Finances | KRG Hospitality

July 23, 2024by David Klemt David Klemt No Comments

Difference Between a Plan and Playbook

The Difference Between a Plan and a Playbook

by Doug Radkey

Sometimes AI comes up with impressive images. This is one of them.

You’ve likely heard that 80 percent of hospitality businesses fail within the first five years.

When you ask those in the industry the question of why there is such a high rate of failure, they reply with a fairly predictable list of factors. These tend to be location, concept or brand confusion, lack of service standards, toxic workplace culture, sub-par marketing efforts, and mismanaged funds.

Many operators who fail try to quickly blame external factors, such as the economy.

When you ask the next question—what are the other 20 percent of operators doing differently to surpass five years in business—you get one simple answer. The difference between those who drive a sustainable profit of 12, 15 or 20 percent (or more) and those who don’t boils down to one thing and one thing only: they have strategic clarity.

It’s not that the successful 20 percent did not battle challenges or the same tough economy or labor struggles. What they had was clarity, and a playbook detailing how to overcome a multitude of challenges.

So how do you achieve strategic clarity? Well, it’s much more than just writing—or filling out a template for—a business plan.

What is Strategic Clarity?

Strategic clarity is the comprehensive understanding and alignment within your hospitality business regarding its identity, direction, purpose, and the means to achieve its goals.

It involves clear communication and consensus on key aspects of the business, ensuring that everyone is working towards the same objectives. Below, the key components that define strategic clarity.

1. Understanding Who We Are

Core Identity: This includes the mission, vision, and core values of your business. It defines what the business stands for, and its fundamental purpose.
Strengths and Weaknesses: Recognizing the business’ strengths, weaknesses, opportunities, and threats (SWOT) aids in identifying the core competencies and areas for improvement.
Culture: The shared beliefs and practices that characterize the business’ internal environment, and how it interacts with both staff and guest perceptions.

2. Knowing Where We are Going

Vision: A clear and compelling picture of what the business aspires to become in the future. It serves as a guide for choosing current and future courses of action.
Long-term Goals: Specific, measurable, achievable, relevant, and time-bound (SMART) goals that outline the desired outcomes over an extended period.
Milestones: Intermediate targets that mark progress towards the long-term goals.

3. Understanding Why We are Doing This

Purpose: The fundamental reason for the business’ existence beyond making a profit. It encompasses the broader impact the business aims to have on its community.
Motivation: The driving force behind the business’ actions and strategies. This includes the values and principles that guide decision-making, as well as behavior.
Stakeholder Alignment: Ensuring that the goals and activities of the business align with the interests and needs of its stakeholders: guests, employees, investors, and the community.

4. How We are Going to Get There

Strategy: The overarching plan that outlines how the business will achieve its vision and long-term goals. It includes the allocation of resources and the selection of strategic initiatives.
Tactics: The specific actions and steps that will be taken to implement the strategy. This involves detailed planning, delegation, resources, and execution.
Performance Metrics: The criteria and tools used to measure progress and success. Key Performance Indicators (KPIs) and other metrics help track the effectiveness of strategies and tactics.
Continuous Improvement: The process of regularly reviewing and refining strategies and tactics based on performance data and changing circumstances.

Strategic clarity is essential for the cohesive and effective functionality of your bar, restaurant, or hotel business. This leadership approach ensures that all members understand and are aligned with the business’ identity, direction, purpose, and methods.

By achieving strategic clarity, organizations can navigate challenges, seize opportunities, and build upon sustainable long-term success. What we have found over the years that attributes to long-term clarity and success is a series of playbooks.

Understanding Plans and Playbooks

Let’s first dive into the critical distinction between a plan and a playbook, and why this matters for your bar, restaurant, or hotel. Understanding and utilizing both can significantly impact your business’ ability to start strong, stabilize effectively, and ultimately position you to scale successfully.

A traditional business plan, as you may know it, is a document that outlines your goals, and the steps you will take to achieve them. It’s often the number one consideration to secure funding and to set strategic direction.

However, it is, more often than not, missing plenty of crucial information, strategies, and guidance that end up planting a false sense of security.

A playbook, on the other hand, is a more comprehensive guide filled with detailed processes, best practices, and adaptable strategies tailored to your specific operations. Within this dynamic industry, you need more than a standard business plan if you want to be successful.

In fact, you should have eight different playbooks in place to position yourself within the top echelon of this industry.

The Power of Playbooks in Hospitality

While plans are often static or rigid (and often forgotten about shortly after they’re written), playbooks are designed to be flexible and adaptable.

Playbooks provide a step-by-step guide, ensure consistency and efficiency, and offer adaptable strategies and best practices to start, manage, and grow effectively.

Playbooks go into more granular details, and provide actionable steps. In this way, they’re notably different from a singular business plan.

The Eight Playbooks

No matter if you are operating a coffee shop, bar, restaurant or hotel (or any other concept within the hospitality industry), the following eight playbooks should be looked at as non-negotiables.

Feasibility Study/Playbook: The foundational guide for assessing the viability of your hospitality business idea. It involves a comprehensive analysis of the market, competitive landscape, financial projections, and operational requirements. This playbook helps you determine whether your concept is realistic and profitable before committing significant resources.
Concept Playbook: Focuses on refining your hospitality business idea into a clear and compelling concept. This playbook guides you through creating a unique value proposition, defining your target market, and outlining the core elements of your business, including service style, interior design, and internal programming.
Prototype Playbook: A step-by-step guide to developing a tangible representation of your hospitality concept. This playbook helps you create a prototype that can be tested and refined before a full-scale launch. This playbook covers design specifications, operational workflows, fixtures/furniture/equipment, and detailed budgets.
Brand Strategy & Identity Playbook: Defines the strategic approach to building and maintaining a strong brand. This playbook covers the creation of your brand identity, messaging, and positioning to ensure consistent and impactful brand communication. It involves color psychology, core values, mission statements, brand experiences, and more.
Marketing Playbook: Outlines the strategies and tactics to attract, build, and retain your target guests. This playbook provides a roadmap for creating and executing effective marketing campaigns across various channels. It provides a step-by-step guide on content, social media management, database building, email marketing, partnerships, and community activations, along with detailed guest journey maps.
Tech-stack Playbook: Provides guidance on selecting and implementing the correct technology solutions to enhance your hospitality operations. This playbook ensures that your technology infrastructure supports your business goals and improves efficiency. This playbook identifies technology gaps, software solutions, hardware requirements, and integration plans, plus training and support on technology.
Financial Playbook: A comprehensive guide to manage your hospitality business’ finances. This playbook covers budgeting, financial forecasting, accounting practices, and financial performance analysis. It should highlight financial contingency plans, mock labor schedules, daily/weekly/monthly/seasonal traffic reports that align with the business, and financial objectives.
Operational Playbook (a.k.a. Business Plan): Outlines the day-to-day operations in great detail, along with long-term strategies. This playbook ensures that all aspects of your operations are well-coordinated and aligned with your overall business goals, and the other seven playbooks. It should highlight standard operating procedures, labor plans, supply chain management, guest services, and measurable operational metrics.

You’ll notice there are seven other playbooks written before the business plan. Far too often, this is where people start. Without the other seven playbooks, it will be nearly impossible to craft a winning playbook for your day-to-day operations.

When Should You Use Playbooks

To Start: These eight playbooks are crucial to craft your success story right from the beginning. Build the foundations before signing a lease or purchasing a property.
To Stabilize: If you’re currently underperforming (profit margins under 12 percent for bars and restaurants, and under 15 percent for hotels), use playbooks to generate impactful results.
To Scale: These playbooks will help ensure that both your first location—and the next location—are prepared for consistent operations without diminishing your brand equity.

Strategic planning within detailed playbooks is essential for your hospitality business’ success.

Regardless of your current position, evaluate your use of business plans, and consider developing comprehensive playbooks instead. Make the time and commitment to achieving true clarity in your business, and position yourself to be on the correct side of this industry’s statistics.

AI image generator: DALL-E

June 25, 2024by krghospitality krghospitality No Comments

The Power of an ImpactMAP™

The Power of an ImpactMAP™

by Doug Radkey

Let’s be honest, the line between success and failure often hinges on the ability to act decisively and act with purpose.

In this article, we’re going to explore two areas of your hospitality business that are under your control: creating a plan, and taking action.

Understanding the Risk of Inaction

The concept surrounding the Risk of Inaction—arguably a new form of ROI—captures the potential losses businesses face when they fail to take strategic actions.

Inaction in the hospitality industry can manifest in various harmful ways. Inaction can also stem from multiple sources: fear of change, lack of resources, or simply underestimating the competition.

Regardless of the manifestation or cause, the consequences are usually the same: stagnation, decline, and, ultimately, a shuttered business.

Let’s put this into context by taking a look at a sample of both a restaurant and a hotel business.

Failure to Innovate

If a restaurant does not act to continuously re-engineer its menu, it risks diminishing profits, providing a low-level guest experience, and mismanaging inventory. Without regular strategic updates, the menu may fail to reflect current culinary trends and guest preferences, which can lead to a decrease in interest and satisfaction.

Additionally, sticking with a static menu can prevent the restaurant from optimizing ingredient use, productivity, and cost-efficiency.

At the end of the day, this lack of adaptation and innovation will result in diminishing sales and profitability, making it difficult for the restaurant to sustain its operations.

Failure to Update Systems

If a hotel on the other hand decides to not use a modern and fully integrated Property Management System (PMS), it risks operating inefficiently and falling behind in today’s technology-driven hospitality environment.

A non-existent, outdated, or fragmented PMS can lead to significant operational issues, such as slow check-in and check-out processes, errors in room availability and booking management, and ineffective communication between different departments. That’s just to name a few crucial issues.

This inefficiency can impact guest experiences negatively, leading to dissatisfaction and potentially harming the hotel’s reputation.

Furthermore, without a modern PMS, a hotel may struggle with data management, limiting its ability to effectively analyze performance metrics, forecast demand, and implement dynamic pricing strategies. These disadvantages will result in lost revenue and reduced competitiveness in a space where guest expectations and operational efficiency are increasingly driven by technological advancements.

In each example above, the risk of inaction leads to missed opportunities and underperformance.

The Power of an ImpactMAP™

To combat the risks associated with inaction, your hospitality business can benefit significantly from developing an ImpactMAP™.

This strategic tool can help you identify where you currently stand, define where you want to go, and outline the steps required to get there, thereby helping you create not only strategic clarity, but drive and accountability.

The Assessment

To create an ImpactMAP™ and to take action immediately, you need to first assess your operations.

An assessment of your hospitality business is a comprehensive evaluation process aimed at analyzing various aspects of your business to identify strengths, weaknesses, and areas for improvement or opportunity. The goal is to gather actionable insights that can help optimize operations, enhance guest experiences, and massively improve your profitability.

The assessment should involve on-site observations, staff interviews, and a deep dive into the following eight categories, culminating in a detailed report that provides recommendations and a strategic plan for future growth and sustainability.

For each of the eight categories, consider a 3x matrix with three responses to the following questions:

Where are we now?
Where do we want to go?
What resources do we need?
What’s holding us back?

Then, create a SMART (Specific, Measurable, Achievable, Relevant, Timely) goal for each response in your “Where We Want to Go” list.

What are the eight assessment categories?

1. Brand Strategy

Assessment: Review your core values, story, messaging, philosophy, design, and reputation.

Opportunity: Enhance brand alignment across all touchpoints to ensure consistency while refining your brand messaging to better connect with targeted guest profiles.

2. Internal Programming

Assessment: Review your pricing strategy, guest experiences, property / menu / room management systems and programs.

Opportunity: Optimize your offerings based on guest preference data and a profitability analysis, along with potential upgrades to your amenities to enhance guest satisfaction and to compete with today’s market standards. In summary, implement efficiencies to improve guest experiences and operational workflow with a focus on your internal programming.

3. Marketing Plans

Assessment: Review guest profiles, guest journey maps, guest databases, awareness and retention strategies, and your digital marketing portfolio.

Opportunity: Integrate advanced digital marketing techniques to increase reach and engagement while developing targeted promotions and partnerships, and by leveraging data analytics to tailor marketing efforts more precisely to guest behaviors and trends.

4. Tech-Stack Plans

Assessment: Review guest facing technology, POS / PMS system, integrations, and marketing.

Opportunity: Identify current technology gaps and plan for a strategic integration of systems that enhance guest experiences while streamlining operations.

5. Standard Operating Procedures

Assessment: Review of all internal and external systems, plus training programs and SOPs.

Opportunity: Ensuring that all staff are clear on their roles and responsibilities, which enhances overall service quality through the development of standardized procedures that ensure consistency and efficiency across the business. Implement feedback systems to continually refine and improve SOPs based on real-time challenges and successes.

6. People and Culture

Assessment: Review of staff experiences, onboarding, productivity, growth, and retainment.

Opportunity: Strengthen employee engagement through improved communication and support systems. Foster a culture of innovation and openness in which employees feel valued and motivated. Develop leadership from within to enhance management effectiveness and succession planning.

7. Financial Health

Assessment: Review of all financials, including Revenue, COGs, KPIs, Expenses, Debt, and Profit.

Opportunity: Identify cost-saving opportunities without compromising service quality. Explore new revenue streams that align with your brand values and market opportunities. Implement more rigorous financial tracking and forecasting tools (such as technology) to better predict financial trends and react proactively.

8. Mindset

Assessment: Daily habits, work / life balance, decisiveness, communications, and growth-based thinking.

Opportunity: Develop a mindset of continuous improvement among all staff levels (starting with yourself) to foster an environment of excellence. Cultivate resilience by planning for crisis management and business continuity. Promote a guest-centric approach, aligning all business decisions with guest satisfaction and personal development outcomes.

Creating the ImpactMAP™

By following the above 3x strategy for each category, you will have created 24 SMART objectives that will be the foundation of your ImpactMAP™ to move your business forward over the next one to six to 12 months.

Importance of SMART Objectives

What does SMART mean and how does it work?

Specific, Clarity, and Focus: SMART objectives provide clear and concise goals that everyone in your business can understand and rally behind. This clarity helps to focus efforts and resources on what’s most important.
Measurability and Tracking: By setting measurable goals, your business can track progress and make data-driven decisions. This measurability allows for adjustments to be made in strategies or tactics to ensure the objectives are met.
Achievability: Goals that are achievable motivate staff. Setting impossible goals can lead to frustration and disengagement, whereas achievable objectives encourage team effort and commitment.
Relevance: Ensuring that each objective is relevant to the broader business goals ensures that every effort made contributes to the overall success of your brand.
Timeliness: Incorporating a timeframe provides urgency, a deadline, and accountability, which can help prioritize daily tasks and long-term plans.

However, you shouldn’t try to accomplish all 24 objectives at the same time. Once you’ve set your 24 impactful objectives, prioritizing them is crucial to stabilize your hospitality business and aim for scalable growth.

Best Practices for Prioritizing Objectives

Assess Business Needs: Start by conducting that thorough assessment of your business to identify key areas that need improvement.
Impact Analysis: Evaluate the potential impact of each objective. Prioritize objectives that offer the greatest benefits in terms of guest satisfaction, revenue growth, and operational efficiency.
Resource Availability: Consider the resources available, including budget, people, and technology. Prioritize objectives that align with current resources or where adjustments can be made to accommodate necessary changes.
Quick Wins: Identify objectives that can be achieved quickly and with minimal disruption to your ongoing operations. These quick wins can boost morale and provide visible improvements that justify further investments in other areas.
Strategic Importance: Some objectives, while not providing immediate benefits, are crucial for long-term success. Prioritize these based on their strategic importance to the business’s future.
Stakeholder Input: Engage with various stakeholders, including management, staff, and guests, to gain insights into which objectives they feel are most critical. This can help in aligning the goals with the needs and expectations of those most affected by the changes.
Balanced Scorecard: Use a balanced scorecard approach to ensure that objectives across different areas such as guest services, internal processes, financial performance, and learning and growth are all being addressed.
Iterative Review: Regularly review the priorities as situations and business dynamics evolve. What may be a priority today might change based on market conditions or internal business changes over the next three to six months.

Once you have your objectives prioritized, it’s time to assign or delegate them as needed and have those assignees (including yourself) take ownership of the objectives with their signature to add another level of accountability.

Implementing the ImpactMAP™

Before starting, ask yourself one final question: What will happen if we don’t take action?

Be detailed and mindful of what the short-term and long-term consequences might be if you don’t act.

Effective implementation of an ImpactMAP™ requires knowledge of these consequences, along with a commitment from all levels of your business. It starts with comprehensive training sessions followed by regular review meetings, which are both essential to assess progress, address challenges, and refine strategies as needed.

Take a SMART-ER approach, which is where you Evaluate and Re-adjust the SMART objectives halfway through the timeline you’ve set.

Conclusion

Risk of inaction is a silent threat that can undermine any business, particularly in this dynamic industry.

Adopting an ImpactMAP™ and making a commitment to take massive action allows you to manage your operations proactively, adapt to changing market conditions, and set a course for sustainable success.

This strategic approach not only mitigates risks but also empowers your hospitality business to thrive in a competitive landscape—but it starts with you and your mindset toward taking action.

Image: KRG Hospitality

March 22, 2023by David Klemt David Klemt No Comments

Spring Clean Your Business!

7 Ways to Give Your Business a Spring Cleaning!

by Kim Richardson & David Klemt

In case you’re so busy you didn’t catch it, we’re officially—finally—in spring, and that means it’s time to spring clean your business.

Below you’ll find a spring cleaning slideshow with helpful advice from KRG Hospitality consultant Kim Richardson.

Each slide contains her best advice for reviewing, refreshing, and improving your business. For your convenience, Kim organizes her spring cleaning advice in just seven slides.

It’s time to look at your business through fresh, energized eyes! Your team, guests, and bottom line will thank you.

[metaslider id=78443]

Note: Unable to view the slides above? Each slide is transcribed below.

1 Re-plant Your Core Values

Review your core values with your team.
Post them where everyone can see them daily.
Foster core values through consistent training.
What kind of experiences are you offering your team?
Hire a coach to help you discover your core values.

2 Tidy up Your Guest Journey Map

Walk through your business from the guest perspective.
Review your website for content, ease of use, current info.
Review your technology and potential pain-points.
Touch up items that may have become run down: paint, signage, furniture, equipment, etc.
Review your flow of service and communication.

3 Spruce up Your SOP & Training Programs

Evaluate how well current SOPs are being followed.
Evaluate how well you continuously train your team.
Make updates as needed and add any new procedures.
Ensure SOPs are easily accessible by your team.
Discuss your standards during pre-shift meetings.

4 Deep Clean Your Financial Books

Review your budgets and projections for the year ahead.
Review and organize the financials tracking processes; receipts, invoices, files, etc. and digitize what you can.
Consider updating your financial tracking technology or bringing in a third party to assist.

5 Dust off Your Business Plan

Evaluate the progress of your business plan.
Acknowledge what you have accomplished.
Are you on track to achieve your goals this year?
Do all of your goals still make sense?
Make any necessary updates and create a game plan to stay on track; review every 30 days.

6 Freshen up Your Marketing Plan

Budget time and money to dedicate towards marketing for the next 90 days.
Create strategic campaigns that will create awareness, build a database, and retain your targeted customers.
Consider working with a third party or having someone dedicated to this role internally.

7 Declutter Your Mind

Perform a calendar audit.
Review goals and formulate action plans.
Practice mindfulness through journaling or meditation.
Consider hiring a mindset coach to help you organize your life and your business.

Image: PAN XIAOZHEN on Unsplash / Slideshow Images: Kim Richardson / KRG Hospitality

September 30, 2022by David Klemt David Klemt No Comments

Operators & Guests Respond to Rising Costs

Operators & Guests Respond to Rising Costs

by David Klemt

Everything is more expensive these days and both operators and consumers have their own ideas for addressing rising costs.

To gather and share insight into people’s mindsets, Restaurants Canada conducted and commissioned two surveys.

For one, the industry research and advocacy organization surveyed operators. The focus was on how much operators anticipated increasing their prices.

On the other side, Restaurants Canada commissioned Angus Reid for a survey focusing on consumers. This survey revealed potential traffic slowdowns and perceived value for money.

For your own copy of Restaurant Canada’s 2022 Foodservice Facts report, click here.

QSR vs. FSR: Consumers

As an operator, converting first-time visitors into repeat guests is paramount. Equally as important: increasing visit frequency per guest.

Of course, an immediate byproduct of rising costs is consumers pulling back and reevaluating their spending. Oftentimes, dining out is one of the first costs consumers slash in order to save money.

Therefore, operators always face the risk of reduced traffic and even losing some guests permanently when they raise prices. However, this is often a necessary risk to take to combat rising costs.

So, how dire is the situation among Canadian consumers currently? Or at least, how did they feel in Q2 of this year? Angus Reid conducted a survey of consumers to find out, and the results can be found within the 2022 Foodservice Facts report.

First, let’s look at visit frequency for QSRs and FSRs. Before we begin, 12 percent of survey respondents answer that they “don’t know for sure” if rising prices will affect their visit frequency for either QSRs or FSRs. Not helpful.

For QSRs, 19 percent of respondents say an increase in prices won’t impact their visit frequency. Thirty-six percent anticipate visiting “a little less often,” while 32 percent will visit much frequently.

As for FSRs, 16 percent of survey respondents won’t change their visit frequency. However, 37 percent anticipate visiting FSRs much less often. Nearly as many, 36 percent, will visit a bit less frequently.

Interestingly, however, is perceived value. More FSR guests believe they receive excellent or good value for their money than they do from QSRs. More QSR guests believe they receive fair, poor, or very poor value for their money.

Overall, though, 90 percent of Canadian consumers feel positive toward the value they receive from QSRs and FSRs.

QSR vs. FSR: Operators

Clearly, it’s good news that the vast majority of Canadians believe they receive good value for their money when dining out.

Nobody enjoys paying more but it appears that both QSRs and FSRs in Canada can increase their prices. At least, they can do so for now while consumers are mostly understanding about inflation.

Restaurants Canada asked QSR and FSR operators a simple but revealing question for their 2022 Foodservice Facts report. The question? How much higher do operators expect to increase their prices by the end of Q4 of this year in comparison to last year?

The majority of operators in both categories anticipate they’ll increase menu prices by more than seven percent. Twenty-seven percent of QSR operators have that expectation. That number rises to 35 percent for FSR operators.

Twenty-two percent of QSR operators anticipate raising prices five to seven percent before the end of 2022. In comparison, 32 percent of FSR operators expect to raise prices in the same range.

At the moment, Canadian consumers appear to be willing to endure these increases. However, it’s likely they expect prices to drop back to “normal” (pre-pandemic prices) or close to it sometime in 2023. That is, unless Canada slides into recession.

Image: PiggyBank on Unsplash

September 23, 2022by David Klemt David Klemt No Comments

Restaurants Canada Reveals Pandemic Impact

Two Years On, Restaurants Canada Reveals Pandemic Impact

by David Klemt

Restaurants Canada looks at the impact of the pandemic on the foodservice industry in their latest Foodservice Facts report.

Canada’s foodservice industry research and advocacy non-profit sees a return to pre-pandemic operations. However, the path forward toward pre-pandemic traffic and sales levels won’t be without its challenges.

“While nominal sales are expected to return to pre-pandemic levels before the end of the year, traffic still remains below what it was before,” says Restaurants Canada president and CEO Christian Buhagiar.

To access your own copy of 2022 Foodservice Facts, click here.

Industry Still Struggling

As an owner, operator, or foodservice professional, you probably have the answer to a specific question in mind.

When will we be “back to normal?” And, of course, the natural followup to that question. Will the industry surpass 2019 traffic and sales?

Restaurants and bars throughout Canada have survived six waves of Covid-19 over the course of two-plus years. There have been an inordinate amount of lockdowns that inarguably forced the permanent closure of far too many businesses.

As Restaurants Canada states (and the rest of us know all too well), there’s no telling if another Covid-19 variant will rear its ugly head. It’s conceivable (but with any luck unlikely) that Canada could face future lockdowns.

At the moment, according to Restaurants Canada, foodservice sales are currently 11 percent below 2019 levels. And yes, that’s after adjustment for inflation. Speaking of which, one reason traffic and sales remain below those of 2019 is consumer confidence. Many Canadians are concerned about a possible recession.

In addition, operators in Canada continue to face a labor shortage.

News Not All Bad

Now, anyone who read the previous section would be justified in lacking confidence in the industry. However, there is good news.

First, let’s compare Q1 of 2022 to Q2. Per Restaurants Canada, just 15 percent of restaurants were able to seat guests with zero restrictions. By April, though, approximately 90 percent of restaurants in Canada could serve in-person guests restriction-free.

Second, Q2 had more positivity in store for operators. According to Restaurants Canada, the FSR segment endured an 18-month decline in traffic when Covid-19 took hold. When restrictions were lifted, the floodgates of consumer demand burst. By Q2, traffic was a mere one percent lower in comparison to 2019.

Going a bit granular, QSR performance also improved in Q2. Per Restaurants Canada, QSR traffic lagged eight percent behind pre-pandemic levels. However, that number improved to just two percent under pre-pandemic levels by Q2.

Compellingly, Q2 still wasn’t done with foodservice industry positivity. While QSRs outpaced FSRs three-fold in terms of traffic, their numbers combined bring the industry back to 2019 Q2 levels.

Restaurant Canada’s positive outlook predicts that the industry will return to pre-pandemic levels by Q4.

Image: StellrWeb on Unsplash

The Florida Theater in Jacksonville, Florida

August 15, 2022by David Klemt David Klemt No Comments

Top 10 States Attracting High Earners

Top 10 States Attracting High Earners

by David Klemt

Using the inflow and outflow data of tax filers earning $200,000 or more, SmartAsset identifies the top ten states attracting high earners.

When it comes to the number-one state, “it’s not even close,” says SmartAsset Advisors. Not surprisingly, several top inflow cities (according to Redfin data) line up with SmartAsset’s top inflow state list.

So, why should this information matter to operators? Plainly, it’s important market information. Population, household income, and age information are crucial considerations when opening any business.

In fact, KRG Hospitality includes such data (and much, much more) when conducting research for our proprietary feasibility, business, and concept plans. Among many elements of opening a restaurant, bar, hotel, or entertainment venue, the income of one’s target audience is crucial.

Knowing where high-income households are leaving and moving to can inform many operator decisions. Where should one open their first concept? Which markets should one consider for expansion? What type of concept will work in a market? What are the threshold price points for menu items? How will this information help inform design choices?

Operators need to recoup their outlay. The income of a concept’s ideal guest should be as important to an operator as knowing their costs.

Top Ten Inflow States

Interestingly, the top state on this list did experience significant outflow in 2020. In fact, the state lost 11,756 high-earning households in 2020.

However, the state also added 32,019 such households, netting 20,263 high earners.

Utah
Idaho
Nevada
Colorado
Tennessee
South Carolina
North Carolina
Arizona
Texas
Florida

Another compelling detail of the states on this list pertains to income tax. In short, three of the states don’t levy personal income tax.

Above, they’re the states in bold: Florida, Nevada, and Texas.

Top 10 Outflow States

So, above are the ten states are seeing the greatest an inflow of high-earning households. Which means, of course, there’s an inverse.

Below, the ten states experiencing the greatest outflow of high earners. Unsurprisingly, SmartAsset deems several entries on the list high-tax states. Also, Washington, DC, is a high-tax area.

Moreover, the list below includes five of the top ten high personal income tax jurisdictions (in bold).

Ohio
Minnesota
Washington, DC
Maryland
New Jersey
Virigina
Massachusetts
Illinois
California
New York

However, it’s not as though these states are seeing a massive exodus of high-earning households. In fact, per SmartAsset, these states have more high-income households than the national average.

Nationally, high-earning households account for less than seven percent of all tax filers. According to SmartAsset, nearly nine percent of tax filers are high-income households in the top ten outflow states.

Image: Trevor Neely on Unsplash

June 13, 2022by David Klemt David Klemt No Comments

After RRF Failure, What’s Next for Us?

After RRF Failure, What’s Next for Us?

by David Klemt

After the US Senate failed to even debate the Restaurant Revitalization Fund, instead opting to let it die, what’s next?

Obviously, trusting our elected officials to do the right thing isn’t a viable option. After all, the Senate slow-walked the RRF’s death march. It took six weeks after the House voted “yes” on RRF for senators to filibuster the bill to death.

Last Thursday, the National Restaurant Association addressed moving forward. Sean Kennedy, executive vice president of public affairs, released a 90-second video in which he spoke about the RRF and where we are now.

Reconciliation?

One of the first options Kennedy proposes in his video is a reconciliation bill. That, however, is highly unlikely to come to fruition.

So, what’s a reconciliation bill? Simply put, it has to do with the Senate’s supermajority requirement.

In order for a bill to advance to a vote, 60 percent of the Senate must support ending a filibuster. On that topic, a filibuster is a procedural tool that prolongs a debate. The filibuster is used to delay or prevent a vote on a bill, resolution, etc.

Now, a budget reconciliation bill circumvents the supermajority requirement. A simple majority—51 senators for the US Senate—is all it takes to override a filibuster in this instance.

Technically, from what I’ve come to understand, the Senate can pass a maximum of three budget reconciliation bills in a year. Most often, it passes a single such bill per year.

Obviously, Kennedy feels that this would be a longshot to cross our fingers and hope the RRF is funded via these means.

Staying Ready

As they say—yes, “they”—if you stay ready, you don’t have to get ready. According to Kennedy, the NRA is prepared to act in any way they can should replenishing the RRF or similar aide once again become an option.

“We’re gonna continue to closely monitor the situation and we certainly can activate if there any signs of movement,” he says. “We’re not seeing them yet.”

The “yet” there is perhaps a bit hopeful. And as we like to say, hope isn’t a strategy. However, optimism is far healthier than pessimism and hopelessness.

Additionally, Kennedy and the NRA are grateful to the bipartisan group of representatives and senators who have shown their support for our industry and replenishing the RRF.

“We’re incredibly appreciative of the works of our champions in Congress,” says Kennedy.

In particular, he acknowledges Senate Majority Leader Chuck Schumer (D-NY), and senators Ben Carden (D-MD), Roger Wicker (R-MS), Kyrsten Sinema (D-AZ). In the House, Kennedy thanks Speaker of the House Nancy Pelosi (D-CA), and representatives Earl Blumenauer (D-OR), Dean Phillips (D-MN), Brian Fitzpatrick (R-PA).

What’s Next?

As Kennedy says, much of what he discussed with people at the 2022 NRA Show centered around this very topic. Just what are we supposed to do moving forward?

Unfortunately, there’s no clear answer, no simple solution we can point to and implement.

Instead, we have several issues we must navigate to keep restaurant and bar doors open:

What can we do to more effectively recruit and retain staff?
How can we best address increases in food costs and problems with availability?
Is there a way to address rising credit card transaction fees?

Of course, that’s but a handful of what we must address and solve. And at least when it comes to the first question, we know some of the elements for the solution:

Treat staff with respect.
Value diversity, equity, and inclusion.
Improve pay and offer benefits.
Develop a healthy company culture and workplace.

On the topic of state and local policymakers, expecting help is a dicey proposition.

Unless they engage with the owners, operators, and industry professionals in their states, counties, cites, and towns, they’ll hurt these businesses. The only effective and helpful way forward is for them to engage with us and not simply introduce and pass legislation that hurts. Possible, of course, but a big ask as we’ve seen proven time and time again.

Image: Minator Yang on Unsplash

United States Capitol Building on fifty dollar bill

August 6, 2021by David Klemt David Klemt No Comments

What is the ENTREE Act?

What is the ENTREE Act?

by David Klemt

Foodservice and hospitality operators are waiting for Congress to act and replenish the Restaurant Revitalization Fund.

Well, that replenishment may come in the form of a bill from Rep. Blaine Luetkemeyer (R-MO).

Congressman Luetkemeyer is a ranking member of the House Committee on Small Business.

Restaurant Revitalization Fund Empty

As operators know, it didn’t take long for the RRF to be depleted entirely.

The Small Business Administration opened the RRF application portal on May 3. Just 21 days later, the portal was closed to new applicants.

More than 60 percent of eligible applicants in need were not awarded grants from the $28.6 billion fund.

Clearly, that amount was nowhere near enough to meet the needs of our industry.

People have been calling for Congress to #replenishRRF ever since the RRF portal was closed on May 24.

Entrepreneurs Need Timely Replenishment for Eating Establishments Act

To be fair, Congress acted quickly to at least address the SBA’s shortcomings in handling the RRF.

Early in June, a bipartisan group introduced Restaurant Revitalization Fund Replenishment Act of 2021. Sens. Kyrsten Sinema (D-AZ) and Roger Wicker (R-MS), and Reps. Earl Blumenauer (D-PA) and Brian Fitzpatrick (R-PA) introduced the bill on June 3.

The bill seeks $60 billion to replenish the RRF and the funds would essentially come from “printing more money.”

However, Rep. Luetkemeyer introduced the Entrepreneurs Need Timely Replenishment for Eating Establishments Act on July 20.

The aptly (if unwieldy) named bill is also proposing $60 billion. However, the funds would come from a combination of sources.

ENTREE Act Funding

Both sources would pour unspent, previously allocated funds into the ENTREE Act.

Rep. Luetkemeyer’s bill proposes using state and local funds from the $1.9 trillion American Rescue Plan.

The ENTREE Act would also secure funds from Economic Injury Disaster Loans that have yet to be spent.

Currently, there’s no indication if Congress intends for these bills to somehow work together. Also, no date has been put forth regarding voting on either the Restaurant Revitalization Fund Replenishment Act or ENTREE Act.

However, we can put pressure on Congress by asking them to act quickly on these bills. So, let’s come together and contact our representatives—it can take just 30 seconds.

Image: Karolina Grabowska from Pexels

The United States Capitol Building with blue sky and white clouds in the background

July 30, 2021by David Klemt David Klemt No Comments

We Need to Join Forces on the RRF

We Need to Join Forces on the RRF

by David Klemt

It’s time for all hospitality professionals to come together and tell Congress to replenish the Restaurant Revitalization Fund.

Honestly, it’s well beyond time for us to all join forces and send our message to Congress.

Owners, operators, managers, and team members need to contact their representatives. Additionally, they need to encourage their friends and family members to do the same.

If we’re going to stop the damage to our industry, this needs to be done.

State of the RRF

Per this download from the National Restaurant Association, 455,304 eligible restaurants applied for RRF grants.

In total, 278,304 restaurants were awarded grants.

To be fair, that’s excellent news. And the Small Business Administration should be applauded for providing lifelines to nearly 280,000 restaurants.

However, the $28.6 billion the fund was seeded with was never going to be enough. Also, the SBA’s RRF portal was open nowhere near long enough.

Toward the end of May, Republican members of Congress sent a letter to the SBA. In it, they criticize the SBA for closing the portal so quickly.

To provide context, the RRF application portal was open a mere 21 days. Further context: the SBA made it clear before the RRF portal was opened that only priority applications would be processed for the first 21 days.

Replenish the RRF

According to the NRA, 177,000 eligible RRF applicants were not awarded grants.

That number represents a total of $43.6 billion in grants that haven’t been awarded.

So, not only does the SBA need to reopen the RRF, they need to replenish it with at least $43.6 billion. The NRA is asking that Congress refill the RRF with $50 billion.

We all know that the situation is dire. Per the NRA, 1.3 million jobs have been lost. Since the first 14 months of the Covid-19 pandemic, restaurants have lost $290 billion in sales. Obviously, that number has grown. At least 90,000 restaurants have either closed their doors long-term or forever.

However, this isn’t only about our industry. As the NRA shows, every dollar spent on this industry generates $2 for farming, baking, fishing, and other industries.

Looking at the numbers makes it clear: We all need to carve out the few minutes it will take to tell our representatives what we want.

What do we want? For the RRF to be replenished. Click here to tell Congress to replenish the RRF with at least $50 billion, and make sure to spread this message on social by using #ReplishRRF.

There are millions and millions of us in this industry. Now more than ever, we need to join forces and pull in the same direction.

Image: Louis Velazquez on Unsplash

Try the free KRG Hospitality Bar & Restaurant Start-up Calculator, rectangle

June 15, 2021by David Klemt David Klemt No Comments

Introducing the KRG Start-up Calculator

Introducing the KRG Bar & Restaurant Start-up Calculator

by David Klemt

We are incredibly excited to announce the launch of a helpful new tool for new and veteran operators alike: the KRG Hospitality Bar & Restaurant Start-up Calculator.

It couldn’t be simpler to use, and it will give users an idea of how much funding their project will require.

Just enter the square footage you desire or that you know you’ll need. Then, our brand-new calculator generates more than 40 key costs for your review.

Know Your Numbers

New or veteran, single unit or multi, success in this business requires an obsessive knowledge of numbers.

Costs, in particular, are operators’ eternal opponents. People incur the greatest costs before they ever open their doors for business.

Now, that’s just common sense on one hand. Securing a location, kitting out a kitchen, building out the front of house—these are five-, six- and sometimes even seven-figure endeavors.

However, on the other hand, the massive costs that come with opening a new restaurant or bar are often the result of surprises or insufficient planning.

That’s where our calculator comes in.

Here to Help

There’s a reason that the KRG Bar & Restaurant Start-up Calculator populates more than 40 fields.

That reason is simple: preparation is key.

For instance, does your current plan budget for utility deposits, business insurances, opening F&B inventory, soft opening and launch month strategies, the complete array of construction or renovation costs?

Here’s a real-world example of our calculator at work:

Let’s say you want to open a 2,200-square-foot pub. At the minimum, you should budget at least $2,547 for business insurances and nearly $8,200 for opening F&B inventory. And you’ll likely want to set aside at least $14,806 for emergencies.

Try it out for yourself today!

Disclaimer

As with any online calculator, this free calculator is to be used as an initial reference point. Every project is unique in its own way. Property and leasing costs, equipment, and renovation costs will heavily fluctuate based on market, concept, and the status/condition of a chosen property.

Image: KRG Hospitality