Shutterstock

Shutterstock

What is it about delivery?

It's all about convenience, duh!

From skipping traffic to getting food from A-list restaurants but avoiding the crowds, leisure time is in the balance.

“I prefer the privacy of eating at home after a stressful day, knowing the bathroom is clean, and the amount of time [delivery] can save me,” says Samantha, a 23-year-old in Portland, OR, when asked about her decision to stay home.

“Delivery apps allow us to see all of our food options in one place without searching through Google maps or Yelp.” Solo diners chime in, as well. “I want to enjoy food from my favorite restaurants without having to leave my apartment. I’ll also [order] on work trips if I’m running low on time,” says Jacqueline, a 26-year-old recent transplant from Houston, TX.

Collective dining is still witnessed in the wild by the ubiquity of sharing plates and communal seating. Some have a better time than most can dream, so they stay home - together.

“[We] don’t have to worry about finding a place that everyone likes. We can all order from different places and it will come right to us. My one friend, she gets Chili’s delivered to her house!” says Abby, a 23-year-old in New Castle, DE.

Shutterstock

Shutterstock

Why not go to a restaurant for a meal?

The digital natives appreciate being unplugged from their surroundings. Interaction, though, is what happens behind a screen. So uninterrupted time matters. Abby jokes, “I don’t like servers constantly bothering me; if I want a refill or if I need something, I’ll let them know. Or I can just get it myself.”

Samantha, chimes in, “Crowds, wait times, not being asked for my ID respectfully - or being asked for it before I even order anything - is super annoying. Sometimes I feel like waiters and waitresses assume that we won't tip well because we are young and we receive poorer service than others.”

“I don’t like dining in [a restaurant] when I don’t want to deal with people or would rather [...] eat at my own place,” says Celine, a 25-year-old in Newark, Delaware.

The cost of dining on site has an expense that can be buffered by avoiding the restaurant. “Two pints of beer in Portland [Oregon] are equal to the cost of a six-pack. So for the cost of having drinks for two, you can buy beer for a week. When you order food in you also have your at-home entertainment, like Netflix or Hulu, which is also a big factor, and you drink whatever you want to,” says Samantha.

Shutterstock

Shutterstock

Are the costs that ride along with the order an issue?

“Costs can be a problem depending on the restaurant, with many online sites such as Uber Eats, GrubHub, and Seamless; they add extra [fees] for delivery and have more out of pocket for a tip, like spending $25 on a $15 meal,” says 23-year-old Jamil.

Samantha adds, “Certain apps do not explicitly tell you the delivery fee price until you are about to click 'buy.' I think they do this so you are too decision fatigued to go back and pick something else, but we always do. Especially if it’s a place we have never tried before.”

Does the charge sway the decision? Apparently not. “I’m content with paying delivery costs, especially if it’s a restaurant I frequent,” says 26-year-old Fortuna.

While some delivery services put quite a pinch on operators to pay 30% of a sale, the customers placing the orders are an adaptable breed. “It’s still usually less than what you would tip a waiter. It’s still more convenient to stay in. I’d rather pay the delivery fee,” says Abby.

Is the trend going to last a thousand years into restaurant life? We only know as much as the tweezer-wielding cooks and the baked-Alaska chefs that redefine what’s hot and what’s not.

Until then, pack it to go and don’t forget to staple the dupe onto the environmentally friendly bag loaded with Brussels sprouts, fish tacos, and quinoa bowls. So, yes, Netflix and Chill is a real thing for millennials and it’s often paired with food delivery.

Is The Future of Dining Digitization? Allset CEO Thinks So!

We are living in a world with a live and thriving “on-demand” economy.

From having the choice to watch your favorite TV shows on your own time and schedule, to ordering meals and groceries through your mobile phone or online.

Companies seem to have finally figured it out…

Time is of the essence!

People seem to be willing to pay for their precious time to avoid time-consuming, mundane tasks. And with so many efficiencies taking place in different aspects of people’s lives, consumers are getting accustomed to speedy services so they can get back to what’s most important to them.

This phenomenon has us thinking… Is the future of dining digitization?

On this episode of On Foodable Feature, we learn from Stas Matviyenko, CEO and co-founder of Allset—a San Francisco-based application that aims to help restaurants provide a more efficient dining experience to guests who are short for time.

Watch the full interview to learn how this app can help increase a restaurant operation’s bottom line, how the technology integration would look like, and costs associated with the service!

Will Thrive Market Become Amazon's Biggest Competitor in the Organic Food Space?

The E-commerce giant Amazon made its plans known to conquer the organic food space about a year ago when it acquired Whole Foods.

While the tech giant was working to revive the organic grocery chain, Thrive Market, the online grocery store specializing in natural and organic products, was quietly and rapidly expanding across the country.

Now, Thrive Market has expanded with new categories and is offering membership perks to compete with Amazon.

Customers pay $5 a month to be a Thrive member and are given access to a marketplace of all-natural foods, beverages, wines, supplements and medicines at a discount, ranging from 25 to 50 percent off. Thrive offers free two-day shipping too.

So what does Thrive Market offer that Amazon doesn't?

It's all about the products and how they are sourced.

“Amazon buying Whole Foods has created a big opportunity for us,” said Nick Green, the co-founder and CEO of Thrive Market. “Whole Foods has been the standard bearer for natural foods and organic products, but the challenge it has had is that many people don’t live near one, and many people can’t afford it. When you think about the Amazonification of Whole Foods, Amazon bought it for the real estate, and it’s tried to make it more accessible for everyone. That means you’re going to see different products on the shelves.”

Thrive Market won't be losing sight of its standards. All products on the marketplace are ethically sourced and non-GMO, along with other requirements.

“Already, Whole Foods shelves have Honey Nut Cheerios and Amazon Echos,” said Green.

Although Amazon has introduced products like these to the Whole Foods stores, Whole Foods CEO John Mackey recently said that the chain will be keeping niche products on the shelves that aren't found at common grocery stores.

“Not only are we not decreasing local foods, we’re increasing them," said Mackey to "Well + Good" in November.

But Amazon has lofty plans for Whole Foods and it is bound to change what products the chain carries.

“Amazon doesn’t want Whole Foods to be a top-five regional or specialty grocer,” said Cooper Smith, principal analyst at Gartner L2 to "Digiday." “It wants it to be a top-five national grocery chain. That’s going to impact the products you see being carried. National brands are hitting the shelves and are in talks whereas they might not have gotten a foot in before.”

According to Green, Thrive Market grew its 2018 revenue by 50 percent compared to the year prior.

See what else Thrive plans to do in the next year to become Whole Foods' biggest competitor at "Digiay" now.

But Amazon isn’t just going after the on-the-go consumer with its grocery deliveries, its cashier-less Amazon Go stores are going to pop-up across the country offering food options. Watch The Barron Report episode below to see how these stores will make an impact on restaurants, especially those in the QSR and fast casual segment.