Well, we all know the restaurant/takeaway/food industry has undergone a transformation with the arrival of COVID. Lockdowns, staff shortages, supply problems, customers changing the way they want to eat – it’s been a minefield out there.
But not all is lost – there is in fact, much to crow about. But the same old just doesn’t work most of the time these days.
Here are the significant changes we note for the future of food in franchising.
1.Yes, we are back to eating out
Most of us are happy to dine out these days (89% going out once a month vs 59% in October 2021 – OpenTable).
A recent guest on my Franchise Simply Radio Show, Wes Lambert, a hospitality industry expert, told me our monthly spend on the restaurant industry has increased from $4bn per month pre-COVID to $5bn per month today. The hospitality industry is booming. Not everywhere mind you. The CBD is probably not performing so well but with staff choosing to work from home, purchasing up to 5 meals a day (breakfast, mid-morning coffee, lunch, afternoon snack, dinner) the suburbs and regions are definitely flying.
But as customers we want more control over what we get.
We are still choosing to order takeaway or delivery to eat in and 84% want our local restaurants to continue to offer delivery and/or takeaway for convenient dining in. Which means when we do dine out, it’s for fun or to celebrate special events/days.
The experience matters.
We like being treated as a regular, we want to be able to choose where we sit (outside or in etc), we want the experience to be special. Great customer service and definitely great food are important.
2. But we are in a tricky hospitality business environment
I don’t need to tell you this. Everyone can see it happening – customers as well as those working in the industry.
The hospitality workforce
With the COVID lockdowns we lost our migrant and visitor workforce, and this has hit the hospitality industry hard. Today Wes tells us the industry is 100,000 people short, and this is only going to increase as we enter the summer silly season.
In addition, Award rates have recently increased so staff we can put on are more expensive.
The supply chain
Supply was significantly affected by COVID lockdowns, lengthening delivery times and increasing prices for difficult-to-source products. The situation has not improved.
The food industry has also been very badly affected by the La Nina floods and the fires which preceded them. Food is more expensive and with the third event coming up, the situation is only expected to get worse. It’s going to be difficult to get lettuce!
Additionally, rent is a hidden issue. Iconic restaurant closures in Melbourne CBD recently brought these to our attention.
Restaurants were given reduced rents through COVID. But now landlords want to regain some of the back rent.
And now, we are experiencing the highest CPI we have faced for a very long time. In the past, rents would go up automatically each year by CPI (about 0%) plus 1 to 3% and leaseholders factored this into their costs.
Today, CPI is going up by 6% still with plus 3%. Too much to handle when labour and supply costs are also rising significantly.
3. So, how is the restaurant industry starting to cope
As Wes points out, you must work smarter and become more flexible.
Look after your staff
Traditionally restaurants would open six or seven days serving three meals. This is probably no longer possible with a pricier and more difficult to acquire workforce.
So, look at your shifts. When is it profitable to open? Maybe you should only be open for the 5 highest profit days a week.
You won’t lose out, Wes assures us. Your customers will understand and the demand on the days you are open will just increase. And your staff will be happier.
Be mindful of what you purchase
Wes advises choose what is in season and what is locally available and have a flexible menu which can accommodate this flow.
Know what your customers order on which days of the week and place your orders to cater for this flow so there is less waste.
As a result, Wesellrestaurants.com advise menus in the US are being streamlined. Tighter menus with fewer selections and higher prices to offset the rising cost of labour and the inflationary rate of food costs. Many restaurants are currently doing away with the typical 8 to 10 items per category and replacing it with 10 items total.
And, in response to the growing consumer demand for healthy eating, those menus will be focused on smaller serves, and include healthier, often cheaper plant-based offerings,. Customers are also seeking variety and new types of food choices, from global cuisines to unusual ingredients.
But don’t go as far as one of my local restaurants which has always had a reputation for beautiful fine Italian dining. Today it has reduced the size and quality of its menu, now offering poor, Australian Italian café food with gluggy sauces which have been kept in the bain-marie for far too long at an eyewatering increased fine dining price. They’ve lost me – I’d rather go to the local pub for that quality of food – more fun. You need to be smarter than that.
Automate and bring in the tech
Finally, and this probably should have been at the top of the list – food service in all categories is automating.
A recent news article promoted on the ABC reported that Miso Robotics Inc in Pasadena has started rolling out its Flippy 2 robot, which automates the process of deep-frying potatoes, onions, and other foods in fast food restaurants. Apparently Flippy 2 is faster, more accurate, more reliable, and happier than most humans doing this job.
Wes also describes how robots are used to serve food and clear plates from a central hub to process them for washing up and cleaning.
These extreme robots, while on the way, are not the main game for 2023 though. The thing is, the most successful food outlets are using technology to automate time consuming processes such as customer booking, ordering, payment, and table management through the POS system. The POS also can take away much of the work associated with ordering supplies against expected customer flow rates through the week and handle staff rostering through apps which connect to the central system. Marketing can also be automated. The thing is that today there are very sophisticated systems which can be connected to each other and are easy to use. It’s not worth trying to cope without digitisation.
Such automation takes so much away from staff so they can then focus on the main game –looking after your customers, preparing great food and making you profitable.
Brian Keen has been involved in the franchise industry for more than 30 years and, today, is the Founder of Franchise Simply, Systems2Grow and Microloan Foundation Australia. His on-the-ground business experience as a multi-unit franchisee, franchisor and consultant helping many of the big names create their own franchise systems and growth over the years has been fed into Franchise Simply, helping today’s SMEs grow their business by franchising. https://franchisesimply.com.au/ https://systems2grow.com/ https://www.microloanfoundationaustralia.org.au/