Foodservice by Design

Team members from Profitality-Labor Guru discuss how industrial engineering can be applied to the foodservice industry.


Success in the Current Environment

Pivoting. New normal. Off-premises. Contactless. Virtual. Digital. These key words continue to dominate our restaurant-related conversations, as they have since March. And they aren’t going away any time soon.

Juan MartinezJuan Martinez, PhD, PE, FCSIThese action words do not apply exclusively to the way restaurants and other foodservice operators serve consumers. They also apply to your success, as a company, be that a restaurant operator, consultant, dealer, factory, rep or any other industry colleague. Successfully navigating a pandemic, in part, depends greatly on your ability to adapt by working remotely, embracing digital and more. Companies that have been able to pivot to the new normal — and what that means can change by the day — and offer off-premises and contactless/virtual products, are likely performing much better than others that have not been able to do this.

For consulting businesses like ours, the new normal includes remote data collection via cameras. It also led to increased use of computer simulation, which includes designing and testing concepts and operational systems remotely, without any contact. This approach can give operators and project teams a good idea of what will work and what won’t before building the physical restaurant.

And, like most of you, we’ve sat in on hundreds of remote meetings with clients and suppliers. We’ve also attended numerous seminars and other online gatherings hosted by industry organizations and colleagues. Although we’ve been physically apart from our clients and industry colleagues, we stay connected and continue our quest to drive efficiency and, ultimately, better unit economics. A daunting task in the best of times, achieving these goals takes on increased importance as labor requirements and customer demands continue to shift, almost daily, with state and local governments continuing to update their guidelines to slow the spread of COVID-19.

While the remote activities allow businesses like ours to keep working with customers and suppliers, one aspect of our approach can’t change: that’s providing a personal touch. It may be easy to say a foodservice operator should simply shift to takeout or delivery to ride out the pandemic, but the harsh reality remains doing so can be both tricky and traumatic. Even the seemingly rapid evolution of drive-thru can be a pretty complex proposition.

Delivery likely represents the most convenient way for customers to receive products. I mean, what’s better than having restaurant-quality food dropped at your front door? Just like those with drive-thrus, restaurants that offer delivery have generally thrived during these times. In that growth, third-party aggregators have become more important to many restaurants, even those that relied solely on their own drivers before the pandemic started.

For many years, Jimmy John’s advertised its “freaky fast” delivery using the employees from each location. Now the sandwich chain uses some third-party aggregators to support and enhance its sales and delivery business. This speaks to the old adage of meeting customers where they eat. More customers use these services due to the convenience, which introduces new revenue opportunities for concepts who had long been in the delivery game.

At the same time, concepts have been able to negotiate lower fees for the services, making third-party aggregator services more appealing. In addition, many concepts will mark up their pricing on third-party sites, since customers have shown a willingness to pay a bit more for the convenience this service provides.

To ensure a profitable business opportunity, though, labor costs must stay fixed, which is often easier said than done when operating in a world dominated by off-premises, virtual and contactless business. A detailed labor analysis often shows virtual sales take less production labor than in-store sales. In some cases, concepts may make more net revenue and profit from third-party aggregator sales than from in-store sales. This represents a new normal for restaurants that has come to fruition in just a few months.

Speaking of labor, it is more critical than ever for restaurant managers to keep their eyes on labor costs and evolve this side of the business, as customer demands change, which seem to happen on a regular basis. One thing that has not changed is the importance of having the right labor, in the right place, at the right time, doing the right things.

While I can appreciate everyone’s use of the phrase new normal, I would suggest that it is important to understand that in some ways, this is no different than before. Change has been a constant in the industry. What is different this time, though, is this change is happening at a faster rate than before.

This is likely even true in our new lives. For me, when the pandemic started I had six grandchildren; now I have nine. Talk about a new normal!

Now that you have read this, I want to challenge all of you to think about how you continue to change and evolve your business model to keep up to date with the daily evolution in our industry that will likely continue for a while. The recent elections just added more change to this, be it at the local, national and global level, just like the pandemic has. A recommendation I give you again is to take on a continuous improvement mentality. Accept the reality and figure out how to continue to “pivot” and what you need to do to continue to evolve and thrive in the virtual, digital and contactless new normal.