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


Three Ways to Keep Your Restaurant From Failing

The economic forecast for the restaurant industry is discouraging—restaurant markets have become oversaturated, labor and food costs are rising, overall sales look weak, consumers are constantly searching for something new and maintain unpredictable loyalties, and banks and investors are not eager to invest.

For current and aspiring restaurant operators, having a game plan is key. As Paul Barron discusses in the above video, there are three key strategies for ensuring that your restaurant succeeds: Cross Competitive Marketing, Multi-Platform Retargeting, and Content Marketing & Execution.

Cross competitive analysis is all about covertly acquiring your competitors’ customers. Tools like Sprout Social are essential for the survival of opening or struggling restaurants. Sprout Social uses digital customer relationship management (CRM) to build lists of the types of customers and influencers your competition is catering to—all to ultimately determine what those customers are looking for in a restaurant.

According to Barron, operators tend to make the same mistake. “They do blanket advertising on digital and think they’ve checked the box,” says Barron. “That’s not how you do digital marketing.” List building and targeting, social conquesting, and studying browser behavior is paramount.

Another helpful tip? Geo seeking. Cell phones are constantly sending data from the apps consumers use to a data provider—and that data provider subsequently sells the data to companies trying to target those consumers.

Operators who choose to acquire that data can target their marketing by geo location, competitors, lookalikes, or influence. Advertisements can even be dependent on a customer’s browser behavior.

“Don’t think about your competition as just competition,” adds Barron. “Think about your competition as their customers.”

To learn more about the value of bounce back cards, training a SEAL team of employees, and the importance of having a story, check out the video above!

Produced by:

Paul Barron

Paul Barron

Editor-in-Chief/Executive Producer


Lululemon Enters the Restaurant Industry with Fuel

Lululemon is no longer just an athletic apparel company: the retailer is opening a new restaurant in the Lincoln Park neighborhood of Chicago.

Called Fuel, the food and beverage concept boasts a full kitchen and offers smoothies, salads, and protein boxes as well as burgers and beer for breakfast, lunch, and dinner. The restaurant is part of a larger 20,000 square foot Lululemon store with two fitness studios.

According to Maureen Erickson, the vice president of experiential retail for Lululemon, this was a natural transition. “Our guests want everything under one roof,” says Erickson. “Building community through connection has always been at the heart of Lululemon. Both online and offline, and Lincoln Park is the physical manifestation of the heart and soul of Lululemon.”

Fuel evokes a fast casual feel with grab-and-go options as well as bar seating and dining tables. An additional space called the “connection room” is designated for Lululemon patrons looking to have a snack or drink after finishing a class.

“Food fuels you, but good food fuels you emotionally, too,” adds Erickson.

Lululemon is not alone in this endeavor: other retailers have been making similar ventures. Crate and Barrel also just opened a full service restaurant this month. Called Table at Crate, the restaurant is designed to showcase Crate and Barrel furniture, plates, and silverware for customers.

Table at Crate is “Crate and Barrel come to life,” says Bill Kim, the chef for Table at Crate. “This is an interactive experience.”

The executive chef of Fuel, Paul Larson, suggests that Lululemon has a different approach. “We want to make sure we always stay on trend with what they need.” The overall Fuel experience does not overtly reference the retailer’s products. The menu is, however, designed with Lululemon’s typical customers in mind.

The menu caters to a number of diets. According to Erickson, Lululemon has a number of vegetarian and vegan patrons as well as burger-loving customers. She stresses that Fuel is “also for people like me who like to work out so I can eat a good cheeseburger.” The goal is flexibility.

Private Equity Firm Ares Management Acquires Cooper’s Hawk

Cooper’s Hawk has been acquired by Ares Management for over $700 million. Some estimates suggest the purchase price approached $800 million—an unthinkable number for many burgeoning restaurant chains.

Cooper’s Hawk offers consumers a unique restaurant-winery experience. The Chicago-based restaurant crafts its own premium wine with 50 unique blends. The wine is made in the chain’s suburban Woodridge production facility.

According to data from Restaurant Business, the deal is likely worth about 23 to 26 times that of the restaurant’s 2018 earnings before interest, taxes, depreciation, and amortization (EBITDA). Chicago Business estimated lower, calculating the deal to be worth 17.5 times that of the restaurant’s income last year. Cooper’s Hawk reported $31 million in earnings in 2018.

Experts compare the move to Fidelity investing $200 million in Sweetgreen in late 2018. The investment implied a billion dollar valuation for Sweetgreen, surprising some in the industry.

Current owners and operators Tim and Dana McEnery founded the first Cooper’s Hawk restaurant in 2005. The chain is understood to be the first restaurant-winery hybrid of its kind in the state. It remains unclear what the McEnerys’ role will be after the deal is completed.

Cooper’s Hawk currently operates more than 35 restaurants in ten states. The chain just opened a new location in Rockville, Maryland. Cooper’s Hawk also features a wine club that is now comprised of over 400,000 members. Club members pay $19.99 a month for a total of twelve company branded wines each year.

Why Data Ownership Should Be Key When It Comes to Tech in Foodservice

According to the National Restaurant Association’s State of the Industry 2019 report, “more than 8 in 10 restaurant operators agree that the use of technology in a restaurant provides a competitive advantage, and many are planning to ramp up their investments in technology in 2019.

This is great news for consumers but with so many choices in the technology sector, operators can be left feeling overwhelmed.

What’s important to remember is whichever tech advancement— whether it's their POS, online ordering, smartphone app, mobile payment, or loyalty program— operators decide to prioritize, it must make sense for their type of business and unique customer needs.

Watch the video above to learn how BurgerFi accurately figured out what tech advancements make sense for their business to get a proper ROI and how data ownership must be a priority in this day and age!

Produced and Researched by:

Vanessa Rodriguez

Vanessa Rodriguez

Writter & Producer