Restaurants are One of the Hardest Businesses on Earth
Martha Stewart. The legendary businesswoman and multimedia maven discussed her career reinventions and plans for the future in a wide-ranging chat at Restaurant Leadership Conference. Martha Stewart, the original lifestyle influencer who found success in magazines, book publishing, television, retail and more, waited until she was 80 years old to open her first restaurant. The Bedford by Martha Stewart, located in the Paris Las Vegas casino-resort, is modeled after Stewart’s home in Bedford, New York, and serves a menu of old-school opulence, with dishes like Oysters Rockefeller and Golden Ossetra Caviar. “Why I didn’t do a restaurant sooner, I’ll never know,” Stewart told Restaurant Leadership Conference attendees Tuesday in Scottsdale, Arizona. “I kept saying, I like to go out to restaurants. I don’t want to work in a restaurant … Restaurants are one of the hardest businesses on earth.” Stewart detailed her storied career reinventions and future plans in conversation with Anne Fink, president of global foodservice with PepsiCo. “I read a book in college that said you metamorphose every seven years,” Stewart said. “And so, I started living that way.” She spent one of those seven-year chunks as an institutional stockbroker, during a time in which “McDonald’s had just emerged as a fantastic company,” she says. “We invested in that company early on and I learned so much about the business of fast food.” Then she moved into the catering business. “I found that catering was extremely similar to stock brokering because in stock brokering, you’re dealing with people’s money. In catering you’re dealing with people’s tastes and homes,” she said. “I learned a lot about how people were living, what they wanted to eat, how they wanted to entertain.”
Jersey Mike’s CEO Peter Cancro Wins 2024 Restaurant Leader of the Year Award
Decades of consistency and heart. Jersey Mike’s CEO Peter Cancro was named the 2024 Restaurant Leader of the Year at Informa’s Restaurant Leadership Conference, as presented by NRN sister publication, Restaurant Business. Cancro — selected by editors for “embodying the pinnacle of our industry” — is well-known for taking the sandwich chain from the original Mike’s Subs shop on the Jersey Shore that he bought 49 years ago, to nearly 3,000 locations today. Cancro’s leadership style and operational approach as the long-term CEO of Jersey Mike’s can be summed up by two different differentiators of the New Jersey-based company’s brand. One is the Jersey Mike’s Day of Giving, which takes place every year on the last Wednesday of March, when all participating stores donate 100% of the day’s sales to a local charity of their choice. In 2024, Jersey Mike’s raised $25 million for charity, even though participation is not mandatory for franchisees. “We started to give and make a difference in 1975… and now the marketing experts will tell you that cause-related marketing is what we should be doing, so I guess we’ll keep doing that,” Cancro said in a fireside chat with Restaurant Business editor-in-chief Jonathan Maze. “The owners really get it…it’s not mandatory. It’s not in the contract, but everyone gives 100% of their proceeds that last Wednesday in March.” Cancro is also well-known for visiting his stores often, and every time he does, he gets behind the counter, introduces himself to the store employees, and begins slicing the meat himself. But why does he do it? “We always had the Wall Street guys come down from New York to the Jersey Shore, and they always said to me, ‘Peter, what are you doing? Are you making subs?’ And I would go, ‘yeah, I guess I am!’” Cancro said. “Our leadership style with pretty much everyone in the company is the same way: we pull people along.”
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Sizing Up the Future of Full-Service Restaurants
Full-service operators are looking at creative ways to ensure their value proposition can compete with limited-service peers. The full-service segment continues to reel from pandemic-related challenges as well as consumers who are more convenience and speed minded. According to Technomic data, the full-service segment has lost three full percentage points of industry share in the past four years – 21% at the end of 2023 from 24% in 2019. Where does the segment go from here? A group of full-service executives provided their thoughts during a Restaurant Leadership Conference panel in Phoenix Monday, titled, “The Future of Full Service,” moderated by Jonathan Maze and Sam Oches, respective editors-in-chief of Restaurant Business and Nation’s Restaurant News. The executives – Scott Gladstone, chief development officer and president, International of Dine Brands, Kelly MacPherson, chief technology and supply chain officer of Union Square Hospitality Group, James O’Reilly, CEO of Ascent Hospitality Management, and Kendall Ware, chief operating officer of Walk-On’s Sports Bistreaux, provided their insights about the biggest factors impacting the segment, such as changes to the tipping model and service fees, the price/value equation versus limited-service, off-premises growth, and technology priorities. Tipping is at a tipping point, so to speak. There are market discrepancies over what the tip wage is, and more concepts, including limited-service concepts, are prompting tips at every transaction, generating tip fatigue among consumers. MacPherson said USHG’s experiment to end tipping in 2015 came to an end during Covid because inflation continued to grow and “we couldn’t compete with hospitality included.” Now, the company is trying to come up with a solution to ease customer anxiety, which is “very real when servers are standing over them with a device.” “The question is how do you continue to enable tipping and be able to give the staff the best advantage, but also from a guest perspective reduce anxiety,” she said. “Not standing over the guest while they’re paying, it seems small, but it goes a long way from a guest perspective.”
Higher Prices and More Locations Drove Chain Restaurant Sales
Last Year. Chain restaurants continued to grow at a healthy pace in 2023, according to the 2024 Technomic Top 500 ranking of the country’s largest restaurant brands by sales. Total sales for the 500 chains increased $31 billion, or 7.8%, to $424 billion, continuing a three-year run of strong sales growth. “It was a very, very strong growth year for our Top 500,” Technomic Managing Principal Joe Pawlak said at the Restaurant Leadership Conference on Monday. But that sales growth came from two sources: Higher prices and more units. Top 500 chains added more than 4,000 net new locations, or 1.8% growth. That’s the fastest rate of unit count growth in seven years. Top 500 chains now operate 233,490 locations, or nearly 6,000 locations more than in 2019, before the pandemic led to thousands of closures. Price increases also fueled sales growth, as average restaurant prices increased 7.1% last year. The combined increase in prices and unit count suggests that consumers either visited chain restaurants less often or ordered lower-priced options or some combination of both. Sales were somewhat top heavy, as the 10 largest restaurant chains grew at a faster rate than the rest of the Top 500. The Top 10 chains grew 9.1% last year and now represent 44% of all Top 500 sales, up from 42% in 2019. The very largest chains have more resources to spend on advertising, technology and remodels that have helped them open some distance between them and the remaining chains. McDonald’s, as it has every year since the ranking’s inception, remains the country’s largest restaurant chain by sales, with system sales last year of $53 billion. It is larger than the combined sales of the second and third largest chains, Starbucks, and Chick-fil-A. But both those chains grew at a healthier clip (12.5% and 14.7%, respectively) than did the Chicago-based fast-food chain (9%). The one major move on the Top 10 came from Chipotle Mexican Grill, which leapfrogged Domino’s to be the 9th largest chain.
Casual-Dining Restaurants Have a Value Problem
Consumers say they’re getting less bang for their buck at sit-down places. Consumers say they’re getting less bang for their buck at casual-dining chains these days, even as those chains are doing their best to give it to them. The average night out at a casual-dining restaurant costs just a little less than $15 per person, according to data from researcher Technomic. That also happens to be right around what consumers say is a good deal for a sit-down dinner and a drink. And yet overall, the public’s value perception of the sector fell 2.4% last year, Technomic found, compared to a 1.3% drop-in quick service. Casual dining “actually saw one of the largest dips in value perception, and that I would say is troubling,” said Rich Shank, vice president of innovation for Technomic, during a presentation at the Restaurant Leadership Conference on Monday. Just hours earlier, a panel of full-service restaurant executives was grappling with that very problem in front of an audience of operators and suppliers, who hit them with questions as existential as whether tableside service adds any incremental benefit to the business at all—a notion that was quickly shot down. “If you’re in casual dining, you have to believe that there’s value in service,” said Scott Gladstone, chief development officer of Applebee’s and IHOP parent Dine Brands. “Otherwise, you can’t fully compete on food quality with QSR.” Still, the fact the question was even asked underscores just how difficult the situation has become for full-service restaurants. Menu prices in the sector have risen by somewhere in the neighborhood of 20% since 2021, and consumers are showing that they’re maxed out by shifting some business to lower-priced fast-food concepts.
Customer ‘Listening’ is Broken
Here’s how to fix it. A friend tells you a restaurant has bad service and gave her food poisoning. Would you still go? But what if that “friend” is actually just someone leaving a review on Yelp? For today’s always-online consumers, it’s all the same. Reviews matter. Ninety-four percent of diners base their decisions on online reviews, and businesses who respond are seen as nearly two times more trustworthy than businesses who don’t. Responding to your customer reviews is essential to boosting multi-location businesses’ online reputations and increasing customer loyalty. Also, a negative review is more fluid than you might think: Yelp users are 33 percent more likely to change a negative review to a neutral or positive one if they receive a prompt response.; And, 88 percent of diners are more likely to look past a negative review if they see the business has responded to it and adequately addressed the issue, and may be open to patronizing the business from there. If people perceive a brand to be authentic and conversational, they’ll be more inclined to love and recommend the restaurant to others. Nobody likes being ignored – online or off. To actively influence online reputation, restaurants must see review responses as one side of an ongoing conversation. And it goes further than reviews. We live in an attention economy and your customers are interacting with you on more than just review platforms and in your stores. They’re also on social media accounts commenting on photos and videos, as well as posting their own. Multi-location quick serve restaurants may be overwhelmed by this – thinking: “How can we possibly handle all the reviews coming in, monitor social media, and get customers their food safe and hot along the way? There’s no way we can do all this!”
Did You Know?
How full-service restaurants can better manage their frenetic schedules. Technology can be the grease that keeps sales sizzling in the front-of-house and the back-office humming with far less effort. Restaurant operators face ongoing labor challenges, rising wages, and critical technology investment decisions as our industry continues to adapt and adopt new digital tools. Together, these challenges can create a hectic schedule that underscores the fast-paced nature of restaurant work, especially for full-service and casual fine-dining restaurants. But operators can take some steps to make the most of their growing tech stacks, from adding new revenue streams to utilizing the latest tools that minimize time-consuming tasks so that they can spend more time doing what they love—delighting their guests.
Employee Tip
Improving survey response rates for restaurant managers. Restaurant managers balance several responsibilities while taking care of staff and guest needs. One of the most important parts of being a successful restaurant manager is having the ability to hear their customers’ concerns. While managers use a variety of ways to listen to their guests, surveys are one of the most successful tools for receiving feedback. Surveys give valuable insights into client satisfaction and enable managers to determine problem areas that need improvement. However, it can sometimes take time to get customers to respond to surveys they’re given. Fortunately, managers can apply multiple strategies to increase their response rates.