Planning | KRG Hospitality

AI-generated image depicting a hotel owner or executive in the lobby of their property

August 14, 2024by David Klemt David Klemt No Comments

Maximizing a Hotel’s Off-Season

Maximizing a Hotel’s Off-Season

by Doug Radkey

Note: AI-generated image.

Nearly every hotel experiences an off-season during the calendar year, a period of time when they can see occupancy rates drop by as much as 30 percent.

But when did it become normalized to sit back and view this significant dip as acceptable?

With the right strategies, these periods can become opportunities for growth. Or in the very least, reduce the occupancy drop to five or ten percent.

What would that difference do to your annual outcome?

Forecast Your Off-Season

Hotel operators, independent and chain, should be mindful of the off-season, forecast demand effectively, and leverage local opportunities. This change in approach can help hotels develop comprehensive strategies to maximize revenue and occupancy during traditionally slow periods.

Being mindful of this period allows you to develop strategies proactively to mitigate its impact. This approach involves recognizing the specific months or times of year when demand traditionally drops, which can vary significantly depending on your location and target market.

For instance, a beach resort may experience a lull during the colder months, whereas an otherwise busy hotel located in the heart of a large city might see fewer guests during the summer when business travel decreases. Identifying these patterns helps operators better prepare and implement measures to attract guests and maintain profitability during these quieter times.

Effective forecasting involves analyzing historical data to identify trends and patterns in occupancy rates, daily rate, and revenue metrics. Tools such as Atomize, a dynamic revenue management system (RMS), and Mews, a property management system (PMS), can provide valuable insights by processing large amounts of data and highlighting seasonal fluctuations.

Predicting slow seasons accurately gives operators the ability to adjust their marketing strategies, pricing models, and operational plans. Doing so optimizes performance, and minimizes the negative impact of a reduction in demand.

Diversify Your Target Market

One of the most effective strategies for maximizing hotel revenue during the off-season is diversifying your target market. Broadening the scope of a hotel’s potential guests attracts new segments that may not have been the primary focus during peak periods.

This can include targeting niche markets such as wellness travelers, eco-tourists, digital nomads, and local residents looking for staycations. Each of these segments has unique needs and preferences an operator can cater to with specific packages or experiences.

To reach these off-season niche markets effectively, hotels need to create customized marketing campaigns that speak to their interests and needs directly. Personalized, targeted marketing can enhance the appeal of your hotel to these segments significantly.

For example, digital nomads, who seek remote working environments, can be attracted with packages that include high-speed internet, comfortable workspaces, and discounted long-term stays. Marketing campaigns for this segment could highlight the hotel’s co-working spaces, business amenities, and serene surroundings conducive to productivity.

When targeting local residents looking for staycations, campaigns could emphasize the convenience and luxury of a local getaway, offering special weekend packages, family deals, or romantic escapes.

This strategic approach may not only fill rooms but also build brand equity among niche segments, ensuring a steady flow of revenue throughout the year.

Embrace Group Bookings

Group bookings can be an effective strategy for filling rooms quickly, and generating revenue during the off-season.

Targeting groups helps hotels secure multiple reservations at once, thereby stabilizing occupancy rates, and mitigating the impact of seasonal downturns.

Further, group bookings encompass a wide range of categories, including corporate events, conferences, weddings, family reunions, and social gatherings. Each of these groups has specific needs and expectations. Operators can meet these needs through tailored packages that include group discounts, meal plans, and activity options.

Going further, operators can appeal to these groups by partnering with local tour operators and community organizations to promote personalized packages.

Dynamic Pricing Strategies

Dynamic pricing involves adjusting room rates in real-time based on demand, competition, and other market factors.

Leveraging revenue management software and data analytics helps hotels optimize pricing to attract more bookings while maintaining profitability. This flexible approach ensures that room rates are always competitive and aligned with current market conditions, filling rooms that might otherwise remain vacant. These pricing strategies can be extended into bundles and experiences to showcase additional value.

Combining accommodation with additional services and amenities offers more value to guests, making their stay more appealing. These bundles not only enhance the guest experience but also encourage longer stays, and increased spending on-site.

Further, curated experiences can range from culinary workshops and wellness retreats to cultural tours and outdoor adventures. Understanding the preferences of the targeted or niche off-season market should lead to the creation of unique and memorable experiences that go beyond standard accommodation offerings.

For example, a hotel might collaborate with a local chef to offer cooking classes, or with artists to provide guided art workshops. Curating guest experiences not only differentiates the hotel from competitors but also provides added value that can justify higher room rates during the off-season.

Lastly, a dynamic pricing strategy could be used to encourage short-term and long-term stays beyond the typical three- to seven-night range.

For short-term stays, offering discounted rates for extended weekends or mid-week stays can appeal to both leisure and business travelers looking for a quick escape. With long-term stays, hotels can provide special rates and amenities for guests staying multiple weeks or even months. Doing so can attract digital nomads, business travelers on extended assignments, or families relocating to the area.

Strategic Adjustments

Outside of trying to build business, the off-season provides an ideal opportunity for hotels to review and adjust their operations. This ensures they are running efficiently and effectively, and preparing themselves for the next peak season.

During these quieter periods, hotels should conduct comprehensive reviews of operational efficiencies to identify areas where processes can be streamlined.

This may involve analyzing housekeeping routines, front desk procedures, and food and beverage operations to find ways to reduce waste and improve service delivery. Focusing on these improvements enhances overall efficiency, which not only saves costs but also improves the guest experience.

Reviewing and updating standard operating procedures (SOPs) is another crucial task that can be undertaken during the slow season. Hotels can take this time to involve staff in the review process, gathering feedback on current procedures and identifying any gaps or inefficiencies. Updated SOPs can then be communicated and implemented through targeted training sessions, ensuring that all team members are aligned, and equipped to provide the highest standard of service.

The off-season is an excellent time to schedule one-on-one meetings with team members, and comprehensive training sessions that include refreshers on existing protocols, along with introductions to new technologies or service standards. Investing in staff development not only improves service quality but also boosts employee satisfaction and retention.

Technology plays a pivotal role in modern hospitality management, and the slow season is the perfect time to review and upgrade technological systems. Whether it’s enhancing the property management system (PMS), implementing a new guest (customer) relationship management (CRM) tool, or upgrading the hotel’s Wi-Fi infrastructure, these technological improvements can enhance operational efficiency and guest satisfaction significantly.

Additionally, hotels can explore new technologies such as AI-driven analytics and automated check-in systems to stay ahead of industry trends and improve the guest experience.

Review Playbooks

The off-season is a strategic time to review and adjust various playbooks that guide a hotel’s operations and strategy.

Reviewing the Brand Strategy Playbook ensures that the hotel’s identity, values, and positioning remain strong and relevant. Operators can update Marketing Playbooks to reflect new trends and campaigns tailored to attract guests during the next 12 months. Business Playbooks should be assessed to ensure all operational plans align with the current market environment and organizational goals. Financial Playbooks are critical for maintaining financial health, and reviewing them helps identify cost-saving opportunities and areas for investment.

Regularly updating these playbooks maintains strategic clarity and agility, ensuring a hotel remains ready to capitalize on opportunities as they arise.

Utilize the off-season to build occupancy, leverage revenue opportunities, adjust operations, update SOPs, enhance training programs, and upgrade technology. Doing so helps a hotel to optimize its performance.

This proactive approach ensures that when the busy season returns, the hotel is not only coming out of the off-season with better cash flow, but operating smoothly and efficiently, providing an exceptional guest experience.

Image: DALL-E

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

AI-generated image of a caramel sundae surrounded by pats of butter and chicken nuggets

June 21, 2024by David Klemt David Klemt No Comments

Fast-food Giant Halts AI Ordering

Fast-food Giant Halts AI Order Taking

by David Klemt

Ironically, this image is AI generated. So, how many pats of butter and nuggies do like with your sundae?

Roughly two years after first experimenting with artificial intelligence-driven ordering technology, McDonald’s is pulling the plug…for now.

The fast-food behemoth made its interest in artificial intelligence abundantly clear in 2019. In Q2 of that year, the company purchased Dynamic Yield for a reported $300 million. Immediately after making the acquisition, McDonald’s implemented Dynamic Yield’s machine-learning tech to an estimated 8,000 drive-thrus.

KRG Hospitality readers may recall that the fast-food company faced a class-action privacy lawsuit in Illinois. The plaintiff alleged that McDonald’s “violated BIPA because it failed to obtain proper consent prior to collecting and disseminating Plaintiff’s and the other class members’ voiceprint biometrics who interacted with its AI voice assistant at its Illinois locations.”

Around six months after making that acquisition, McDonald’s picked up Apprente. Interestingly, the voice-powered ordering tech platform had only been founded in 2017.

Following the purchase, the Apprente team became founding members of McD Tech Labs, a group that fell under the McDonald’s Global Technology Team umbrella. Two years later, McDonald’s would sell McD Tech Labs to IBM.

Put simply, McDonald’s was interested in testing voice-activated “automated order taking” (AOT). In theory, an effective platform could take orders, speeding up drive-thrus and streamlining operations.

Well, it appears that the answer is no. At least, not to the standards of McDonald’s, and satisfaction of the company’s guests.

Speed, Convenience, and Accuracy

A drive-thru needs to be fast. There’s no question about it, that’s the entire point.

The speed, after all, makes a drive-thru convenient. Otherwise, people would just park and place their orders at a counter or kiosk.

However, speed means nothing without accuracy. An LSR, QSR or fast-casual restaurant with a drive-thru could promise a guest will wait in line for no more than ten seconds after ordering. If they don’t get what they ordered, it doesn’t matter.

Poke around social media—TikTok in particular—and you’ll come across some viral AOT moments. There’s the addition of several “butter portions” to an ice cream order. Also, the addition of bacon to an order for ice cream, which I’m not entirely confident I’d correct. At least one guest popping into an AI-powered McDonald’s drive-thru had hundreds of dollars of McNuggets added to their order.

So, by July 26 of this year, as reported by Restaurant Business, the experiment will end. This partnership between McDonald’s and IBM to test AOT will be no more.

However, McDonald’s also said that IBM will remain a partner for other efforts. Further, McDonald’s shutting down AOT (for now) doesn’t seem to have turned other brands off from the idea. Per reporting, IBM says other fast-food chains are inquiring about AOT.

This story makes a few things clear to me. First, McDonald’s is confident that investing in tech is the way forward. They’ve spent hundreds of millions of dollars to test and implement new tech solutions. Second, someone has to go first and test in earnest, and it appears that LSRs and QSRs are leading the charge in hospitality.

And third, AI isn’t ready for prime time just yet. It’s wise to keep up to date with AI-powered innovations, but it’s also smart to be cautious.

Image: Shutterstock. Disclaimer: This image was generated by an Artificial Intelligence (AI) system.

A street-art-style image of a thought bubble coming from a chef

June 19, 2024by David Klemt David Klemt No Comments

Concept Development: Idea to Execution

Restaurant Concept Development: From Idea to Execution

by Nathen Dubé

A big light bulb means a great, big idea is coming.

Creating a restaurant concept is an intricate process that requires blending creativity, an understanding of a given market, and business acumen.

From the initial idea to the grand opening, each step is crucial in ensuring that the restaurant not only stands out in a competitive market but also delivers a memorable dining experience.

In this comprehensive guide, we’ll explore the essential stages of restaurant concept development, providing insights and strategies to turn your vision into a thriving reality.

1. Ideation: Craft Your Vision

The journey of developing a restaurant concept begins with a compelling idea. This idea should reflect your passion, culinary expertise, and a clear understanding of your target market.

Below, how to start down the path from vision to reality.

Identify Your Niche

A deep understanding of the niche you want to fill in the market is critical. Are you aiming for a high-end fine dining experience, a casual eatery, a fast-casual concept, or a food truck?

Research current market trends, consumer preferences, and gaps in the market to find your unique angle.

Define Your Concept

Your concept should be a detailed description of your restaurant’s identity. This includes the cuisine, service style, ambiance, target audience, and overall theme.

For example, are you creating a rustic Italian trattoria, a chic urban sushi bar, or a family-friendly diner?

Create a Vision Statement

A vision statement is a concise description of what you want your restaurant to achieve, and how it will stand out. This statement will guide your decisions throughout the development process.

2. Market Research: Understanding the Landscape

Thorough market research is essential to validate your concept and refine your strategy. This step involves analyzing the competitive landscape, understanding customer preferences, and identifying potential challenges.

Analyze Competitors

Visit and analyze restaurants that could be considered competitors. Evaluate their strengths and weaknesses, menu offerings, pricing strategies, and guest experience.

Understanding what works and what doesn’t can help you position your restaurant effectively.

Understand Your Target Audience

Identify your target demographic in terms of age, income, lifestyle, and dining preferences. Conduct surveys, focus groups, and interviews to gather insights into what will attract and resonate with your guests.

Evaluate Location Options

Location is a critical factor in the success of a restaurant. Analyze different locations based on foot traffic, accessibility, visibility, and proximity to competitors. Consider the demographics of the area to ensure they align with your target audience.

3. Business Planning: Laying the Foundation

A well-crafted business plan is essential for securing funding and guiding the execution of your restaurant concept. It should outline your strategy, financial projections, and operational plan.

Executive Summary

Provide a concise overview of your restaurant concept, including the vision statement, target market, and unique selling proposition (USP).

Market Analysis

Summarize your market research, including competitor analysis, target audience insights, and location evaluation.

Marketing Strategy

Detail how you plan to attract and retain customers. This includes branding, advertising, promotions, and social media strategies.

Operational Plan

Describe your restaurant’s daily operations, including staff roles and responsibilities, supplier relationships, and inventory management.

Financial Projections

Provide detailed financial projections, including startup costs, operating expenses, revenue forecasts, and break-even analysis. This section should also include funding requirements, and potential sources of financing.

4. Branding and Design: Creating an Identity

Your restaurant’s brand and design play a crucial role in attracting guests, and creating a memorable dining experience.

This step involves developing your brand identity, designing the physical space, and creating marketing materials.

Develop Your Brand Identity

Your brand identity includes your restaurant’s name, logo, color scheme, typography, and overall visual style. Ensure that it reflects your concept and appeals to your target audience.

Design the Interior and Exterior

Work with architects and interior designers to create a space that reflects your concept and enhances the dining experience.

Consider factors such as layout, seating arrangements, lighting, and décor. The exterior should be inviting and reflect the brand’s identity.

Create Marketing Materials

Develop a website, social media profiles, menus, and promotional materials that align with your brand. High-quality photography and compelling content are essential for attracting customers and creating a strong online presence.

5. Menu Development: Crafting Culinary Offerings

The menu is the heart of your restaurant concept. It should reflect your vision, appeal to your target audience, and be feasible to execute consistently.

Design a Balanced Menu

Create a menu that offers a variety of dishes that reflect your concept. Ensure a balance of flavors, textures, and price points.

Consider dietary restrictions and preferences to cater to a diverse customer base.

Cost and Pricing

Accurately cost each menu item to ensure profitability. Consider ingredient costs, portion sizes, and preparation time.

Set prices that reflect the value of your offerings while remaining competitive in the market.

Test and Refine

Conduct taste tests and gather feedback from potential guests, industry professionals, and staff. Use this feedback to refine your dishes and ensure they meet your quality standards.

6. Staffing and Training: Building Your Team

Your staff is a crucial component of your restaurant’s success. Hiring the right team and providing comprehensive training ensures a consistent and high-quality dining experience.

Hire Skilled Staff

Recruit chefs, servers, bartenders, and other staff who have the skills and experience needed to execute your concept. Look for individuals who are passionate about your vision and have a strong work ethic.

Develop Training Programs

Create comprehensive training programs that cover everything from food preparation and presentation to customer service and safety protocols. Regular training sessions and evaluations help maintain high standards.

Foster a Positive Culture

Encourage a positive and collaborative work environment. Recognize and reward outstanding performance, and address issues promptly to maintain morale and productivity.

7. Marketing and Promotion: Attracting Customers

Effective marketing and promotion are essential for attracting customers and building a loyal guest base. This involves both online and offline strategies to generate buzz and drive traffic.

Leverage Social Media

Use social media platforms to showcase your restaurant’s unique offerings, engage with potential customers, and build a community. Share high-quality photos, behind-the-scenes content, and promotions to attract and retain followers.

Collaborate with Influencers

Partner with local influencers and food bloggers to reach a wider audience. Inviting them to dine at your restaurant and share their experiences can generate valuable word-of-mouth promotion.

Host Events and Promotions

Organize events such as soft openings, tastings, and special promotions to generate excitement and attract customers.

Consider loyalty programs and discounts to encourage repeat visits.

Public Relations

Reach out to local media outlets and food critics to secure coverage of your restaurant. Positive reviews and features can significantly boost your visibility and credibility.

8. Execution: Bringing Your Concept to Life

The final step is the execution of your concept.

This involves managing the logistics of opening day, ensuring a smooth operation, and continually refining your approach based on feedback and performance.

Prepare for Opening Day

Ensure that all permits and licenses are in place, staff are trained, and inventory is stocked.

Conduct a soft opening to test your operations and make any necessary adjustments.

Monitor Operations

Regularly evaluate your restaurant’s performance, including customer feedback, financial metrics, and operational efficiency. Use this data to identify areas for improvement and implement changes as needed.

Stay Adaptable

The restaurant industry is dynamic, and trends can change quickly. Stay informed about industry developments and be willing to adapt your concept to meet evolving customer preferences and market conditions.

Conclusion

Restaurant concept development is a multifaceted process that requires careful planning, creativity, and execution.

Following these steps to guide your vision and transform it into a brick-and-mortar reality. Doing so will give you the strongest chance to create a restaurant that stands out in the market, and that delivers a memorable dining experience.

Remember, the key to success lies in a clear vision, thorough research, strategic planning, and a commitment to excellence.

Embrace the journey, learn from each step, and watch your restaurant concept come to life, delighting diners and making a lasting impact in the culinary world.

Image: Shutterstock. Disclaimer: This image was generated by an Artificial Intelligence (AI) system.

October 11, 2022by David Klemt David Klemt No Comments

The Crucial Role Systems Play

The Crucial Role Systems Play

by David Klemt

Having efficient systems in place does more than just streamline day-to-day restaurant, bar, and hotel operations and increase productivity.

Of course, that’s an excellent reason for operators to ensure they implement multiple systems. Front-of-house, back-of-house, and leadership team members need systems to perform at their best.

Six Sigma, kaizen, the technology stack, checklists, manuals, marketing strategies, the guest journey… Each of those systems and more are key to the long-term success of restaurant, bar, and hotel operations.

In fact, these systems should be developed and ready for implementation before the doors ever open for the first time.

Further, effective systems communicate the expectations for roles and tasks. Onboarding and training systems improve recruitment and retention. Also, they provide the transparency that today’s professionals expect from their employers. On top of that, systems help develop consistency, which keeps guests coming back.

A strong leadership team is effective at implementing and following systems. Overall, a strong team is one that understands, embraces, and adheres to a systematic approach to operations to achieve shared goals.

Simply put, the only way achieve success is to be strategic. One can’t be strategic without the implementation of systems.

But there’s another crucial role that systems play in restaurants, bars, and hotels.

Get Out

This topic is the byproduct of a recent KRG Hospitality client call. While explaining our approach to projects, our team touched on the importance of systems.

However, the topic wasn’t brought up simply to detail what systems the client would need to have in place.

A crucial role systems play in a successful operation is getting an owner away from their four walls. More importantly, allowing them to confidently and comfortably leave their business.

If an owner—be they a sole proprietor or business partner—can’t step away from their restaurant, bar, or hotel without worrying, something is wrong. Either the systems in place are ineffective, they don’t address every element of the business, they aren’t being adhered to, or they don’t exist.

Effective systems allow an owner to take time away from their business without micromanaging staff. Systems should also be in place so the owner or owners don’t feel anxious when they’re not working on the business.

Breathe

Stepping away to pursue a hobby, engage in self care, spend time with family and friends, or just because one wants to take a “lazy day” is necessary.

The strategic implementation of systems makes it possible for someone to take time away from their business. They can take that vacation, pursue that goal that doesn’t relate to their business directly, recharge, etc.

Of course, having systems in place also mean an owner and members of their team can travel. They can comfortably attend industry shows, make a guest appearance at a peer’s bar, or host a pop-up without worrying about the business. Having systems in place also makes it possible to travel to discover new F&B items, learn new techniques, and forge relationships with industry peers.

In other words, systems help owners and operators do something they likely haven’t done in months, if not years: breathe.

Image: Fabian Møller on Unsplash

January 11, 2022by David Klemt David Klemt No Comments

Top 10 Bar Hacks Bonus Episodes: Goals

Top 10 Bar Hacks Bonus Episodes for Setting and Achieving Goals

by David Klemt

We’ve rounded up the ten best bonus episodes of Bar Hacks that feature KRG Hospitality president Doug Radkey offering goal-setting guidance.

Obviously, we all want to succeed. However, it’s not always obvious where we should start. This has been proven all the more true the past two years.

Doug has a way of cutting a path through the overwhelming noise and distractions operators face each day. The Bar Hacks bonus episodes below can help listeners take a deep breath, reset, and take the necessary steps to identify, measure, and achieve their 2022 goals.

Bonus #1: Strategic Clarity

Doug explains strategic clarity as the understanding of who we are, what we’re working toward, and how we’re going to get where we want to go. Click here to listen.

Bonus #3: Simplification

In this episode, Doug asks listeners a simple question: “Is your vision for your restaurant or bar’s systems complex or simplified?”

Bonus #4: Acceptance

We can’t really make achievable goals if we don’t understand the current situation we’re facing. In this bonus episode, Doug explains why it’s important to be able to accept change and differences.

Bonus #6: Decision Making

We make thousands of decisions every day, from the simple to the complex and everything in between. Doug shares his insights into clearly and confidently making decisions for your business. Click here to learn more.

Bonus #7: Innovative Leadership

What is innovative leadership? It’s confidence in your abilities and your team, knowing when to get out of the way, and the culmination of a few other key concepts. To listen, click here.

Bonus #9: Flexibility

For this bonus episode, Doug explains why success in this era of hospitality requires owning the entire guest journey, frictionless omni-channel experiences, and other elements of a flexible approach to business.

Bonus #12: Self Care

Doug shares his thoughts on one of the most crucial elements of operating a business in the hospitality industry. Hint: He’s not talking about menus, marketing or making money in this episode.

Bonus #13: Confidence

Do you think you have a growth-based mindset or a fixed mindset? Doug discusses confidence and the impact it has on your ability to lead effectively in Bar Hacks Bonus #13.

Bonus #14: Self Learning

Knowing that you don’t know it all opens up your world and makes you a better leader. Doug explains how seeking out knowledge, experiences and opportunities to learn makes you a better operator, keeps you sharp, helps you better relate to and mentor others, and improves your business in every way. Listen now!

Bonus #17: The Seven Cs

Doug explains each of the Seven Cs and how they’ll help you build a winning team. Without the right people on staff, you don’t have much of a chance to achieve your goals. Click here to listen to this important episode.

To listen to the first five bonus episodes in this list in one convenient episode, please click here for today’s Bar Hacks podcast episode. Cheers!

Image: Mikołaj on Unsplash

October 19, 2021by David Klemt David Klemt No Comments

Modernize Your Scheduling Today

Modernize Your Scheduling Today

by David Klemt

Scheduling platforms and apps modernize restaurant, bar and hotel team management, streamlining and simplifying several processes.

When it comes to improving communications, the benefits of updating and upgrading how you manage scheduling can’t be overstated.

Of course, in our tech-heavy world, several scheduling platforms do more than just inform your employees about their shifts.

Today’s options handle payroll; assign specific tasks to particular team members; help leadership provide feedback; give staff a platform to provide feedback to leadership; and much more.

Staff Retention

Now, we’ve addressed how our industry has been much quicker to embrace new tech innovations over the past couple years.

We’re bringing up the topic of scheduling platforms for a specific reason. We all make mistakes, and we can learn from those mistakes. And we can also learn from others’ mistakes so we can do our best to avoid making them as well.

On today’s episode of the Bar Hacks podcast, Chef Brian Duffy shares a story about a scheduling issue.

During his return appearance, Chef Duffy explains that his 20-year-old daughter provided two months’ notice about days off she needed to her former employer. “Former” is key here.

It’s clear that the hospitality group property at which she once worked either didn’t utilize a scheduling app, didn’t communicate well, or both.

At any rate, Chef Duffy’s daughter received constant phone calls from management during her vacation. Obviously, that would be infuriating.

Even worse, after she quit that job—she had provided two weeks’ notice—this former employer called to ask if she was coming in for “her shifts.” Well, no—she had quit, with notice.

Clearly, there are other issues with that leadership team beyond a lack of clarity in scheduling. However, a powerful, easy-to-use staff management tool could possibly have kept Chef Duffy’s daughter from quitting this job. A powerful platform, for example, like the four below that are mentioned on episode 53 of Bar Hacks.

7shifts

When choosing a scheduling platform, one crucial element is integration. 7shifts integrates with several major POS systems, such Toast, Harbortouch, Heartland, TouchBistro, Micros, Upserve, and Clover.

In addition to scheduling, which is a given feature for all these platforms, 7shifts offers robust features. Leadership can send one-on-one messages to staff or create group chats. The app itself is a timeclock and handles payroll. And more inclusive packages provide operators with labor budgeting, sales forecasting, labor alerts, and even state-based compliance tools.

7Shifts is free for single locations with up to 10 workers. At the Appetizer level, 7shifts costs $17.99 per month, per location, for up to 20 team members. For $39.99 per month, per location, operators with up to 30 staff can take advantage of the Entrée level. The Works is $69.99 per month, per location, and manages an unlimited number of staff.

HotSchedules

One of the key features of HotSchedules is labor forecasting. Per the platform’s website, HotSchedules “labor forecasts are based on activity, historical data, and specific business rules” to reduce costs and increase revenue.

On the leadership side, scheduling is streamlined and simple to use. Managers can approve—or deny—shift requests with a single click. They can also message individual team members or send messages to a single location.

On the team side, staff can give away, swap and pick up shifts via the convenient app. Staff can request time off, and HotSchedules integrates with their Google Calendars. Upon arrival, staff can clock in through the HotSchedules app and track their attendance and pay.

OpenSimSim

At the surface level, it may seem like OpenSimSim isn’t as robust as the company’s competitors. However, it’s powerful and efficient.

One of the best OpenSimSim features is the open shift invite. Using this feature, team members can be invited to apply for an open shift once one becomes available. In addition, staff can set their profiles up to be auto-approved for open shifts.

Of course, OpenSimSim offers features similar to other scheduling platforms. For example, leadership receives real-time open shift, overtime, and late clock-in notifications. Users can also direct message and group chat via the platform.

Schedulefly

Last on this list solely because I organized these platforms alphabetically is Schedulefly. When you look into this platform, you’ll notice immediately that it’s powerful enough to manage concepts with multiple units.

Managers can quickly and easy navigate each unit in their chain to handle scheduling, broadcast messages for individual locations, message specific team members, and more. Is there a shift that needs to be filled at a specific unit? Schedulefly makes it easy to target the appropriate location and get it filled.

Similar to 7shifts, Schedulefly offers pricing based on staff size. There are no contracts, no fees, and each “level” offers all the same features and services:

19 staff or fewer: $30/month
20 to 39 staff: $40/month
40 t0 59 staff: $50/month
60 to 79 staff: $60/month
80 staff or more: Contact Schedulefly for pricing.

It should go without saying that scheduling is crucial. Understaffing, overstaffing, staffing frustrations, failing to listen to staff about scheduling, and not simplifying the process can increase staff turnover.

Outdated approaches to scheduling also leads to significant decreases in revenue.

At its core, scheduling is a form of communication, a vital one. Commit to improving your communication today by upgrading your scheduling. Your leadership team and staff will thank you.

Image: Gerd Altmann from Pixabay

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

February 8, 2021by David Klemt David Klemt No Comments

Introducing KRG Mindset Coaching

Introducing KRG Mindset Coaching

by David Klemt

Seeking an alternative to complete start-up planning and project management? The solution you’re looking for is KRG Mindset Coaching.

Just like every operator is unique, each project brings with it distinct challenges that require individual approaches and plans.

Some projects are already under way but need help moving forward. KRG Mindset gives these projects the help needed to cross the finish line and achieve long-term success.

What is Mindset Coaching?

Owning a hospitality business may look great on paper, but starting a hospitality business can be really quite stressful:

There are what seem to be endless hours of planning.
There are numerous third-parties involved.
There are often hundreds of thousands of dollars at stake.
There are over 500 unique tasks to complete.

It doesn’t matter if this is your first, fifth, or twentieth project—it’s crucial that you be both prepared and organized when opening a new concept or expanding operations.

However, not every project requires our full suite of targeted solutions, which includes feasibility studies, conceptual planning, business planning, brand development, guest experience strategies, food & beverage programs, and operational assessments.

If you’re beyond the idea stage but find your project is struggling to reach the finish line, we’re here to help. And just like a project in its earliest days, you’ll receive the unique, fully customized KRG treatment.

Is Mindset the Solution for You?

KRG Mindset provides a unique, coaching-style program that helps your start-up make continual forward progress:

Receive a dedicated consultant who will be an approachable advisor for you and your project. They’ll review and navigate your start-up questions and challenges, and be your compass to provide you with a clear path towards a successful opening.

Weekly 1-on-1 video/phone sessions with access to a private calendar: a weekly session in which we evaluate the past week and define required actions for the next week with a focus on budgets, timelines, and industry-specific consulting.

Your dedicated consultant is also available for second opinions and the review of: key documents, location, concept, branding, layouts, equipment, menu, service, technology, labor and financial optimization, system development, operations, marketing, and overall strategic clarity.

Your consultant will help you see the blind spots throughout your project, positioning you to maintain your budget and desired opening date.

Your consultant will help you make strong, educated decisions throughout your start-up project that will have a positive impact on the successful start of your restaurant, bar or hospitality brand.

And finally, your advisor will coach you so you become more confident, energized, and motivated about your opening while holding you accountable and helping you become a better leader through the creation of new habits, communication methods, and decision-making processes.

Click here to schedule a call.

Or, if you’re looking for a more hands-on approach where we develop the winning plans and property for and with you, we invite you to learn more by choosing your preferred option: Restaurants & Cafes, Bars & Lounges, Boutique Hotel & Resorts, or Golf, Gaming & Entertainment.

Images: KRG Hospitality