U.S. Restaurant Sales Are Trending Modestly Higher
Consumers are expected to continue incorporating restaurants into their spending plans. Consumers were the driving force behind the strong post-pandemic economic expansion, as a healthy labor market and elevated savings allowed them to spend at a torrid pace. While cooling growth in both employment and wages tested their resilience in recent months, the expectation is that households will retain both the desire and wherewithal to continue incorporating restaurants into their spending plans in the months ahead. That resiliency won’t necessarily translate to strong growth though, as reflected by the recent trajectory in restaurant sales. Eating and drinking places registered total sales of $94.7 billion on a seasonally adjusted basis in July, according to preliminary data from the U.S. Census Bureau. Although July represented the fourth consecutive month of rising sales, the rate of growth remained relatively small. July’s sales increase of 0.3% came on the heels of modest 0.1% gains in both May and June. In total during the last 4 months, eating and drinking place sales were up 1.1%. That was slightly above the 0.8% gain in non-restaurant retail sales during the same period.
The modest sales growth in recent months was largely driven by rising menu prices. As a result, real restaurant sales remained essentially flat, after adjusting for menu price inflation. In inflation-adjusted terms, eating and drinking place sales declined 0.7% between July 2023 and July 2024…
Evolving Economics
How the restaurant industry must adapt to survive. The sector is at a crossroads, necessitated by changing economic conditions and consumer behaviors. Over the past two decades, the restaurant industry has experienced remarkable growth, characterized by bustling dining rooms and ever-expanding revenue streams. Fifteen to twenty years ago, the sector thrived under a golden era of consumer spending and relatively stable economic conditions, supporting a straightforward strategy for business growth: increase revenue to solve all problems. This approach seemed infallible as long as the customers kept coming and the cash registers kept ringing. However, the landscape has shifted dramatically. Recent years have seen a convergence of economic pressures that have reshaped the foundation of restaurant management. Increases in interest rates, significant labor shortages, and a rise in the cost of goods sold (COGS)—which surged by over 8 percent according to a recent report by the National Restaurant Association—are creating a challenging environment. These factors have led to reduced customer visits, forcing many restaurants to confront a stark reality: the old playbook of simply boosting revenue is no longer effective. Traditionally, raising menu prices by modest increments was a painless decision when demand was high. This method not only boosted revenue but also masked underlying inefficiencies within operations. As long as the front doors were crowded, issues like inventory management, labor cost variances, and even theft were often overlooked. Despite warnings from industry analysts about these burgeoning inefficiencies, the focus remained steadfast on revenue generation. Fast forward to 2024, the restaurant industry faces a vastly different economic climate. An entire generation of restaurant managers, groomed under the “revenue cures all” philosophy, finds itself ill-equipped to navigate the current complexities. Many lack the necessary skills to calculate accurate food costs or understand metrics like sales per labor hour, essential for crafting effective profit-enhancing strategies without relying solely on increasing revenue…
Bielat Santore & Company – Restaurant Industry Alert
BURLINGTON COUNTY, NJ BAR-RESTAURANT FOR SALE
PRICE REDUCED TO SELL FOR THE SECOND TIME!
ASSET SALE – Multi-level restaurant & bar located in the heart of the beautiful Burlington County, NJ Opportunity Zone overlooking the Delaware Riverfront. Designed in a casual, yet intimate setting. The spacious building can also accommodate outdoor events including parties, weddings, business affairs. A top-to-bottom renovation was done in 2016 at a cost of $1M+. Sale includes real estate, liquor license and FF&E. PRICE WAS $1,995,000 – THEN $1,500,000 – NOW $1,250,000
Contact Robert Gillis 732.673.3436 for additional information.
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How Restaurants Can Improve Recall Communications
Recalls are happening frequently. Which means that restaurants (and other food businesses) must be prepared to manage a food recall properly and professionally. While significant effort goes into handling recall logistics, understand the importance of communicating properly with key audiences about the situation. Best practice recall communications means providing clear, action-oriented messages tailored to each specific audience, delivered promptly through various delivery channels. If your restaurant is involved in a food recall, quickly (and calmly) inform key audiences about the recall, explaining what happened and what to do next. Reassure them that your company is doing everything possible to remediate the risks and prevent future food safety breaches. Reiterate that your organization prioritizes food safety and public health. As food safety breaches—and recalls—continue to occur regularly, prepare a communications plan in advance so you’ll be ready if your business is ever impacted. Since a recall consumes significant time and resources, don’t start thinking about your communications strategy in the middle of a recall situation. Implement the following communications best practices. Be prompt and transparent. If your organization is involved in a recall, inform key audiences immediately. Clearly communicate what happened, how it happened, and what you’re doing to resolve the situation. Provide updates as they’re available. If consumers and other key stakeholders think you weren’t forthcoming with information, it may compromise their trust in your company. However, being transparent fosters trust and demonstrates that you’re handling the situation with integrity and professionalism. Having a communication plan in place will guide you through a stressful situation with confidence. Understand your audiences. You’ll need to reach numerous, distinct audiences—including the media, consumers, employees, supply chain partners, and regulatory agencies—communicating specific messages to each. These stakeholders must be informed about the recall, necessary action items, and updates, as they become available…
Embracing Hyperlocal Ingredients
Transforming menus and communities. Buying locally has been trending for quite a few years for several reasons. People have become increasingly aware of climate change and the importance of ethical sourcing. Consumers want to support their communities, and do so by attending and buying from family owned businesses, art fairs, and local brands. Their desire to shop local has extended to farmers markets and the food industry. They are aware that some parts of the food industry have unsavory processes and practices; consumers like knowing what’s in their food and where it is coming from. Some restaurants are expanding on this trend by using hyperlocal ingredients. What is hyperlocal? Hyperlocal means most or all ingredients are grown or raised by the restaurant itself. What they cannot produce themselves, they source locally. The result is a unique culinary experience that features unmatched freshness and innovative and educational menus, with a strong emphasis on sustainability. Sustainability is a trend in its own right, but it is also a perfect counterpart to hyperlocal ingredients, which have fewer packaging, storing, and transportation needs. The global economy allows people to eat food out of season and regardless of its origin, but that comes at a cost. Much of the food typically available at restaurants and grocery stores has a large carbon footprint. Its carbon footprint depends on how far it has traveled, how long it has been stored, and other variables. Transportation alone accounts for nearly 20 percent of food-system emissions. The modern supply chain is an impressive feat, but it has its weaknesses. Disruptions in the supply chain can happen suddenly and wreak havoc on the foodservice industry. Hyperlocal ingredients reduce emissions while also creating a more resilient supply chain for restaurants…
Five Tips to Minimize Super-Sized Labor Costs
There are a number of strategies owners can take. Restaurants are feeling the bite of high labor costs, thanks to increased minimum wages, staff shortages, and high employee turnover that is outpacing other industries. Luckily, there are a number of strategies owners can take to minimize the amount payroll gobbles up. 1. Invest in Technology. The simplest way to reduce labor needs in any business is to use technology to streamline and automate processes. Replacing manual tasks and having employees do more in less time can help QSRs reorganize their teams to reduce hand-off delays and combine similar tasks to eliminate redundancies. One smart idea is investing in software that can schedule employees’ working hours, manage HR processes, prepare payroll, analyze labor data, and monitor employee attendance. In addition to reducing the number of hours management would have to spend attending to all these tasks, software can help increase employee satisfaction, such as eliminating “clopens” (when an employee closes at the end of the business day and then opens the next morning) and reducing overtime. Smart fryers and ovens can automate food preparation and cooking, eliminating the need for numerous workers in the kitchen while still ensuring consistent quality and faster service. Introducing automated dishwashers and robotic floor cleaners will save employees from washing dishes and mopping floors. These machines will save time and usually do a more thorough cleaning than their human counterparts. Self-service kiosks can maximize the number of on-premise orders while mobile apps or websites allow customers to place orders directly without staff intervention. These options also offer contactless payment solutions and integrated point-of-sale systems which can track sales and eliminate the need for manual cashiering. 2. Enhance Retention…
What Restaurant Owners Need to Know About Dual Pricing
What is dual pricing? Dual pricing is a payment model that allows businesses to implement two different prices for credit card transactions. Businesses and restaurants can adopt this pricing model through a point-of-sale (POS) system, presenting both cash and card price. When a restaurant offers dual pricing, it maintains 100 percent of the cash price for every item sold. While this may seem fictitious, it’s legal in all 50 states. In today’s world, restaurants are always looking for ways to manage transaction fees and optimize profitability. With the ever-changing financial landscape and technology improvements, there are many advancements in payment processing that restaurateurs should be aware of. One of the more popular solutions to helping a business thrive is dual pricing credit card processing. A perfect example of dual pricing is a gas station. There are always two different prices, one for card and one for cash, with the cash prices being significantly lower. Gas stations significantly lower their credit card processing costs because of this program. However, dual pricing still keeps cash or card, giving the consumer the ability to choose. Consumers who use cash ultimately help the business reduce transaction fees without even knowing. This same solution can be used in restaurants whether its fast food, dine-in or fine dining. To implement dual pricing, the restaurant is required to have suitable merchant accounts that accommodate the pricing model. Merchant accounts act as an interface between the business and the card networks, facilitating the authorization and settlement of credit card transactions. To move forward with dual pricing, the restaurant needs to select a merchant account provider that offers flexibility. With Visa’s recent surcharge cap of three percent, it’s essential restaurateurs are aware of the different payment solutions available…
How Self-Service Tech is Saving Jobs
In California’s $20 minimum wage era. When California passed AB 1228 earlier this year, mandating a $20 minimum wage for fast-food workers, the industry braced for impact. Concerns of widespread layoffs, reduced hours, and significant price hikes to offset labor costs took over. Four months into this significant change for the industry, another narrative is emerging. Restaurants have pivoted, adapted, and continued to focus on delivering what they can control: a rewarding experience for guests and team members alike, and one that increasingly leans on technology to drive better business results. In many ways the legislation accelerated what innovative restaurant brands already knew. The fast-food industry has long been primed for a digital transformation, and the new wage requirements are only accelerating this technological shift. Change, though scary, is necessary to grow. There have been many doomsday headlines that claim robots are taking away jobs. Despite the concerns, that’s not the case for the restaurant industry. The industry continues to be fueled by people serving people. At Bite, an innovative kiosk provider to the industry, our north star is and will always be to elevate hospitality everywhere, and technology will not threaten that, regardless of whatever app or burger-flipping machine comes out next. But what digital can do, and do well, is enhance hospitality. Contrary to initial fears, many restaurants are finding that implementing self-service technology like intelligent kiosk solutions allows them to maintain their workforce rather than eliminate it. Part of this stems from the strategic reallocation of labor. No one’s role at the cashier is limited to order-taking. Typically, their job will consist of order-taking, bagging food, cleaning, answering questions and other miscellaneous counter tasks…
Did You Know?
The restaurant operator dilemma: traffic health is about balance. Restaurant operators are caught in a whirlwind of issues in today’s marketplace. A great deal of time is being spent on solving many of the issues that are front and center, but quickly another opportunity surfaces. Consumers continue to adjust what they are looking for, and their personal cash flow is having an impact on that. Operators are dealing with fluctuating pricing on products and increased cost of labor. What direction should an operator take? The first answer to this question is to stay focused on what you do well. Your chances of success go up exponentially if you avoid moving into a lane that you are not comfortable with…
Employee Tip
How restaurants can protect guests from car injuries in parking lots. Most injuries and deaths in parking lots are not reported. Unless there is a fatality, most law enforcement agencies do not submit crash reports to state DMV agencies. However, we know that there are many unreported pedestrian-auto collisions in retail parking lots. Since these events occur regularly in parking lots throughout the United States, they are in legal terminology “foreseeable. “In most states there is a legal duty imposed on restaurant owners to warn patrons of any risks on the premises, and to take reasonable action to prevent them. “Premises” not only includes your restaurant, but also sidewalks and parking areas. Restaurant owners and property managers have a legal duty to take reasonable action to make the premises safe for their customers, who are “invitees…”