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December 15, 2023by David Klemt David Klemt No Comments

Transactional vs. Experiential Service

Is Your Business Transactional or Experiential?

by David Klemt

When you consider your restaurant or bar honestly, is the service you and your team are providing to guests transactional or experiential?

It’s an important distinction, and it applies to every restaurant and bar category. Whether operating a QSR or FSR, today’s guests want more for more their money.

Further, they expect more just for choosing to leave their homes. A recent report from CWB Franchise Finance, in partnership with Circana and fsStrategy, indicates strongly that experiential concepts are on the path to weathering economic challenges and achieving long-term success.

Now, to be clear, of course all businesses are transactional. In that regard, restaurants and bars are clearly no different from other businesses.

Guests come in, they place orders, and they pay for the goods they receive. Transactional, right?

However, restaurants and bars are in a position to deliver memorable experiences.

Sure, for some people those memories are fleeting. There are those who are always seeking the next thing. But operators who become known for providing more than just menu items will remain on the radar of even the most fickle guest.

When a restaurant or bar delivers goods plus phenomenal services, when the guest experience involves more than just ordering and paying, it becomes experiential.

Think back to the times this year you’ve popped into a QSR or fast-casual restaurant. Can you remember much about the experience? If yes, fantastic—that operator understands the power of an experiential business model. Should the answer be no, that operator sees value only in being transactional.

Which are you happy to return to in the future?

Experience is King

I’m going to assume you’re much happier to return to an experiential concept than a strictly transactional one. And if that’s a correct assumption, you should apply that to your own restaurant or bar.

According to studies Circana has conducted over the past couple of years, Canadian consumers are reacting to economic uncertainty and financial instability as one would expect: cutting back on discretionary spending.

Generally speaking, that means reducing their spending at restaurants and bars. However, there’s a bit of good news tucked into those Circana studies.

Per Circana, half of Canadians plan to increase spending on something in particular: experiences. Further, 91 percent of Canadians say they’ve spent money at experiential restaurants recently.

“A restaurant visit isn’t necessarily just about nourishment, but instead is a platform for socializing, entertainment and exploration,” reads the joint CWB, Circana, and fsStrategy report.

Importantly, an operator need not go to extremes to deliver an experience. Something as simple as creating an LTO around craveable drinks can pay huge dividends. For proof of that, simply look at McDonald’s in the US and the hype that surrounded the berry-flavored Grimace Shake.

Operators throughout Canada and around the globe need to understand how impactful being experiential can be.

Takeaway

It’s true that operators are competing against one another. However, it goes deeper than that now.

Operators are also battling convenience and comfort. Between working from home, pandemic-induced isolation, and technology, people are used to staying in and ordering whatever they want.

So, not only are operators faced with the challenge of standing out from one another, they’re up against the phones in people’s pockets.

For many people, choosing to leave home to dine and drink in person is a big deal. To some, restaurants and bars are about celebrating special occasions or socializing. For others, the motivation is as simple as the need to finally get out of their home.

It’s imperative, therefore, for operators to be more than transactional. Being experiential, whether the experience is small but impactful or over the top and unforgettable, is the way forward.

Restaurants and bars that deliver a memorable experience are better positioned to remain top of mind for a guest’s future in-person visits, delivery and takeout orders, and large-party special events. Don’t think of being experiential just in terms of nailing each visit, think of elevating the guest experience to capture future business.

A focus on the experiential builds loyalty from existing guests, and it encourages those guests to become ambassadors of your brand. Ask what you can do with your menu, team, and space today to become more experiential than transactional.

Image: Thiago Miranda on Pexels

Kentucky Peerless Distilling Co. whiskey barrels

December 13, 2023by David Klemt David Klemt No Comments

Will Whiskey Bring Us Together?

Will Whiskey Bring Us Together?

by David Klemt

A letter penned by Senator Catherine Cortez Masto and signed by a bipartisan group of senators shows that we’re capable of coming together.

There’s seemingly no escape from messages that America is divided like never before. And, when inundated with that message, it’s easy to believe. Sadder, when we believe that message it’s too easy to plunge into despair.

However, 17 senators, Democrats and Republicans, are coming together in support of American whiskey.

These senators are seeking the permanent removal of tariffs on American spirits and wine by the European Union. That 25 percent tariff, first imposed in June of 2018, is in retaliation over a dispute over aluminum and steel. This was a response to the US imposing a 25 percent tariff on steel imports, and ten percent on aluminum.

Unfortunately, after a suspension in 2021, the tariffs on American whiskey will jump to 50 percent on January 1, 2024. So, Sen. Cortez Masto and a bipartisan group of senators are urging the Biden administration to work with the EU to permanently suspend or otherwise eliminate tariffs on American whiskey.

If Ambassador Katherine Tai and the White House are unable to broker a deal with the EU, the tariffs would be catastrophic for many American whiskey distillers. In turn, their whiskeys would become more costly for restaurant, bar, nightlife, and hotel operators. And, of course, for consumers.

Here’s to hope. Hope that a deal can be reached, and hope that somehow, some way, our elected officials will engage in more bipartisan efforts moving forward.

Bipartisan Support in the Senate

Below, the text of the letter that Sen. Cortez Masto (D-NV) sent to Ambassador Tai and the White House.

The following senators signed this letter in a show of bipartisan support:

Marsha Blackburn (R-TN)
Katie Boyd Britt (R-AL)
Mike Braun (R-IN)
Maria Cantwell (D-WA)
John Cornyn (R-TX)
Mike Crapo (R-ID)
Bill Hagerty (R-TN)
Tim Kaine (D-VA)
Mitch McConnell (R-KY)
Joe Manchin (D-WV)
Roger Marshall (R-KS)
Rand Paul (R-KY)
Gary Peters (D-MI)
Jacky Rosen (D-NV)
Mark Warner (D-VA)
Todd Young (R-IN)

If only restaurants and bars, venues where American whiskey is bought and sold, had received this type of support when seeking RRF replenishment.

The Letter

“Dear Ambassador Tai,

“We write today to request an expedited agreement with the European Union (EU) to secure the permanent removal of retaliatory tariffs on spirits and wines. While we applaud the Administration’s efforts to suspend retaliatory tariffs for five-years on spirits and wines in the WTO Large Civil Aircraft Dispute and the two-year pause on American Whiskeys in the steel and aluminum dispute, we are deeply concerned that a lack of a permanent fix risks the re-imposition of tariffs. As of now, a 50 percent tariff is set to hit American Whiskeys on January 1, 2024.

“Spirits have had a significant cultural impact in our country, and currently have a profound impact on the U.S. economy. In 2022 alone, U.S. distilled spirit exports reached $2.06 billion. But the impact of the retaliatory tariffs was devastating. For the American Whiskey industry, exports decreased from $702 million to $440 million, a loss of 20 percent between 2018 and 2021. In 2022, American spirits exports rebounded over 2017 pre-tariff levels – the last full year before retaliatory tariffs – due in large part to the suspension of retaliatory tariffs. For many in the hospitality industry and others such as retailers, grocers, importers and distributors, many of which are small, locally-owned businesses, the impact was severe, compounded by the onset of the Covid-19 pandemic.

“While we understand that you continue to negotiate towards a deal to settle the dispute related to steel, we believe that the targeting of spirits is extraneous. Likewise, a permanent fix is needed as the two-year pause on American Whiskey tariffs is set to snapback soon.

“Understanding that tariffs are a ‘tool in the toolbox’ in negotiating a deal, the imposition of additional tariffs on this industry would be detrimental. There are mutual benefits in finding a path forward, and our belief is that spirits and wines are a point where there can be consensus to limit the damage for all parties.

“We look forward to your support in finding a permanent fix for retaliatory tariffs on spirits and wines.”

Image: Daniel Norris on Unsplash

December 12, 2023by krghospitality krghospitality No Comments

Drink Donnybrook: Let’s Talk Screwdriver

Drink Donnybrook: Let’s Talk Screwdriver

by David Klemt

Is there vodka in there? Maybe.

As it turns out, the origins of one of the simplest cocktails on the planet—there are just two ingredients in a traditional Screwdriver—are a mystery.

Another interesting note about the Screwdriver: It’s likely a relatively new drink.

If the Screwdriver is an American invention, the earliest most believe it could have been created is the 1920s. That’s when Smirnoff sold the rights to North American distribution to a distiller in the US.

However, it’s possible the cocktail wasn’t invented until some time in the 1940s. Vodka didn’t really become popular among Americans until the ’40s. So, it’s conceivable that the Screwdriver is less than 100 years old.

Still, it’s difficult to believe that someone, somewhere didn’t think to add a splash of vodka to their orange juice in the 1800s. Or that someone didn’t think to “adjust” the taste of the vodka in their glass with a bit of OJ.

Either way, it’s pretty entertaining to know that we don’t have a definitive answer for who created the Screwdriver, where it was first made, and when. When we consider the fact that the recipe calls for just two simple ingredients, maybe it does make sense that we don’t know the who, where, and why. It’s so easy to make that it’s believable multiple people had the same idea around the same time, across the globe.

Of course, it wouldn’t be a Drink Donnybrook without checking into some origin theories. So, let’s dive in!

World War II

One theory involves WWII and the US Marine Corps.

It’s quite simple, really. During WWII, stationed overseas, perhaps a few Marines jazzed up their orange juice with a touch of vodka.

Oh, but wait. The Screwdriver may not be attributable to the USMC. It’s possible, according to another theory, that the former US Army Air Forces came up with drink and name when stationed in Ankara, Turkey.

As the predecessor to the Air Force, the USAF may hold claim to the Screwdriver.

If it’s one thing we need, it’s more fuel for the inter-service rivalry between the USMC and USAF.

Journalists

Two publications mentioned the Screwdriver in the 1930s and 1940s.

According to some historians, Journalism Quarterly at least made reference to a drink called the “Smirnoff Screwdriver” in 1938.

If that’s true, the classic cocktail predates WWII by a year. And if that’s true, it’s possible that American marines, airmen, or soldiers spread it around the world.

In 1949, Time magazine mentioned the Screwdriver. According to the writer, the cocktail was the newest drink grabbing attention at the Park Hotel in New York. Apparently, American engineers, Balkan refugees, and Turkish spies loved the drink.

Interestingly, if Time‘s reporting is accurate, it’s possible the supposed Turkish spies frequenting the Park Hotel bar got the name of the drink from American airmen.

Since apparently no bartenders who worked at the Park Hotel appear to have taken credit for it back in the ’40s, it’s unlikely it was created there.

Roughnecks

Okay, so you’re an oil worker. It’s the 1950s and you’re working in the Persian Gulf.

You’re performing back-breaking, dangerous tasks in oil fields. Maybe you need a pick-me-up, and maybe that pick-me-up involves mixing orange juice and vodka together.

But…you don’t have a barspoon. You certainly don’t have a swizzle stick. And you don’t have a coffee stirrer handy.

What you do have is a screwdriver. That screwdriver will definitely stir a drink. It doesn’t take time for this vodka-orange juice concoction to get the name “Screwdriver” because of the stirring utensil.

Well, that’s one theory, anyway.

Two days from now, December 14, you can share all those stories with your guests. Why? Because that’s National Screwdriver Day, a time to celebrate one of the simplest cocktails ever made.

Of course, you and your team can make the Screwdriver your own. Top-shelf vodka, the finest and freshest hand-squeezed orange juice (maybe even blood orange juice), any number of garnishes or rims, a touch of sparkling wine or water… The simpler the drink, the easier it can be to riff on it.

Cheers!

Image: Ryutaro Tsukata on Pexels

December 11, 2023by David Klemt David Klemt No Comments

FTC Targets Restaurant Fees and Surcharges

FTC Targets Restaurant Fees and Surcharges

by David Klemt

The Apex Building, also known as the Federal Trade Commission Building in Washington, DC.

Well, that didn’t take long. Less than two months after asking for the public’s input, the Federal Trade Commission is proposing legislation targeting additional fees and surcharges.

The proposed rule is known as the “Unfair or Deceptive Fees” rule. As one may imagine, the FTC is going after hidden and so-called “junk” fees.

As it stands, according to multiple outlets, this rule would prohibit restaurant and bar operators from surcharges that are commonplace. For example, larger-party fees, delivery surcharges, and even credit card processing charges would be banned by the rule.

Instead, operators would be compelled to list total prices on menus, whether for goods or services. Further, the FTC is directing operators to provide larger groups with “larger group” menus. These separate menus would show total prices calculated to include any surcharges.

Even further, it’s being reported that the FTC is also addressing tips. The Commission’s rule directs operators who charge service fees in place of tips to remove the fee and return to tipping.

Interestingly, the National Restaurant Association is reporting that the FTC never identified restaurants as a targeted industry when asking for public comments about junk fees. However, other sources claim that restaurants were indeed included when the FTC put forth the request for public feedback.

Regardless, it’s a fair statement to say that the Commission doesn’t understand restaurant operation and costs. It appears that the FTC either didn’t work with any operators when drafting these proposed rules. Or, if they did seek out restaurant operator input, they put very little stock into it.

Costing Independents

One thing that’s clear is these proposed rules will cost operators. In particular, compliance will cost independent operations, which account for nearly 70 percent of American restaurants.

According to the NRA, the cost of changing menus will cost nearly $5,000 per operator, for starters.

“The FTC doesn’t take the realities of the restaurant industry into consideration,” reads the Association’s fact sheet. “Its estimated compliance cost—$3.5 billion—would equal a cost of $4,818.27 per operator for menus alone. Small independent operators run on a 3-5% margin and make an average of $45,000/year. The cost of making this change would be approximately 10% of their total income.”

As independent operators can attest, credit card swipe fees are a dynamic cost that affects them disproportionately in comparison to their chain restaurant counterparts. Since these fees are calculated on a per-transaction basis and not fixed, adjusting menu prices to comply with the FTC’s rule puts them at a costly disadvantage.

Then there’s the simple fact that when restaurants raise prices, traffic tends to drop. When traffic drops, revenue goes with it. And when traffic and revenue drops, hours are cut back, and people lose their jobs.

Harmful Legislation

As far as I can tell, this is another example of a government agency attempting to impose rules on an industry it doesn’t understand.

When drafting legislation that affects restaurants, a group of operators and industry advocates that truly represents those who will be impacted should be impaneled. Input should be taken into thoughtful consideration before drafting rules, and drafts should be provided to the panel to receive feedback.

Unfortunately, the past few years have made it clear that our industry has very few friends the federal government. Our lobby, such as it is, simply isn’t respected as valuable enough to warrant consideration before imposing harmful rules on the industry.

This, despite the fact restaurants and bars in America employ more than 12 million people. That’s a lot of voters too many elected lawmakers are willing to dismiss as unimportant.

Image: ipse dixit on Unsplash

Café de España drink at the Palma at the Santa Monica Proper Hotel

December 6, 2023by David Klemt David Klemt No Comments

New Alcohol-free Program Has Our Attention

New Alcohol-free Program Has Our Attention

by David Klemt

The alcohol-free Café de España cocktail at Palma Lounge inside Santa Monica Proper Hotel.

Offering guests an alternative to imbibing during the holiday season and into Dry January, the Palma’s “Conscious Consumption” menu has our attention.

Palma Lounge inside Santa Monica Proper Hotel is offering a fully realized zero-proof cocktail menu. Showing their savviness, the shrewd Proper Hospitality team launched this alcohol-free menu at the start of November.

Given the number of holiday gatherings people are expected to attend from mid-November through December 31, this is a smart move.

There are several reasons a guest may choose to abstain from drinking alcohol while at a bar, restaurant, or special event. A person may be sober; sober-curious; in need of a break from alcohol after attending a number of personal and professional events; the designated driver; or not be in the mood to drink.

At the end of the day, it doesn’t matter why a guest doesn’t want to consume alcohol, even while out at a bar. What is important is making that guest feel included and comfortable, not alienated or as though they don’t fit in.

Full Consideration

Truly, operators and their front-of-house teams should treat alcohol-free cocktails the same as their low- or full-proof counterparts. Zero-ABV beverages deserve as much as consideration as traditional cocktails. Taste, balance, mouthfeel, garnish, presentation… These drinks shouldn’t be afterthoughts.

Indeed, a great non-alcohol drink menu should be as intriguing as the standard cocktail menu. A guest abstaining from alcohol should receive the same service and experience as other guests.

If done right, with premium ingredients, these beverages can be priced in line with their boozy menu peers. As importantly, they’ll also encourage guests who order them to return to a bar or restaurant.

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A post shared by Santa Monica Proper Hotel (@santamonicaproper)

What really got our attention is how deep the Palma Conscious Consumption menu runs. There aren’t just one or two zero-proof drinks. There aren’t a half-dozen. No, there are at least ten.

And in terms of careful consideration, the menu includes Lyre’s, Optimist, and Seedlip products. With this menu, Palma is positioned to weather Dry January without problem as guests will be well aware of this menu.

Any operator looking for an example of a conscientious approach to no-alcohol, wellness, and a favorable guest experience should look to the team at Palma.

For the full Conscious Consumption program press release, see below.

PALMA AT SANTA MONICA PROPER HOTEL INTRODUCES ‘CONSCIOUS CONSUMPTION’ BEVERAGE PROGRAM

New Menu Features Robust Selection of No-ABV Options for Every Occasion

November 2023—Beginning November, 2023, Palma at the Santa Monica Proper Hotel introduces its new Conscious Consumption program, a selection of non-alcoholic cocktails and beverages for its wellness-focused surrounds in the heart of Los Angeles’ west side.

WHAT: Whether curbing consumption between a schedule of holiday parties, hitting reset in the new year, or monitoring day-to-day indulgence, Palma’s new Conscious Consumption menu includes nonalcoholic versions of both traditional cocktails and original creations, featuring a range of N/A spirits that are exciting as they are satisfying. Highlights include:

The Cosmo: Optimist Fresh, Lyre’s Orange Sec, cranberry, lime
Fresh 75: French Bloom Le Blanc, Optimist Fresh, lemon, agave
Café de España: Lyre’s Coffee Originale, espresso, orange blossom
TropiCali: Seedlip Spice, Lyre’s Orange Sec, Tropical Red Bull, ginger
Spritzu: French Bloom Le Blanc, Lyre’s Italian Orange, Fever Tree Club Soda, yuzu
Basil Drop: Seedlip Spice, Lyre’s Orange Sec, lemon, basil
No-Jito: Lyre’s Dark Cane, mint, orange, lime, Fever Tree Club Soda
Hug on the Beach: Optimist Fresh, lemon, cucumber, ginger
Prickly Bear: Seedlip Spice, Lyre’s Orange Sec, prickly pear, grapefruit, jalapeno-ginger syrup
Gin and Juice: Lyre’s Dry London, Fever Tree Sparkling Grapefruit, lime

WHERE: Palma at the Santa Monica Proper Hotel (700 Wilshire Blvd, Santa Monica, CA 90401)

WHEN: The new menu is available beginning November 1, 2023

HOW: Palma accepts walk-ins for both dining and the bar, to make a reservation, visit here.

About Santa Monica Proper Hotel

Santa Monica Proper is an architectural wonder set amid two contrasting buildings — a Spanish Colonial Revival landmark and a sleek contemporary new build, connected by an artfully crafted bridge — where the creative vision of Kelly Wearstler’s design seamlessly blends past and present. The property is anchored by Palma, an all-day enclave for craft cocktails and eclectic bites, along with a rooftop destination, Calabra. The latter features vibrant Mediterranean and California coastal cuisine and a robust wine program, with hubs for both indoor and outdoor gathering, complete with sweeping ocean and cityscape views. Lastly, the Siete event space (formerly Onda) offers a unique setting for high profile collaborations, residencies and events, complete with furnishings by Kelly Wearstler.

About Proper Hospitality

Proper Hospitality designs, brands, and operates high-end lifestyle hospitality experiences under the Proper, Hotel June and The Collective brands. Each property is a distinct reflection of the vibrant community surrounding it, while sharing a common belief in uncommon luxury, convenience of location, and world-class amenities provided by locally vetted innovators in art, food & beverage, fashion, music, technology and wellness. Led by the visionaries behind The Kor Group, the company currently manages Proper branded hotels in Santa Monica, Downtown Los Angeles, San Francisco and Austin, Hotel June in West Los Angeles and Malibu, and The Collective, a curation of design-driven independent hotels including Avalon Hotels in Beverly Hills and Palm Springs, Ingleside Inn in Palm Springs, Venice V Hotel in Venice Beach, The Culver Hotel in Culver City and Paia Inn in Maui. For more information and to discover the latest on anticipated openings, please visit www.properhotel.com

Image: Dylan+Jeni (image was cropped to landscape orientation for this article)