Restaurant Sales Growth Improved Slightly in May
Mainly due to acceleration in check growth. After experiencing a softening in year-over-year growth every month since January, restaurant sales growth improved during May. But the upswing was relatively small, did not come from a substantial increase in guest counts, and the industry is still experiencing an erosion in sales performance compared to recent months. Restaurant same-store sales growth was 1.9% during May, up from 1.3% the previous month. The comparison to Q1 performance is tricky because the favorable Omicron lap created unusually strong growth rates during the first months of this year. But what is clear is restaurant sales growth is not as strong as it was during the last months of last year, immediately before the Omicron boost came into effect. As a comparison, restaurant same-store sales growth averaged 4.4% for the months included in Q4 2022. However, despite consumers continuing to battle significant inflationary headwinds, and the continued concerns for a slowing economy, the slowdown in sales growth is not coming from an erosion in traffic growth but rather from a deceleration in average check growth. But the news is far from positive when it comes to traffic growth. Year-over-year traffic growth remains persistently negative, as it has for many years. Same-store traffic growth was -3.5% during May, an uptick higher than the -3.6% reported for April. Performance for the industry is not very different than the average -3.7% traffic growth recorded for the months during the last quarter of 2022.
How to Calculate Food Cost for Restaurants
Helping operators to make better decisions, streamline operations, and enhance profitability. Creating craveable dishes and providing high-quality service are crucial parts of running a successful restaurant, but so is having a comprehensive understanding of your restaurant’s financials. One of the most important parts is accurately calculating food costs. This helps operators make better decisions, streamline operations, and enhance profitability. What is Food Cost? The first step is defining what food cost is—the total expense needed to purchase ingredients for menu items. This is inclusive of all the edible components of a dish, including spices, produce, meats, and condiments. Determining the Cost of Ingredients. To calculate food costs, you need to establish the cost of ingredients. This means keeping records of all purchases and invoices. Consider these steps:
- Inventory Management: Maintain a list of all your ingredients, including quantities, unit costs, and suppliers. Regularly update this list to ensure accuracy.
- Supplier Selection: Collaborate with reliable suppliers who offer competitive prices without compromising on quality. Establishing strong relationships with suppliers can lead to better deals and cost savings.
- Invoice Organization: Keep track of all invoices and receipts related to ingredient purchases. Ensure that each invoice corresponds to the respective ingredients on your inventory list.
Americans are Rediscovering the Joys of Analog
And restaurants are following suit. In response to the inexorable creep of technology, consumers are turning back the clock. In fact, they’re turning it way, way back to a kinder, gentler, tech-free time before the turn of this century, and they’re influencing many products and industries in the process. Consider that old-fashioned boardgames are on a roll according to the Washington Post, which reports that category sales jumped 28% between 2019 and 2022, while the BoardGameGeek website counts more than 3,000 new boardgames released last year. Similarly, The New York Times says that traditional books are hot again and that bookstore sales were up 6% last year to just under $9 billion. And numerous sources are tracking the resurgence of vinyl, the object formerly known as the record album. Dealt a presumed death blow by innovations like streaming apps, long-playing records have staged a remarkable comeback. Sales have jumped exponentially in recent years and topped 43 million units in 2022, per the trade publication Variety. These numbers are even more extraordinary considering that an estimated 50% of buyers don’t actually own turntables on which to play them. The blast-from-the-past list includes the second wind of old-fashioned flip phones and the continuing popularity of conventional greeting cards. Consumers are seeking respite from the digital and (re)discovering the joys of the analog, all of which constitutes unalloyed good news for menu developers. Because regardless of the technology by which a meal is ordered, prepped or delivered, the food itself is and will remain resolutely analog.
It’s Time to Revisit the ‘Restaurant of the Future
Redefined contactless dining for a new generation. To say the last few years have felt like eons wouldn’t be a stretch. But let’s just go back to 2021 for a moment. Consulting giant Deloitte released a restaurant trends report intended to crystal ball the future. The underlying thread was COVID-19 pumped massive uncertainty into the sector as well as disruption. Two-thirds of surveyed consumers at the time said they did not expect to return to pre-pandemic dining habits within six months. The outlook was murky. But, again, if one COVID theme has endured, it’s that time operated differently. The phrase “new normal” never did the innovation cycle justice. Many of the trends defining headlines today were topics well before COVID—conditions proved more of an accelerant than an inventive force. And so, what’s the fallout? It’s a landscape guests envisioned before 2020, here ahead of schedule. Deloitte recently released another report—the first since that 2021 drop. It found 55 percent of customers (polled in March 2023) said their rate of in-person dining was actually the same or higher than before the pandemic. Additionally, 69 percent reported they ordered takeout or delivery the same or more frequently than a few years ago. Put simply, COVID did not curb consumers’ appetites the way 2021 cautioned. However, while the prediction restaurant patronage might never recover was overblown, the way guests interact with brands undeniably shifted. Many preferences that emerged during lockdowns held. Namely, two themes from that 2021 study are still pulsing: ultimate convenience, which was reflected in delivery and takeout growth (back then, food-away-from-home spending was 10 percent higher than pre-virus levels); and the importance of frictionless digital engagement.
Orchestrating Restaurant Operations
To increase CX. One of Merriam-Webster’s definitions for orchestration is “to arrange or combine so as to achieve a desired or maximum effect.” Simple concept yet much harder to pull off for today’s restaurants struggling to harmonize in-store, drive-thru, delivery and curbside experiences for both customers and employees. Customer expectations are level set by their most advanced in-store and digital experiences. And those expectations mean:
- Mobile apps automatically apply discounts and loyalty points
- Signage clearly communicates information like designated areas for pickups, online orders and dine in
- Packaging keeps hot food hot and cold food cold no matter the delivery distance
- Diners have a great experience regardless of staffing challenges
These vital components (and there are more), if not in sync, can turn into multiple points of frustration that degrade your customer experience and, quickly, your brand. To improve your brand and stay in customer’s consideration set, consider these six ways to enhance customer experience.
63% of Independent Restaurants Paying More for Rent vs. January
Restaurant operators said their rent is higher than it was six months ago. The trend toward higher rent prices for independent restaurant operators accelerated in June, with 63% noting their rent is higher now than it was just six months ago. According to Alignable’s June Small Business Rent Report, this is compared to 55% of all small business owners navigating higher rent prices, an 8% jump from January and a record high. Further, 16% of all small business owners say their rent is over 20% higher, marking a 2% increase since May. For context, 47% of small business owners noted they were experiencing higher rent prices in January, and that number has grown each month. The trend toward higher rent prices for independent restaurant operators accelerated in June, with 63% noting their rent is higher now than it was just six months ago. According to Alignable’s June Small Business Rent Report, this is compared to 55% of all small business owners navigating higher rent prices, an 8% jump from January and a record high. Further, 16% of all small business owners say their rent is over 20% higher, marking a 2% increase since May. For context, 47% of small business owners noted they were experiencing higher rent prices in January, and that number has grown each month.
The New Competitor in the Restaurant Business
Homes. Our team participated in May’s National Restaurant Association Show in Chicago. Dining post-COVID lockdown continues to shift and change. Going into the show, we honestly were curious about the session conversations, show floor promotions and client meetings. One of the main takeaways is that home is the major competitor for restaurants. In terms of staffing, our specialty, how can you compete? Here is what we learned. (i) Excellent service; During the show sessions, conversations revolved around competing for business. Does a family eat out or stay home? The pandemic got everyone accustomed to eating at home. For most people, they go out so they can get personal attention and first-rate service. They remember and return to restaurants that make them feel good. This kind of treatment isn’t limited to table service in five-star restaurants. Even in fast-food establishments, opportunities for excellent service abound. Keeping tables clean, taking orders with a smile, and letting people know you’re glad they came will make customers of even the humblest burger joint feel appreciated and inspired to return. (ii) Keep staff happy; The key to providing excellent service is not only having quality staff but also retaining them. We heard at the show that staff want and need a voice, a predictable schedule, and fulfillment on the job. This was dubbed labor leverage. If you’re not able to give full-time staff this type of culture and workplace, using temporary staff might be a good option. Many people are surprised to learn that temp workers are a more consistent source of quality help because they’ve already been vetted and trained by the staffing agency, and they show up because they’re only assigned to the shifts they’ve already asked for.
Did You Know?
How to find summer talent for seasonal hiring. For many hiring teams, the stress of seasonal hiring can take away the joy of the summer season—with excitement swallowed by the impending doom of filling shifts. And the economic expectations don’t ease any of the nerves. With the hospitality and restaurant industries expecting to see a boost this summer, employers are expected to add over a million summer jobs for teens this year. But there is hope. The strongest hiring tools are made to withstand economic surges (and lulls), and with the right ones in place, teams can create a strategy that runs off automation (instead of manual efforts). Below are 3 strategies to ensure your seasonal hiring is quickly marked off your to-do list.
Employee Tip
Pregnant workers fairness act now effective. On June 27, 2023, the federal Pregnant Workers Fairness Act (“PWFA”) went into effect. The law requires employers with 15 or more workers to provide “reasonable accommodations” to a worker’s known limitations related to pregnancy, childbirth, or related medical conditions, unless the accommodation will cause the employer an “undue hardship.” The PWFA does not replace federal, state, or local laws that are more protective of workers affected by pregnancy, childbirth, or related medical conditions. These laws have been passed in approximately 30 jurisdictions.
Bielat Santore & Company – Restaurant Industry Alert
BIELAT SANTORE & COMPANY REPRESENTING REGIONAL RESTAURANT COMPANIES
SEEKING IMMEDIATE EXPANSION!
Bielat Santore and Company currently represents a select collection of regional restaurant companies who are seeking growth opportunities in New Jersey; through the purchase of existing restaurants that include land, building and liquor licenses. The firm has closed numerous transactions with these companies. The restaurant companies are internally funded, have established banking relationships, are corporately managed and can move expeditiously toward a closing on the right locations.
If you are considering the sale of your restaurant assets, contact Richard Santore, 732.531-4200.
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