Unlocking The Value of Loyalty Programs for Restaurants
Serving up new opportunities to build customer loyalty. Consumers have an appetite for restaurant loyalty programs, and as market pressures build, brands can leverage these relationships to entice customers to keep coming back for more. Explore how restaurants can maximize the value of their customer loyalty programs to increase brand loyalty by moving from transactional to experiential and, ultimately, emotional engagement. As changing customer habits, economic pressures, and other factors put a squeeze on profits, restaurants have opportunities to stand out and drive more brand loyalty by enhancing their restaurant loyalty programs. The key to these potential enhancements involves applying strategic levers that elevate the customer experience, such as exclusive access privileges and personalized services. Our new report, based on findings from the 2022 annual Deloitte survey Evolving trends in brand loyalty and consumer behavior, details how restaurants can activate these strategic levers to gain stronger brand devotion from customers. Restaurant loyalty programs have traditionally focused on transactional benefits intended to drive key metrics, such as visit frequency, share of wallet, and check size. These features are popular among consumers who enjoy earning and redeeming product rewards for free menu items or discounts.
Delivery Demand Keeps Driving Growth in Restaurant Industry
Delivery demand keeps driving growth in restaurant industry. The restaurant industry has experienced a great deal of turbulence over the last few years. Undoubtedly, the pandemic created significant challenges across the sector, but while many businesses were forced to close their doors, the period also led to a significant increase in off-premises dining and delivery demand, with restaurants endeavoring to capitalize on new opportunities. As we move through Q1 of 2023, and with the pandemic dust having firmly settled, it is fantastic to see a degree of normality returning to the restaurant sector. Certainly, the ecosystem has changed, but while the food delivery channel will have benefitted from sustained increases in both consumer and restaurant penetration, the dynamics have shifted considerably and the bar for restaurant success has been raised. Cost increases across the board have put enormous pressure on restaurant operators, not least in terms of the delivery channel where the prices of fuel, insurance and labor have risen sharply. The delivery fees charged by marketplace delivery apps offer little respite and the impact on the bigger restaurant brands is limited, as they have the scale to negotiate. Larger chains are also quicker to embrace technology that automates the management of their in-house drivers and can redirect excess delivery volume to the marketplace alternatives.
D.C.’s Attorney General Just Warned Restaurants on Service Charges
Some in the industry are still confused. The Pug owner Tony Tomelden got a letter this week from an unexpected source: D.C.’s Office of the Attorney General. The letter and accompanying fliers sought to educate and warn businesses about service charges — fees that became increasingly common since the pandemic hit and could become standard practice with the implementation of Initiative 82, which phases out tipped wages. While service charges and other surcharges are not illegal in the city, the OAG says in the letter that the fees may violate D.C.’s consumer protection law if they are not “predominantly, clearly, and accurately disclosed to diners before diners place an order.” The move appears to mark the first time the D.C. government has publicly weighed in on service charges, a nebulous concept that’s not strictly defined — unlike tips, which are legally required to go to tipped workers. (Revenue from service charges de facto goes to the employer, and there are no rules about how they are distributed.) Fliers accompanying the letter directed businesses that charge service fees to:
- Disclose the fee at the beginning of an order, either orally or in bold, large print on the menu
- Accurately describe the reason for the fee, either through its name (“worker health insurance fee”) or in text describing what the money is used for
- Only use the fees collected from diners for those purposes specified
Violators of the law would have to refund customers or pay penalties up to $5,000, the flyer notes.
Inside a Chef-Designer Collab
Why is design so crucial for creating the right look and atmosphere to complement a menu? A restaurant’s design is a guest’s first impression, setting the stage for the experience to come. When creating an elevated dining space, it’s critical for there to be a meeting of the minds between the chef and designer that culminates in a setting that is reflective of the chef’s vision and taste. Hospitality designer Beatrice Girelli, co-founder and design director of Indidesign, recently conceptualized The Desmond, headed by Executive Chef Jason Neroni, at the all-new Kimpton Alma in San Diego. Throughout the design process, Girelli worked alongside Neroni, listening to his concerns to ensure a restaurant that operates to his and the Alma’s standards. The partnership resulted in a 116-seat signature restaurant directly inspired by the chef’s menu. Conceived as a destination, The Desmond is tucked away in a slightly hidden location and an elevator ride is required. Alma is a timeless destination restaurant, designed with a mix of historical and contemporary elements. The design weaves deep blue and greens as well as brighter tones to open up the space for an approachable setting. Modern Restaurant Management (MRM) magazine talked with Girelli about this project and restaurant design trends.
Keeping a Safe Bar Environment
Especially on busy holidays. The St. Patrick’s Day drinking statistics are sobering. Over the St. Patrick’s Day weekend in 2019, 63 percent of car-related fatalities involved drunk drivers, and in 2018, 33 percent of pedestrians killed in car crashes over the holiday were intoxicated with a BAC over 0.08. Spirit sales are 153 percent higher than usual over the holiday weekend, and it’s the number one beer drinking holiday. Though businesses in the hospitality industry provide a fun and relaxed atmosphere for clientele to briefly escape their everyday routines, it’s also their responsibility to keep their patrons safe. Excessive drinking can lead to verbal altercations on-site, physical harm to oneself and others, and widespread issues once a patron has left an establishment. Society Insurance, which provides coverage to the hospitality industry, has put together four tips on how restaurants and bars can help create a safer environment on St. Patrick’s Day and year-round. Laws regarding the sale and consumption of alcohol are not established by the federal government. Local authorities establish and enforce these laws, so the specific guidelines as to who can sell, purchase and consume alcohol and under what conditions (and the punishments for violation) vary widely across jurisdictions. Failure to manage the commercial sale of alcohol could threaten the success of a business due to increased liability exposure, both criminal and civil.
Why Happy Hour Hasn’t Soured for Restaurants
Even in an age of telecommuting, restaurants are betting on the post-work daypart. While not part of the traditional, three-square-meals paradigm, happy hour has proved itself a viable revenue generator in the restaurant sector. A 2018 study from Nielsen even credited happy hour with generating 60.5 percent of weekly sales at restaurants and bars and increasing the average check by $8. (It should be noted the study defined happy hour as taking place between 5 and 8 p.m., which runs much later than most programs.) But a lot has changed since 2018. Consumers are returning to restaurants for dine- and drink-in—but they’re not necessarily going back to the office. This sea change has myriad implications for restaurants, with many lunch-centric establishments either curtailing their hours or shuttering their doors altogether. But happy hour isn’t lunch. While the latter can be a social gathering, happy hour is almost exclusively one. Some studies suggest consumers are seeking out these occasions even more than they did before COVID. “The happy hours themselves have not changed because of the pandemic. They are still a way for our restaurants to attract guests and start the energy earlier in the day. They are just as busy as they were before,” says Jennifer Krapp, director of restaurant operations for Charleston, South Carolina–based Indigo Road Hospitality. “I believe that with so many people working remotely now, people are craving that social interaction that they are not getting throughout the day.”
Grocery-Restaurant Price Gap Narrows in February
Consumer Price Index indicates The Consumer Price Index for February indicated a narrowing of the gap between grocery and restaurant prices, the Bureau of Labor Statistics reported Tuesday. The index for food at home, mostly groceries, rose 10.2% over the last 12 months, and the index for food away from home, mostly restaurants, rose 8.4% over the past year, the bureau said in its latest report. The index for full0service meals rose 8% over the last 12 months, and the index for limited-service meals rose 7.2% over the same period. “With grocery prices continuing to rise at a faster rate than restaurant prices, and with commodity-cost inflation remaining a huge challenge – coupled with what has been so far fairly manageable consumer resistance to menu price increases,” said Mark Kalinowski of Kalinowski Equity Research said in a Tuesday note, “we expect that U.S. restaurants will continue to raise menu prices at a meaningfully higher-than-historical-average rate during the first half of 2023, if not for longer.” Consumer Price Index data showed the gap between groceries and restaurants narrowed in February from January, when food at home rose 11.3% and food-away from home was up 8.2% in the past year.
February Jobs Report Driven by Surge of Hiring
At restaurants, bars. U.S. job growth came in stronger than expected in February, boosted by a flurry of hiring at bars and restaurants. Employers added 311,000 jobs in February, the Labor Department said in its monthly payroll report released Friday, easily topping the 205,000 jobs forecast by Refinitiv economists. It marked the second straight month of hotter-than-expected job data after the economy added 504,000 positions in January, a total revised from an initial report of 517,000. The unemployment rate unexpectedly ticked higher to 3.6% as the labor force grew. “Job creation was heavily tilted toward the service sector again last month, with nearly one-third created in the lower-wage leisure and hospitality sector,” said Jim Baird, Planet Moran Financial Advisors CIO. “Those jobs had been slower to return in the early stages of the recovery as consumer spending was heavily tilted toward goods and social distancing measures restrained travel.” Job gains were concentrated in the leisure and hospitality sector, the hardest hit by the COVID-19 pandemic, and the industry brought on 105,000 new workers in February.
Did You Know?
The line between the coffee shop and the cocktail bar has never been blurrier. At Milwaukee’s Discourse Coffee Workshop, you order your caffeinated beverage of choice from a bar loaded with cocktail tools like strainers, jiggers, and bottles of Angostura bitters. Maybe that’s a latte like the Channel Orange, with smoked and oaked vanilla syrup, orange oleo saccharum, and candied orange powder, or the Snowblind, which includes nitro cold brew with vanilla syrup, maple root beer, Bittercube root beer bitters, and oat cream. Discourse Coffee founder Ryan Castelaz’s goal behind his bar’s clever program is to “empower baristas everywhere to dream bigger and feel like they can express themselves through coffee.
Employee Tip
Restaurants and Bars near a full job recovery. Restaurants and bars continued to add a healthy dose of workers last month as the industry gets near a full employment recovery three years after the start of the pandemic. Food services and drinking places added 69,900 jobs in February, according to data released Friday by the U.S. Bureau of Labor Statistics (BLS). They now employ 12.2 million workers, or just over 100,000 jobs short of where they were in February 2020, the last month before widespread closures of dine-in services led to mass-scale job cuts at restaurants across the country. Wages continued to grow.
Bielat Santore & Company – Restaurant Industry Alert
ALWAYS GIVE PEOPLE MORE THAN THEY EXPECT!
Owning a building and liquor license in Asbury Park NJ, while living in New York was a challenging job to manage. Once I decided to sell my property and liquor license, Richard Santore and Bielat Santore & Company were recommended to me by my attorney. Richard defines professionalism in the realty business. He is capable, intelligent, and has amazing communication skills. His diligence and perseverance in a tough market due to the pandemic, proved to be no obstacle for such a seasoned professional. Richard is resourceful, courteous, fair and goes above and beyond to seal the deal. He kept me updated throughout the selling process, execution of contract and the completion of sale. Richard proved to be reliable and honest, which are rare attributes in business. Not only do I highly recommend Bielat Santore & Company as an exceptional real estate company, but they have proven to have their finger on the pulse of the restaurant marketplace by publishing an informative weekly newsletter to assist the hospitality industry in navigating these unprecedented times. Richard and his team truly outshine all other realtors. Carmella Esposito, 649 Mattison Avenue, Asbury Park, NJ
Since 1978, the principals of Bielat Santore & Company, Barry Bielat and Richard Santore, have sold more restaurants and similar type properties in New Jersey than any other real estate company. Furthermore, the firm has secured in excess of $500,000,000 in financing to facilitate these transactions.
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