Warren Solochek looks at the future of social responsibility efforts as the restaurant industry emerges from COVID-19-related dining room closures in this fourth installment of FE&S’ 2020 Vision series. Solochek offers his insights as an independent foodservice industry consultant with nearly 40 years of industry analysis experience.
As restaurants continue to reopen their dining facilities after months of shutdown, the environment in which they will function will be dramatically different — and substantially more difficult — than it was at the start of 2020. Among the numerous questions restaurant owners now need to answer, perhaps the largest one is, can I make money with seating limited to 50% or less of capacity? If an operator cannot be profitable during the months that seating restrictions remain in place, the next biggest question becomes, can the business generate enough revenue to hold on until state or local authorities lift the limitations?
Those two questions, naturally, beget one more important one: How does a restaurant incentivize potential customers to visit its establishment instead of visiting another operator? What actions can an operator take — and publicize — to increase the chance that their business becomes the restaurant of choice? What actions will differentiate one establishment from competitors? What strategies will enable operators to emerge in a stronger competitive position than they held before the coronavirus led to widescale closures across the country?
Increasing the focus on carryout and delivery, even once dining rooms open, represents the obvious first step. Many operators took this step to survive the shutdowns, and off-premises dining will remain a key offering for restaurants in the months to come. Online ordering, for example, is no longer the sole domain of Millennials and Gen Zers. As the coronavirus forced Americans of all ages to stay at home, more Gen Xers and Boomers had the opportunity to hone their online shopping skills. Online food purchasing has grown by leaps and bounds since mid-March. Comfort levels with online grocery purchasing will translate to a greater comfort level with ordering food online from restaurants for many of the same reasons.
From a consumer’s perspective, any opportunity to stay safe and still get restaurant food is a positive. The easiest way to accomplish this is through carryout or delivery. Any operator not willing or able to make this transition will have a difficult time competing for the foreseeable future.
Assuming a foodservice operator successfully transitions to digital ordering, what will make it stand out in a very competitive environment? Perhaps the best approach is not to focus on what’s changed, but instead concentrate on what remains the same in the consumer mindset.
Social responsibility is a concept that will continue to resonate with consumers. This can take a variety of formats and actions, but a few key areas to focus on include an emphasis on limiting food waste through a streamlined menu, locally sourcing as much as possible and using environmentally friendly packaging. During these emotionally charged times, actions must speak louder than words. Customers will quickly see through operators that simply pay lip service to being socially responsible, and they will seek other alternatives.
Menu Management and Local Sourcing
Start with a review of the current menu. Can the operation eliminate some items on the menu to reduce inventory costs? Over time, many operators have expanded their menus in the hopes of expanding their user base. Not every item or preparation method added to the menu results in the increased sales that justify increased food inventory. A portion of that food inventory may even go bad before entirely used. Deleting items from an existing menu is often difficult because of emotional support for food components. Instead, use facts to support their continued use. In today’s operating environment, menus need to be closely scrutinized to determine which items an operator can trim or eliminate without alienating loyal customers.
As Americans return to restaurant use in greater numbers, operators would be wise to focus primarily on menu items considered old favorites with broad appeal that hold up well during carryout because a growing percentage of food sold will be for off-premises consumption. Eliminating items that don’t travel well may lead to short-term savings, namely in the form of inventory reduction.
It is also worthwhile to evaluate portion sizes. Are any portion sizes too large for a single eating occasion? Reducing portion sizes saves on food costs, lowers menu prices and reduces unwanted food waste.
Indeed, making effective and efficient use of ingredients has become more important than ever before. Due to the disruptions within the U.S. supply chain since March, food waste of all types has become much more visible to Americans. More Americans are wondering what can be done to support a cleaner, greener world that limits waste of all kinds.
One simple act of support for this cause is when consumers opt to visit restaurants that visibly work to minimize food waste and that actively work to build a cleaner environment. Restaurants demonstrating their support to limit food waste and provide a more environmentally friendly source of food, whether one eats on premises or off premises, will get the vote of a growing number of Americans who are seeking a meal not prepared in their own kitchen.
The facts surrounding food waste in U.S. restaurants are well documented. According to some estimates, a single restaurant can produce up to 150,00 pounds of waste a year. Yet, for many restaurant operators, reducing waste has been a low priority as they have focused on other operational and labor planning matters. As operators prepare for reopening, a stronger commitment to reducing waste should become a higher priority because success in this area should lead to cost savings.
Operators looking to appeal to environmentally concerned consumers often emphasize their local sourcing efforts. Transportation of locally sourced foods leads to a smaller carbon footprint than food shipped from longer distances. This approach often manifests itself through descriptors that position specific menu items or ingredients as being sourced either directly from the farm or from a local purveyor. Use of these terms on a menu implies fresher/healthier foods because they are sourced from locations closer to the restaurant. Importantly, healthier foods are perceived as having higher value and as such can justify a higher menu price. Higher menu prices will offset the potentially higher food costs associated with sourcing from local providers and can result in the creation of offerings unique to a specific operator.
Fast-food operators tend to be part of larger chains with more uniform menus and food distribution sources, thereby restricting the local food options offered to customers. This becomes a competitive advantage for full-service operators relative to their lower-priced competition.
From the consumer’s perspective, the most visible place to introduce eco-friendly solutions is with the packaging utilized for carrying food home.
Many local and state statutes regulate how retailers, including restaurants, make their food available for transport. A number of municipalities have already passed regulations, or have plans to within the coming two years, that ban use of plastic bags. And in many municipalities, polystyrene clam shells have already been banned, requiring operators to utilize more environmentally friendly forms of packaging.
Packaging serves as an important but easily overlooked tool to reinforce a restaurant’s image. What an operator chooses says a lot about its commitment to environmental sustainability. Studies have shown customers are increasingly willing to pay more for sustainable brands at retail as well as foodservice. Though an operator cannot ignore the cost of packaging, cost should not be the only factor taken into consideration. Low cost does not equal perceived value.
Luckily, more packaging manufacturers now make fiber-based products that can more easily be recovered and recycled. Packaging manufacturers have created cardboard and fiberboard containers that retain heat better and do not leak through when they contain sauce or gravy. Operators should consider if they have the ability to place their logo and other messaging that reinforces brand image on the packaging. The same holds true for the bags used for carryout and delivery. Stronger paper and fiber-based bags provide an uncluttered space for logo placement, website URLs and phone numbers. Restaurant operators are rapidly moving toward the use of paper bags for takeout and delivery. Some of these bags can even become reusable carriers.
Smart operators across many retail verticals strategically utilize packaging to their advantage. A best-in-class example of this concept are Trader Joe’s grocery bags, which prominently display the brand and logo. Within the broader retail channel, Lululemon has created a very strong advertising campaign with its reusable bags that contain positive messages such as Breathe Deeply.
Actions Speak Louder Than Words
One solid example of a foodservice operator working to minimize waste across its operations is Sodexo. The foodservice management company’s efforts have focused on two key areas: a reduction of single-use plastics and a reduction of food waste created before customer consumption.
In 2018, Sodexo launched a plan to eliminate single-use takeout bags and stirrers by 2019; remove polystyrene foam items like cups, tops and food containers by 2025; and shift to providing straws only upon request from customers. The goal of this plan is to eliminate 245 million pieces of unnecessary single-use items.
To deal with food waste, Sodexo initiated a data-driven waste reduction program in 2019 across 3,000 of its locations and continues to roll it out to more sites. This initiative strives to quantify where and how much waste Sodexo generates in the food preparation process in each unit and identify the causes of the waste in order to reduce levels by up to 50%. While not all restaurants are capable of reducing waste by 50%, every operator is capable of developing a process to reduce it, regardless of size or format.
Many operators will only get one chance to reacquaint themselves with their customer base and demonstrate that they still can provide a satisfying meal at an affordable price. For that reason, and many others, operators will define success differently than they have in the past. The restaurant industry can no longer expect demand for its products and services to continue to grow. If operators can open and rebuild their sales to a level that will enable them to stay open through the next 12 months, they will have achieved success.
Luckily, Americans maintain a healthy appetite for a good restaurant meal. The challenge for operators is to develop creative new go-to-market strategies and execute them as well as possible.