Frigid Weather? Rising Inflation? Restaurants Are Having a Big Winter Anyway
January-February are usually the doldrums, but Americans have been eating out, and spending. This winter, Denver has faced record-breaking Arctic blasts — below-zero temperatures, heavy snowfalls and brutal wind chills. But at Barolo Grill, a longtime Italian fixture in the affluent Cherry Creek neighborhood, the mood is warm. The restaurant has just logged its most lucrative January and February since it opened in 1992. “It is actually a bit bewildering,” said the owner, Ryan Fletter. “I am thrilled and surprised.” The first two months of the year are typically the slowest period for restaurants, and many take a January hiatus. This winter has posed even more challenges: frigid weather across the country, egg prices at a record high and fears that food costs will continue to rise. Overall consumer spending in the United States fell in January for the first time in nearly two years. Yet Americans have been dining out in unusual numbers, and spending more money doing it. January sales at eating and drinking places were $98.6 billion, almost $2 billion higher than in January 2024 when adjusted for inflation, according to census data analyzed by the National Restaurant Association. (February figures have not yet been released.) The number of diners this January and February was about 5 percent higher than a year earlier, according to data from OpenTable. Many restaurants, both casual and high-end, report that business in both months was surprisingly robust. At Barolo, even as menu prices have stayed the same, the average check has increased by about 10 percent, Mr. Fletter said. Diners “are having a nicer bottle of wine, they are consuming more food, they are doing tasting menus and not à la carte.” In interviews, restaurateurs offered several theories for the unexpected boom. Unemployment rates are low. Some said diners were less stressed and more interested in socializing because it’s not an election year. Others said customers were seeking comfort amid the unpredictability of the changes coming out of the White House. But most simply expressed relief…
Direct Selling: A Solution For Restaurants
A potential solution for smaller food businesses. Consumers are angry about high prices, but few realize just how little profit many of the small and medium-sized food industry producers and independent restaurants who make and sell them their meals actually make. Big food companies like Kraft Heinz and PepsiCo have posted increased profits recently. But the story is very different for smaller players in the sector. The average profit margin in the restaurant industry is just 3-9%. Independent restaurants are particularly squeezed thanks to the comparatively higher prices they pay to distributors compared to large chains with more negotiating power. Smaller-scale food producers are in a similar bind. They too are seeing their profits squeezed by distributors who themselves are also struggling to turn a profit thanks to pressure from large grocery chains and food companies, the Wall Street Journal recently reported. Christine Quinn, owner of My Family Seasonings, told the paper that over the past two years distributors “paid her almost 40% less than she billed” for her seasonings. She was forced to raise the cost of a bag of seasoning from $4.99 to $6.99. While Quinn saw raising prices as the only solution to her financial difficulties. There is another option. Some small food industry producers like her—as well as the independent restaurants who buy from them—are attempting to cut out middlemen and do business with each other directly. These efforts are enabled by new technology that helps food producers and their customers connect directly and streamline the selling process. In retail, platforms like Faire.com and Rgand.com allow brands to work directly with retailers, bypassing large distributors. These solutions have proven effective in reducing intermediaries and increasing transparency. Now similar platforms are emerging in the food sector, enabling producers to sell directly to customers like restaurants, hotels and caterers. These solutions automate ordering, provide demand analytics and help manage supply chains, all without a distributor taking a large cut of the sale. The upsides of this more direct approach to sales within the food industry go beyond just higher margins for local restaurants and producers. When producers hand over control of distribution and sales to third parties—distributors, wholesalers and retailers, they give up control over their brand. As a result, their products are often sold under retailers’ private labels or resold without any mention of the original manufacturer. Direct sales can help producers of all sizes strengthen their brands and gain control over their customer base.
Bielat Santore & Company – Restaurant Industry Alert
MONMOUTH COUNTY, NJ RESTAURANT FOR SALE/LEASE
Photo used to illustrate “Italian Restaurant” only and not actual representation.
Indulge in the allure of refined Italian cuisine at this established Monmouth County, NJ restaurant.
- Location: Highly visible intown location
- Building: 7,709 sq. ft. free-standing structure
- Seating:
- Dining: 100 seats
- Private Affair: 100 seats
- Bar Lounge: 50 seats
- Outdoor: 30 seats
- Features: This culinary gem boasts an open display kitchen supported by a second full kitchen.
- Financials: Grossing $2M+ annually.
- Offering: Sale of liquor license, FF&E, and goodwill. Favorable long-term lease of real estate.
- Utilities: Electricity, gas, water, sewer, and telephone.
This property is ideal for a passionate chef-owner and/or seasoned restaurant professional. Interested?
Contact Richard Santore 732.531.4200 for additional information.
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6 Ways to Cut Restaurant Waste
Boost your bottom line. Your kitchen staff should understand not just how to prepare food, but also the economic and environmental impact of waste. If you’re not tracking it, I guarantee your profits are disappearing with the trash. A core principle I teach restaurant owners is how to reduce kitchen waste and enhance their bottom line. From mastering portion control to implementing smart inventory management, I’ve got tips to turn waste into wealth. Use the following tips to put those trash-bin dollars back into your pocket with six ways to cut restaurant waste and boost your bottom line. The true cost of kitchen waste. First, let’s talk numbers—the kind that really hit where it hurts: your profits. Every carrot stick, ounce of steak and slice of bread costs money. When they end up in the trash, your hard-earned cash goes with them. It’s not just the cost of ingredients; it’s also the resources spent acquiring, storing and preparing them. This is the true cost of kitchen waste in the restaurant industry. Understanding your true cost of goods sold isn’t just some accounting jargon; it’s the bedrock of your profitability. Every time you over-portion a dish or let ingredients spoil, you’re chipping away at your bottom line. Consistently over-portioning fries or letting a half-case of tomatoes spoil each week can lead to significant financial losses over time. These aren’t just minor mishaps; they’re leaks in your financial boat that can sink your operation if left unaddressed. Waste reduction: A competitive advantage. Reducing waste isn’t just about being eco-friendly; it’s a competitive advantage. Tightening up your waste management practices can lead to a 2–3 percent drop in your food cost. That might sound small, but in the restaurant business, every percentage point counts. It can be the difference between thriving and merely surviving. Here are the six ways to cut restaurant waste and boost your bottom line…
Pandemic Reflections: What Lessons Has the Restaurant Industry Learned?
Part One. One of the biggest struggles for restaurants post-covid is staffing. Finding reliable, long-term employees is a bit harder, and incentives including competitive pay as well as a positive work-life balance can help address retention. Escoffier is aiding restaurant owners and managers by preparing qualified candidates ready for engaged employment. Special events have become a big reason for going out, making unique dining experiences more important than ever. Customer habits have also shifted after the pandemic. Special events have become a big reason for going out, making unique dining experiences more important than ever. Loyalty is a huge factor now as guests desire rewards and perks for sticking with a favorite small business, and repeat customers are keeping many restaurants going. Building strong relationships with diners has always been key to long-term success but now even more so. At the onset of COVID, most fast casual restaurants went from primarily dine-in business to mostly takeout and delivery models. This trend has held on in the last five years. While working hard to bring customers back into the restaurant is very important for success, it has become more important to figure out the third-party equation in terms of pricing, commissions and fees, and value – which is ultimately the difference between success and failure. Today, driving positive customer feedback via online channels is now equally as important as having a great location. If restaurant operators are not attuned to this, they will find it very difficult to exist in the very near future. Additionally, the approach to restaurant development has completely changed. Tables and chairs take a backseat to efficient space. Instead of simply trying to fit as many seats as possible into a space, the focus now is finding the minimum necessary seating capacity while maximizing kitchen efficiency and service throughput. This shift ensures that operations run smoothly, and sales revenue is optimized…
Pandemic Reflections: What Lessons Has the Restaurant Industry Learned?
Part Two. The past five years have reinforced the critical intersection of digital and hospitality in the restaurant industry. When the pandemic shifted consumer behavior overnight, off-premise became mission-critical, and at Olo, we were grateful to support restaurants as they navigated unprecedented challenges. The industry’s resilience has been inspiring, and as we look ahead, the lesson is clear: a strong digital foundation is key to thriving in an ever-changing landscape. Digital not only powers seamless experiences but also unlocks guest data that can elevate hospitality across all touchpoints, both digital and in-person. The pandemic was a transformative period for the restaurant industry, leading to significant changes in how both restaurants and consumers operate. One of the most impactful changes – and the stickiest – is contactless payment. While the pandemic forced consumers to leverage contactless payment, such as tap-to-pay, out of pure health and safety concerns, it’s quickly become the normal course of business for restaurants aiming to streamline operations and maximize convenience. According to Mastercard Contactless Consumer Polling, more than half of Americans are now using some form of contactless payment, and several sources state that adoption rate is accelerating amongst younger consumers. At Ansa, we’re at the forefront of this dramatic shift to contactless payments, providing restaurants with a leading white-labeled digital wallet solution to simplify POS-agnostic contactless payments and meet the next generation of guests where they are. The big lesson I learned is that I’ve had to continue to adapt my pricing, because people are still watching their spending. That’s why we instituted lower-priced lunch specials and made other adjustments. The customer’s needs always come first, even though my prices continue to rise…
Pandemic Reflections: What Lessons Has the Restaurant Industry Learned?
Part Three. From a legal perspective…
- Insurance: the pandemic highlighted the limitations of insurance policies. Even though local and state orders prohibiting or severely restricting restaurants’ ability to serve customers and generate and revenue, standard business liability policies did not provide coverage, and many policies had a pandemic exclusion. Several high-profile restaurant groups brought litigation against insurance companies for their coverage position, but were ultimately unsuccessful. Many restaurant owners had believed they would be covered in the event of something like the pandemic, and found themselves without a safety net.
- Landlord/Tenant Disputes: in my practice, I have seen a huge increase in lease disputes. Restaurant owners negotiated payment plans with their landlords, many of which had prolonged forgiveness dates, but were often not able to pay back rent.
- Workforce: COVID fundamentally changed the labor market. Restaurants had difficulty hiring and retaining staff, which led to more interest in automating processes.
- Delivery/Takeout: COVID created a shift from in-person dining to takeout and delivery options, increasing reliance on third party delivery services, and on attractive takeout options. Restaurants that did not have this infrastructure had to build it quickly, particularly with takeout of alcohol orders.
Overall, the pandemic highlighted the vulnerabilities, margin issues, and lack of safety net to restaurants in a way the industry is still recovering from…
Restaurant Menus Have Been Growing
Here’s why some chains are cutting back. Do you want more choices on a menu? Or a slimmer set of options? Restaurants are trying both strategies. Major chains across the US have been expanding their offerings in recent years, seeking to cater to different tastes and generate hype. But some big names are moving in the other direction: Outback, for example, is “attacking” a complex menu, while Papa John’s is cutting items that throw off the rhythm in the kitchen. Besides improving speed and quality, streamlining a menu can reduce waste, lower ingredient and labor costs and shift the diner’s eye to higher-profit dishes and drinks, said Susan Roe, an associate processor in the hospitality and tourism management department at San Francisco State University. Some edits are part of a larger comeback campaign. Starbucks (SBUX) plans to trim 30% of its menu. The focus will help baristas quickly serve quality items, while fostering a more inviting atmosphere, executives have said. The streamlining bucks broader industry trends. Major restaurants have in recent years generally expanded menus that were chopped during the pandemic, foodservice analysis groups said, when restaurants sought to stretch budgets by buying more items in bulk and to maximize output amid labor shortages. Like Starbucks, Bloomin’ Brands (BLMN) is simplifying its approach amid sluggish sales. The parent company of Outback Steakhouse, Carrabba’s Italian Grill and Bonefish Grill lost market share during the fourth quarter, CEO Michael Spanos said last month. Bloomin’ is trimming menus by up to 20%, Spanos said, adding that less popular and labor-intensive items will be first to go. The culling should alleviate pressure in the kitchen, he said. “It enhances morale, and it brings down our labor costs in the back of the house,” Spanos said, according to a transcript of the company’s latest earnings conference call made available by AlphaSense…
Did You Know?
Why Restaurants Can’t Take a ‘One-and-Done’ Approach to Employee Recognition. While everything from the coldest January in 14 years to trade wars to wildfires have pressured restaurants to start 2025, labor remains a constant in the ever-evolving task of balancing costs in this business. Following March 7’s Employee Appreciation Day, QSR magazine caught up with Gary Beckstrand, VP of the O.C. Tanner Institute, to discuss the state of employee retention, recruitment, and more…
Employee Tip
How to have tough conversations with underperforming employees. For some restaurant managers, holding employees accountable is second nature. For others, it’s a nerve-wracking challenge. They don’t want to come across as mean, risk pushback, or damage relationships. One manager recently told me, “I don’t want to seem too hard on them.” Another admitted, “I’m a people pleaser.” Ironically, these same managers don’t resent their own bosses for holding them accountable. In fact, they respect them more for it…
