Supply chain

Guests sitting at the bar inside a restaurant
by David Klemt David Klemt No Comments

Datassential’s State of the Operator 2022

Datassential’s State of the Operator 2022

by David Klemt

Guests sitting at the bar inside a restaurant

The latest addition to the Datassential FoodBytes research series shares insights into the top three challenges most—if not all—operators are facing.

Now, some of what the report reveals paints a bleak picture. Inflation, the labor shortage, and supply chain issues persist even past the midway point of 2022.

However, operators are a tenacious and innovative group of business owners. Of course, that tenacity seems to manifest in people thinking this industry can weather any storm. That perception can come at operators’ detriment. Exhibit A: The Inflation Reduction Act of 2022 not including replenishing of the RRF. But, I digress.

“The State of the Operator & the Road Ahead,” which you can download here, is helpful and informative. As you may be aware, we’re fans of Datassential and their FoodBytes reports. In fact, you can find our synopses of FoodBytes reports here and here.

Below are some key points that operators should be aware for consideration. I strongly urge you to download this free report today.

Operator Outlook

First, let’s take a look at traffic. As Datassential points out, some hospitality business segments are performing better than others currently.

In large part, this is due to two factors: People working from home, and people returning to travel. So, operators who rely heavily on commuters and in-person workers are struggling. On the other hand, operators inside or around hotels are, per Datassential, performing the strongest at the moment.

Interestingly, though, nearly half of operators (47 percent) are seeing an increase in traffic in comparison to pre-Covid levels. Fourteen percent of operators are reporting no change in traffic. Unfortunately, traffic is lower for 39 percent of operators.

Next, sales. In comparison to pre-Covid times, more than half (51 percent) of operators report an increase. Again, 14 percent of operators are experiencing no change. But 35 percent of operators are experiencing a decrease in sales.

Finally, profit margins. Half of operators may be seeing increases in traffic in sales, but profit margins are taking a hit. On average, the industry’s profit margin is now hovering at 13 percent. That’s an eight-percent drop in comparison to pre-Covid levels.

Segment Performance

The findings regarding profit margins are likely to be the most alarming to operators. Historically, our industry has operated on razor-thin margins for decades. Dropping from an average of 21 percent to 13 is concerning.

However, context is important. The segments seeing the lowest profit margins in 2022 are: Business & Industry (B&I), Healthcare, and Colleges & Universities (C&U). Again, remote work (and learning) are largely responsible for those particular segments watching their profit margins tumble.

The strongest performers are: Quick-Service Restaurants (QSR) at 17 percent; Fast Casual at 15 percent); and Midscale, Casual Dining, and Fine Dining, each at 13 percent. Lodging is just below the current average at 12 percent.

Operator Adaptation

Inflation, rising food costs, supply chain issues, labor shortages… Operators are finding ways to cope, and in some situation, thrive.

Unsurprisingly, the vast majority of operators are increasing menu prices. In the past 12 months, 77 percent of operators have raised menu prices at least once.

These increases range from one percent a staggering 30 percent. However, the majority have kept these increases to one to ten percent. Most (31 percent) have implemented increases of no more than five percent. Just one percent of operators boosted prices between 25 to 30 percent.

Of course, raising prices isn’t the only strategy operators have at their disposal. Forty percent of operators are streamlining their menu, reducing the sizes of their menus. However, it’s wise for operators to review their menus at least every three months to eliminate poor performers.

Other strategies include focusing on value for guests (27 percent); utilizing LTOs and launching new menu items (26 percent); eliminating a specific daypart or portion of the menu (25 percent); and making portion sizes small, or “shrinkflation” (18 percent).

There’s much more revealed in Datassential’s latest FoodBytes report. Download your copy today.

Image: Luca Bravo on Unsplash

Durham Distillery Navy Strength Gin in a snowbank
by David Klemt David Klemt No Comments

Durham Distillery’s Pandemic Pivot

Durham Distillery’s Pandemic Pivot

by David Klemt

Durham Distillery Navy Strength Gin in a snowbank

Distillers throughout the world are experiencing supply chain issues affecting their ability to produce and bottle their spirits.

One particular issue impacting distillers—and therefore the businesses that sell their products—is a glass bottle shortage.

Obviously, bottles are every bit as important to a brand as the liquid inside. We would all likely ace a quiz calling for us to match bottle silhouettes and brands.

Of course, other issues are also confounding producers, and the restaurants and bars that rely on them.

Labor challenges throughout the world reduced spirit, beer, and wine production. Using a particular spirit as an example, an agave shortage is impacting tequila.

However, consumption hasn’t slowed. Therefore, many distillers, brewers, and winemakers find themselves unable to meet demand.

The situation is dire enough for some retailers and even entire municipalities to ration certain products.

Pandemic Pivot

A distillery in North Carolina is turning a necessary pivot (everyone’s favorite pandemic word) into a limited-edition run for two of their products.

Durham Distillery, located in Durham, NC, produces CONNIPTION Gin. There are two core expressions, both crafted using traditional methods but with a modern approach.

CONNIPTION Gin American Dry is, of course, crafted with juniper berries. However, there’s also Angelica root, cardamom, cucumber, honeysuckle, Indian coriander, and orange peel.

Durham’s Navy Strength expression of CONNIPTION is crafted with bay leaf, caraway, cardamom, fig, Indian coriander, juniper berries, lemon, and rosemary.

Fans of these gins, along with craft spirit aficionados, are familiar with CONNIPTION’s signature bottle shape: American Dry and Navy Strength use rectangular bottles (see image above).

Faced with either slowing production due to an inability to obtain signature bottles or using a more readily available bottle, Durham Distillery chose the latter.

Durham Distillery CONNIPTION Gin Pandemic Pivot American Dry cylindrical bottle

“Given the global supply chain issues so many of our friends and colleagues here in North Carolina and beyond are currently facing, we knew we had two options: give in or lean in and make the best of the situation while keeping our focus on continuing to deliver our award-winning gin to our amazing, loyal customers throughout the state,” says Durham Distillery co-founder and CEO Melissa Katrincic. “The supply chain had an actual conniption and we’re pleased we could be nimble to pivot to solve for our needs.”

Like Durham’s Cold Distilled Cucumber Vodka, both CONNIPTION expressions are available in a cylindrical bottle. Of course, this is only for a limited time.

In fact, the labels on the round bottles read, “same delicious gin but round,” “NC Exclusive Pandemic Pivot,” and, “Temporary Due to Glass Shortage.”

Durham Distillery CONNIPTION Gin Pandemic Pivot Navy Strength cylindrical bottle

This particular pandemic pivot is deceptively simple. Altering packaging may seem like no big deal but it’s a gamble for established brands.

In the case of Durham’s CONNIPTION, this pivot seems like a fun and engaging win.

Image: Hayes Potter on Unsplash

Yellow neon "butter" sign and scaffolding
by David Klemt David Klemt No Comments

Canadian Trends 2022: Technomic

Canadian Trends 2022: Technomic

by David Klemt

Yellow neon "butter" sign and scaffolding

Curious about what to expect in 2022 as a Canadian restaurant, bar or hotel operator?

Technomic has some predictions for next year.

Reviewing their “Canadian Trends: Looking Ahead to 2022” report, creativity and streamlining will be keys to success.

Let’s jump in!

Butter

Yes, this is why I chose the image above. Technomic is very specifically identifying butter as an important 2022 F&B trend.

And no, they don’t appear to be predicting the popularity a particularly rare or esoteric butter. The industry intelligence firm means butter will prove important in 2022.

In large part, Technomic is pointing to comfort food as a driver for butter.

Generally, the firm points to how versatile butter is in the kitchen. Browned and herb-infused butters, says Technomic, will find its way into cocktails.

Flavor and texture will play an important role, extending the butter prediction into buttery foods territory. For example, Technomic predicts butterscotch, buttermilk and ghee will see a boost in usage and demand.

Additionally, the plant-based movement will help nut butters grow more popular. In fact, Technomic says nut butters will find their ways onto burgers and into cocktails.

Interestingly, the firm’s butter prediction gives operators two larger trends to watch: comfort food and plant-based.

Cross-utilization

You don’t need me to tell you that North America—and the rest of the world—is facing supply chain issues.

I know you’re exhausted from just the past nearly two years of constant adaptation and pivoting. In 2022, you’ll have to continue with your creative problem solving.

The supply chain challenge (there’s an understatement) requires creativity in several areas. This includes the kitchen and menu.

Technomic suggests that one path forward through supply chain problems involves ingredient preparations:

  • Pickling
  • Candying
  • Salt-baking

The firm says these creative takes on ingredients operators already have will extend product life; add new flavors to dishes; and deliver new textures. Those last two offer guests new experiences.

In addition, getting creative with the ingredients you may be able to get more readily will help streamline and update 2022 menus. However, revising your menu will require careful consideration of your supply chain and cross-utilization, with a heavy helping of creative prep.

Running Lean

Smaller footprints. Shrunken staff. Streamlined menus. Smaller, shrunken, streamlined, optimized, leaner…

Call the process whatever you want, Technomic is predicting that operators will need to “optimize” (read: make smaller) their businesses.

Of course, there isn’t a one-size-fits-all solution. We’ve read and heard predictions since last year about what will need to shrink moving forward.

While some recent news reports say that ghost kitchens are out, Technomic seems to think that’s not the case. Technomic suggests ghost kitchens will remain viable for operators who want to expand without investing in real estate.

Additionally, Technomic’s report suggests something that should come as no surprise. In short, if it works for a brand or location, smaller may be better and here to stay.

Growth

Now, this is the most promising of Technomic’s predictions: Growth.

Per the firm, the foodservice industry in Canada was down 29 percent in Q1 of 2021. Pre-pandemic, sales reached $95 billion. That represents a loss of nearly $30 billion.

However, there’s reason to be optimistic in 2022, according to Technomic.

The firm expects growth of 21 percent in 2022 over 2021, or sales of $74.8 billion. Should this prediction prove accurate, 2022 would close just three percent under pre-pandemic sales.

Technomic identifies full-service as the foodservice segment to experience the most growth next year at 26.2 percent. In comparison, the firm predicts limited-service to grow 7.3 percent.

Next year won’t be easy. 2022 won’t be a magical return to normalcy. But there is room for optimism if Technomic’s predictions are correct.

Image: Jon Tyson on Unsplash

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