Tech stack | 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

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.

Black-and-white photograph of shelves loaded with broken desktop computers and monitors

May 20, 2024by David Klemt David Klemt No Comments

Why We Offer Tech-stack Planning

Why KRG Hospitality Offers Tech-stack Planning

by David Klemt

If your hardware looks like this, it may be time to update your tech stack.

Navigating the seemingly endless restaurant, bar, and hotel technology options available to operators can feel like an overwhelmingly complex task.

This can be particularly true for brand-new operators and those with a decade or more of experience under their belts. For the former, where does one with little to no experience even begin putting together their technology stack?

And for the latter, what tech upgrades are worth implementing, and which platforms are crucial; which are nice to have; and which are unnecessary for a particular concept?

Sitting down and sifting through the platforms within just a few categories can be a significant investment of time. Learning to use each solution and training relevant team members on them also requires considerable time and effort. That’s to say nothing of the initial and monthly outlay of precious monetary resources after making selections.

Of course, there’s also the nagging feeling that maybe the platforms chosen aren’t the “right” fit, or the best in class.

Most operators, regardless of the length of time they’ve been in hospitality, are aware of a handful of tech selections they need to make. They know they need a point-of-sale system, a customer relationship management option, an online ordering platform, a reservation system.

But what about inventory, gratuity management, marketing campaign management, guest feedback, scheduling, catering, website chatbots, AI-enhanced loyalty programs, and even kitchen displays?

According to Brizo Foodmetrics, operators need to consider a dozen tech categories. At KRG Hospitality, we say there are at least that many.

Difficult Choices

Per a new report from Nation’s Restaurant News, people are excited but cautious about the tech available to the hospitality industry. Anyone interested in reviewing the 2024 Restaurant Technology Outlook report can click here to gain access.

Among the report’s insights are the identification of a number of challenges operators face when it comes to tech decisions. The most-significant barrier is still pricing, with 37 percent of NRN survey respondents saying hardware comes with high costs. Further, 30 percent think there’s not enough transparency surrounding additional fees.

There’s also an interesting perception as regards features. While 33 percent of respondents feel the systems they’ve selected are light on functionality, 18 percent say their systems have functions that they don’t even use.

Thirty-two percent of survey respondents identify a lack of knowledge of systems as a barrier to adopting new tech solutions. In some good news, just ten percent of respondents say systems are too difficult to use. Still, ten percent of our industry is a significant number.

Combined, 87 percent of those surveyed will either possibly (24%), probably (33%), or definitely (30%) invest in tech in 2024. That’s an impressive number.

However, 39 percent of respondents were “definitely” going to invest in tech in 2023. That’s a drop of nine percent.

Here to Help

When we at KRG develop a tech stack for a client, it’s with their specific project and needs in mind.

And while we do have preferred partners, we present multiple options. Moreover, each option comes with a synopsis of features and a justification for its inclusion.

If a preferred partner isn’t the best option or the client wants to choose something else, we support that decision. Tech is challenging enough already without being steered toward specific platforms for no other reason than, “We like this one.” These decisions aren’t about us, they’re about what’s best for our clients.

At the end of each tech-stack plan are estimated costs for each option. We include the onboarding fees, monthly fees, and the annual cost. Again, these are close estimates as modules, additional features and hardware like handhelds, and subscriptions can increase or reduce the overall cost.

The hospitality industry tech landscape is transforming from a barren desert to a thriving wetland. KRG Hospitality is here to help you navigate this complex terrain.

Image: z yu on Unsplash

March 15, 2024by David Klemt David Klemt No Comments

What are You Changing in 2024?

What are You Changing in Your Restaurant or Bar in 2024?

by David Klemt

More fun with AI-generated images. That’s quite the busy bar setup.

Toward the end of last year, Nation’s Restaurant News identified what changes operators chose to make after analyzing their operational data.

The publication surveyed hundreds of operators about how data drove their decisions. This survey was an element of their year-end report, Market Leader Report: The Data-driven Restaurant.

As one would imagine, this report focuses on data collection, analysis, and usage. However, NRN‘s report doesn’t just address the importance of data collection in the F&B space. Rather, they seek to understand if operators are collecting the “right” data; whether they can optimize the data they collect; what metrics they’re tracking; and how they’re acting on all that data.

Simply put, it’s an important report addressing a topic crucial to today’s restaurant and bar operations. Those who want their own copy of The Data-driven Restaurant can download it free here.

While entire report is valuable, the focus of this article is one question and the answers provided. Below, to provide context, is a breakdown of the survey respondents.

The Who

Most of the respondents identified as independent restaurant operators.

Indie: 37 percent
Chain (franchisee): 21 percent
Chain (company owned): 18 percent
Multi-concept: 15 percent
Single-site operator: 6 percent
HQ or brand level of foodservice company: 3 percent

By a slim margin, most survey respondents categorized their restaurants as full service or casual dining.

Perhaps unsurprisingly, the fewest respondents operate in the upscale or fine dining category.

Full service / casual dining: 30 percent
Fast casual: 28 percent
Quick service: 20 percent
Midscale / family dining: 15 percent
Upscale / fine dining: 7 percent

The What

So, what question caught our attention at KRG Hospitality?

“In the past 12 months, which initiatives did your organization undertake after analyzing data?”

NRN conducted this survey in November 2023. Not surprisingly, respondents mostly made changes to their menus after reviewing their data. Streamlining menus and adjusting prices were two of the biggest operational trends last year, as many operators are no doubt well aware.

That theory is supported by the survey results. Below, the top four answers to the question above.

Changed menu prices (48 percent)
Removed items from or added items to our menu (47 percent)
Improved the way we trained our staff (26 percent)
Adjusted our loyalty program’s rewards and/or incentives (24 percent)

Honestly, it’s heartening to see that training is among the top-three data-driven actions operators took last year. And, of course, it’s not shocking that the menu was the focus of the most attention. Streamlining is an effective way to reduce food and labor costs. Further, pricing is always (please excuse the pun) on the menu.

Our question is: What changes, if any, do you plan to implement this year now that we’re headed into Q3?

The What: The Sequel

If the menu received the most attention after operators reviewed their data, what received the least?

Well, it appears marketing fell to the wayside, along with the kitchen. The following are the bottom four answers to the question in the section above:

A/B tested marketing campaigns and increased ROI (6 percent)
Changed specs on our kitchen equipment or technology (10 percent)
Identified lapsed customers and marketed to them (11 percent)
Increased throughput in our kitchen during peak periods (13 percent)

Now, I’ll concede that one marketing action found itself in the middle of the pack when it came to this survey question. Upon analyzing their data, 18 percent of respondents identified new potential guests and marketed to those people.

Still, in comparison to making changes to menus, the fewest respondents took marketing action or made changes to the kitchen directly.

Does this mean that menu changes have the greatest impact on guests and ROI? Well, that’s possible. However, I think something else is at play.

Personally, I think collecting data is the easy part. At this point, most platforms serving our industry are collecting data for operators.

But tracking the correct metrics, analyzing the associated data, and knowing what to do after analyzing said data? That’s difficult. It can be overwhelming, which is why it’s so important to build and implement the proper tech stack for a specific concept. This is why one of the services we offer our clients is tech-stack development.

Further, the tech stack needs to be built around an operator and their leadership team. If nobody knows how to use it or what to do with the data they’re collecting, it’s useless.

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

Front of house staff member using SevenRooms

March 3, 2023by David Klemt David Klemt No Comments

EHI and Danny Meyer Invest in SevenRooms

EHI and Danny Meyer Invest in SevenRooms

by David Klemt

SevenRooms is showing no signs of resting on their laurels, announcing a major new investor: Enlightened Hospitality Investments.

EHI, a private-equity fund, traces its launch back to 2016. The fund, launched by and affiliated with Union Square Hospitality Group, typically makes investments in the $10-25 million range. Generally speaking, EHI makes non-control investments.

As you’re likely well aware, USHG’s founder and executive chairman is none other than restaurateur Danny Meyer. The Shake Shack chairman is also the managing partner of EHI.

Investment in SevenRooms by EHI—and by extension Danny Meyer—is huge news. Meyer now joins other high-profile chef and restaurateur investors in SevenRooms:

Chef José Andrés
Chef Thomas Keller
Jeremy King
Chef Michael Mina
Chef Wolfgang Puck

“At EHI, we always pay close attention to transformative tech that advances high touch,” says Meyer. “Far more than a reservations platform, SevenRooms provides abundant tools to create highly customized guest experiences and equips both restaurant and hotel teams to do what they do best—deliver truly memorable hospitality.”

Continual Growth

Since 2011, SevenRooms has pursued growth while serving the hospitality industry.

Whether in terms of innovation, partnerships, appointing the right people to key roles, or attracting investors, the platform is constantly strategizing to ensure its longevity.

Just look at what the company has achieved over 24 months:

March 2021: SevenRooms appoints Pamela Martinez as the company’s chief financial officer.
September 2021: SevenRooms announces a multi-year partnership with TheFork. The partnership is big news for operators throughout Europe and Australia. Further, the partnership illustrates how the company is pursuing global growth.
October of 2021: The company forms a partnership with Olo. This ensures clients who also use Olo are able to capture data from a key group: off-premise customers. That data creates profiles for such customers automatically. That means operators can learn more about—and effectively market to—customers who engage with them via online orders.
December 2021: SevenRooms and ThinkFoodGroup—the hospitality company behind Chef José Andrés’ portfolio of restaurants—make their partnership public. Interestingly, this partnership also includes ThinkFoodGroup joining SevenRooms in an advisory role.
January 2022: The platform announces the hiring of a chief revenue officer, Brent-Stig Kraus.
December 2022: SevenRooms enters into a partnership with Competitive Social Ventures.
January 2023: The company announces the appointment of their first-ever chief marketing officer.

As our industry rapidly attracts tech platforms and innovations, it can be difficult to know which companies are here to stay.

The growth of SevenRooms shows stability and longevity. Those are two key factors that should inform operator decisions when considering the tech stack.

Image: SevenRooms

Guests enjoying an array of dishes at a restaurant

February 1, 2023by David Klemt David Klemt No Comments

4 Takeaways from Resy’s State of Dining

4 Takeaways from Resy’s State of Dining Report

by David Klemt

The State of Dining and What’s To Come in 2023 from Resy is an informative report that highlights several key developments to watch this year.

In fact, Resy’s report shines a light on ten trends and predictions for operators to consider. However, I’m going to address the four that stand out the most (to me).

For those who may be unfamiliar with Resy, the company is an online reservation platform. While Resy mostly serves major American cities, it does have a presence in Toronto, Canada, and London, UK.

Most importantly, the platform has a unique view of the industry. Resy looks at the industry through the lens of reservations, meaning they collect data concerning consumer behavior in real time.

So, let’s start with some compelling revelations based on reservation data. To view this report in its entirety, visit Resy via this link.

1. 5:00 PM

According to Resy, one reservation time is standing out from the rest. In comparison to 2019 and 2021, 5:00 PM reservations grew by two percent in 2022.

Now, two percent may seem like insignificant growth. However, given Resy’s reach and the platform’s number of active users, the opposite is true.

A two percent increase equates to hundreds of thousands of reservations.

Now, think about your restaurant or bar and consider your reservation distribution. Do you know which hour sees the most reservations? Not an assumption—do you have the data and therefore know the time?

If not, that’s information you need. Not only is this important for scheduling and controlling costs, it’s the benchmark you need to know if you have any chance of tracking change.

2. The Return of In-person Dining

This is one prediction that multiple industry (and even non-industry) publications are making for 2023. It’s the same for hospitality industry platforms: Companies see 2023 as the year restaurants and bars really come roaring back.

But when Resy makes this prediction, they’re using their reservation data to back it up.

First, last summer represents the single busiest season in the platform’s nine-year history. Second, a specific event, a dinner with chef-operator Massimo Bottura, sold out via Resy in a minute.

Third, October 2022. Why is this month worth pointing out in particular? By October, more Resy users had visited restaurants in 2022 than they had during the entirety of 2021.

Clearly, Resy expects this trend to continue and strengthen in 2023. Given their access to reservation data, this seems like a well-informed prediction.

3. Miami

In December of last year we checked out the best states in America for starting a business. Pennsylvania stood out to us for obvious reasons: our Northeastern office is in Philadelphia, with Kim Richardson at the helm.

Overall, Pennsylvania holds the number four spot on the Forbes list. For comparison, Florida slots in at number 45.

However, Miami appears to be an outlier for restaurant and bar entrepreneurs when it comes to Florida.

Per Resy, the restaurant footprint in Miami grew fourfold from 2017 to 2022. Moreover, Resy is seeing continuous growth in Miami. Going even further, this growth is coming from local and outside operators.

In fact, Resy describes South Florida as “white hot for high-profile sequels.” An operator has a top-tier concept? They’re likely to expand into Miami.

4. TikTok

Last week I addressed Datassential weighing in on photos versus videos. According to the F&B research firm, video is now dominating social media engagement.

And also last week, I explained the importance of discovery functionality. Operators who are considering adding a platform to their tech stack should consider whether it will help people discover their restaurant, bar, or hotel.

Resy is a platform that doesn’t just offer discoverability, it’s a core feature. So, when they say that TikTok appears to be a powerful discovery tool for restaurants and bars, that’s likely true.

Now, a poll Resy cites in their report reveals that traditional word of mouth is the top method of discovery. However, the same poll cites that TikTok is the top discovery platform for 43 percent of Gen Zers. Or, in other words, video, or digital word of mouth.

Should operators jump on TikTok? That’s something only individuals can determine is good for their business.

But if they’re courting Gen Z, well…they may need to add TikTok to their social media toolbox.

Image: Meredith Jenks for Resy

January 6, 2023by krghospitality krghospitality No Comments

Dynamic Pricing or Dynamic Menus?

Dynamic Pricing or Dynamic Menus?

by Doug Radkey

A key phrase used throughout 2022 was “the new normal.” In 2023, a key term you will likely hear a lot is “dynamic pricing.”

What is dynamic pricing? It can get quite complex, but the global consulting company, McKinsey, defines dynamic pricing as “the (fully or partially) automated adjustment of prices.”

The term is not entirely new to hospitality. Hotels and the overall travel industry have used modules of the pricing model for years. But for restaurants and even bars, yes, it is something new.

It is also a model getting a lot of attention of late, which begs the following question: Why?

As the bar and restaurant industry recovers from the effects of the pandemic, a dynamic pricing model that optimizes revenue opportunities may seem quite attractive. After all, our industry is looking to rejuvenate its sales to pre-pandemic levels.

Essentially, a dynamic pricing model within this industry would work like this: increase prices when demand is up (peak periods), decrease prices to draw guests in when demand is down (off-peak times).

But should this be a model that disrupts the industry in 2023 and into 2024?

While I am all for a little disruption, the industry needs to tread carefully through this potential transition to dynamic pricing (or perhaps just around the phrase itself) that’s based on demand levels.

Guest Experiences

We all know (or should know) that we do not sell a product. What we sell is an experience.

If we can create a positive, memorable guest experience first and foremost, the revenue will follow.

While hotels and travel, as examples, have boasted “positive financial results” over the years through their different approaches to dynamic pricing (while still trying to focus on the end-user guest experience), independent bar and restaurant brands must be careful not to create a hostile brand perception.

Why? Because many consumers view changing prices based solely on levels of demand as being unfair.

Being unfair will certainly create a negative guest experience and/or brand perception. The hotel and airline industries have been able to navigate this perception successfully by offering alternatives. For example, different rooms and amenities or less convenient flight times at different price points. Essentially, companies in lodging and travel provide options and flexibility before customers make the choice to spend.

What about rideshare and surge pricing as another example? Many of you reading this have likely been burned by surge pricing as a consumer, which can be by definition a form of dynamic pricing.

Have you ever tried to book a rideshare during peak periods in a major market? What would normally be a $20 ride is suddenly $40 to $60 (or more) because of their dynamic pricing model.

What did I do in this situation during a recent business trip? I walked another 25 feet up to the cab staging area of the airport and got my ride for $25.

The end results? I had a negative customer experience with the rideshare company, first and foremost. Additionally, that negative experience drove me to the competition. The key here is I was given a choice.

Now let’s switch that scenario to a restaurant.

The Restaurant Scenario

You book a table at your favorite restaurant and order that incredible steak dinner you always enjoy. But instead of it being $50 like you have grown accustomed to, it is now $75 or more. How are you as a consumer going to feel about this new price just because you visited your favorite spot during a “peak period” on a Saturday night? Were you given a choice before the spend?

Of course, this can work in the opposite direction: ordering a meal during a non-peak time and getting it for a cheaper price, thereby getting a discount.

But should we be confusing our customers based on their chosen, convenient time to visit your restaurant or bar? Should you also focus on “discounting” to drive people to your business?

I have even seen recommendations for offering an increased price for peak period but using what was the previous regular price during the non-peak times, labeling the normal price a “discount.”

Should we be framing our regular priced menu options as a discount just so we can charge and make more during a peak period? Is this being fair and ethical to your loyal customers? Should we be going down this road?

With this model (and the phrase “dynamic pricing”), which is based on demand, it is very easy to see how you can quickly confuse or alienate your loyal guests. Unless the industry in its entirety migrates over to this demand-driven model, a similar scenario as outlined above can play out for you and your guests.

Without extremely strong but transparent communication systems in place (which will be a challenge in itself), it is safe to assume that they will likely visit another restaurant up the street and/or provide negative feedback because they feel your pricing model is confusing or unfair.

Dynamic Menus

The phrase that is much more simplified and will be more easily embraced by both operators and guests is “dynamic menu.”

So, what’s the difference?

While it is still by definition “the (fully or partially) automated adjustment of prices,” it is not based on demand throughout the day. Rather, pricing is based on simple supply chain and operational cost adjustments.

According to the National Restaurant Association:

95 percent of restaurants have recently had significant supply delays or shortages of key food items; and
75 percent of restaurants have had to change their menu because of supply chain issues.

With a more dynamic menu, you can adjust pricing to suit those changes accordingly, through the lens of real-time ingredient cost, labor costs, productivity levels, and even the availability of certain menu items.

This simply means that the incredible steak dinner a guest has always enjoyed at your place is perhaps now $53 instead of $50 because the price of beef went up the past week or month. This ensures that as an operator, you will have a minimal gap between your theoretical and actual food costs.

Again, this should work both ways, meaning if the price of beef has gone down, so too should the price.

This means that your guests are paying an accurate value for each item, based on your intended sales mix and contributions, without a loss in margin on your end or negative experience on the guest end.

This means that everything on your menu is “market price” or MP. Where have we seen that before…?

Market Price

We all know restaurant menus will commonly deduct a price and replace it with the term “market price” (often abbreviated to “MP”). This means the price of the menu item depends on the market price of the ingredients, and the price is available upon request. It has been used for years for seafood in particular—most notably lobsters and oysters—in many restaurants.

Therefore, this pricing model is not entirely new. So, why should it stop at just high-priced seafood?

The reason many operators would use the abbreviated MP was because they did not want to reprint menus every single day as the prices fluctuated greatly.

As we move towards digitally savvy restaurant operations, implementing integrated technology and menus, we can begin to find alternatives and ensure that we are actively pricing our menus accordingly based on the market (and overhead costs) to strengthen top- and bottom-line results.

Knowledge is Power

To make a dynamic menu work, whether you’re a QSR, sports bar, casual-dining or fine-dining concept, or any other category of bar or restaurant, you need to know your target customers, provide a targeted menu, and know your numbers (the data).

Curating and engineering a menu should be a simplified process. To be honest, this should have been streamlined prior to the pandemic.

Your menu should be developed based on data, consumer sentiment, regional ingredients, regional suppliers, and local talent within the confines of the overall concept. Food and beverage programs should be developed with thought, care, speed, precision, execution, and last-but-not-least: consistent profits in mind.

Keeping menus “small” (10 to 12 or even 15 items at maximum) will be the new threshold of a successful, more profitable operation. This size of menu will allow bars and kitchens to operate more efficiently; keep inventory costs both low and controlled; control training and labor costs; and provide guests with the most flavorful and exciting items that they truly want.

Be Nimble

You also want to provide menu flexibility by continually reviewing your supply chain. Maintaining a strong personal relationship with your suppliers is imperative. You must also review your costs and inventory on a daily and weekly basis to make dynamic menus work.

To keep inventory, purchase orders, and potential waste to a minimum, it will be crucial that you to ensure your menu is small but innovative. The only way to accomplish this is through effective data management.

However, the new challenge for many independent brands is making data timely, relevant, digestible, and actionable for operators and their leadership teams. The ability to collect, interpret, and effectively react to key datapoints is going to be crucial for anyone who wants to implement a dynamic menu, and for moving forward in general.

At the end of the day, profiting from a dynamic menu is all about making decisions based on accurate cost and productivity data. Of course, there’s only one way to obtain data: embrace technology and create strategic clarity around it.

The Tech Stack

The key to successfully implementing a dynamic menu is integrating a stack of technology that provides real-time data and trend reports.

From point-of-sale software and reports to accounting software, inventory and recipe management software, and invoice management software or a suite that includes all of the above that’s integrated and working together, you can obtain real-time data to adjust your pricing based on real-time ingredient and productivity costs on a daily or weekly basis.

You want seamless movement of data from front- to back-of-house that will position you to make decisions and have a more complete picture of inventory stock levels, costs, and ordering needs, plus itemized sales, contribution margins, and productivity levels.

In Summary

While we must find ways to be innovative, potentially price-gouging our guests during peak periods and discounting during slow periods is not the way for this industry to recuperate and build loyal customers.

Building a strong brand through the creation of memorable experiences and by building connection with your community along with strategic planning, effective marketing, the elements of culture, and efficient operations, you can build sustainable revenue and profit channels.

By following a more dynamic menu approach within your operations, you can still maintain transparency with your guests with less challenging communication methods, remain a fair and well-respected brand within your community, and improve your margins by three to five percent or more with the right people and systems in place.

That sounds like a pretty good deal to me. The question here remains: Are you Team Dynamic Pricing or Team Dynamic Menus?

Image: Joe Neric on Unsplash

April 19, 2022by David Klemt David Klemt No Comments

Dining Room Tech on the Rise

Dining Room Tech on the Rise

by David Klemt

After years of restaurant technology adoption moving at a glacial pace, the industry now appears to be embracing innovations at light speed.

In fact, in just two short years some in the industry think it may be time to slow down. New tech can be exciting but jumping on every “innovation” is expensive, time consuming, and inefficient.

However, slowing down doesn’t equate to hitting the pause button.

Dining room tech was a topic of discussion at the 2022 Restaurant Leadership Conference in Scottsdale, Arizona. The two speakers agree that our industry needs to ease off the tech throttle a bit.

However, they also feel that tech innovations in the restaurant space will continue at a faster rate than they did pre-pandemic.

Session host Raymond Howard, a co-founder of Ziosk, interviewed Chris DeFrain and Hernan Mujica about dining room tech. DeFrain is a CPA at Lehigh Valley Restaurant Group, which operators 21 Red Robin franchises throughout Pennsylvania. Mujica is CIO for Texas Roadhouse.

Red Robin

Industry professionals and consumers alike should be familiar with Ziosk. After all, Red Robin has been a client with tech company since August, 2012.

Anyone who has visited a Red Robin has certainly interacted with a Ziosk terminal.

According to DeFrain, there are some interesting consumer behaviors taking place in Red Robin dining rooms. When it comes to tech, guests appear satisfied to place orders for appetizers and desserts via Ziosk terminals.

As DeFrain sees it, the guest would rather not wait for a server for ordering those types of food items. However, guests do seem to prefer ordering entrees from a server.

That’s a positive in DeFrain’s opinion, as he believes that ordering must remain the domain of servers. While he contends that the tech-based ordering process needs streamlining, DeFrain doesn’t appear interested in taking it out of servers’ hands completely.

This makes sense; the server as an integral element of the guest experience. How can a casual dining restaurant build guest loyalty and deliver a memorable guest experience without an engaging front-of-house team?

Of course, dining room tech should do more than accept orders, summon a server, and offer tableside payments. Today, data is king. Powerful platforms collect as much useful data as possible.

To that end, DeFrain appreciates that Ziosk provides data Red Robin leadership teams can share with staff. For example, a server can be shown how much they’re making in tips during their shift.

Finally, DeFrain says that guest usage of Ziosk terminals is improving feedback and comments.

Texas Roadhouse

In comparison to Red Robin, Texas Roadhouse took longer to sign on with Ziosk. In part, interestingly, this was due to the redesign of the terminal itself.

Turns out, Texas Roadhouse waited for a Ziosk terminal that took up less space and looked better on the chain’s tables.

Per Mujica (and any Texas Roadhouse guest), the in-person experience is core to the brand. Therefore, dining room tech must be an enhancement, not a detriment.

Like Red Robin, the chain has no interest in adopting tech that replaces FoH staff.

Another consideration regarding dining room tech should be important to all operators: The tech must be user friendly. According to Mujica, restaurant guests are happy to embrace tech innovations—if it’s easy to use.

So, operators must be careful and deliberate when choosing their tech stack. Generally speaking, native tech users (Gen Z) will likely be much quicker to learn how to use a particular technology than a Baby Boomer or even Gen X counterpart.

As such, operators must know their guests in order to adopt tech that enhances rather than alienates.

Another reason Texas Roadhouse chose Ziosk, per Mujica, comes down to mobile pay. In short, the chain didn’t like the mobile pay guest experience.

In terms of the future, Mujica predicts that handheld, tableside ordering is the future of dining room tech.

Takeaway

Like Mujica says, operators have now seen what tech innovations can do for them. In short, there’s no turning back.

And I agree with Mujica and DeFrain: it’s likely (and necessary) that tech development will slow a bit moving forward. Honestly, we all need room to breathe, consider the innovations available currently, and decide what works best for a particular business.

Likewise, I agree that tech can’t be allowed to alter the service model. Technology shouldn’t be seen as a replacement for staff.

Interestingly, restaurateur David Chang addressed this very subject during a 2022 RLC conversation. In his opinion, tech won’t replace restaurant roles, it will streamline them. At most, said Chang, tech will replace small, repetitive tasks, such as the physical flipping of a burger.

In closing, when deciding on the tech stack, operators should consider the following: ease of use for guests, ease of use for staff, streamlining of operations, and cost.

In this space, tech should never be embraced simply because it’s shiny and new. Not only is that costly in terms of investment, it can cost guest loyalty and visit frequency.

Image: Vishnu Mohanan on Unsplash