Technology that puts the ‘fast’ into fast casual

It seems as if quick service and fast casual brands will be relying more on technology to help cut labor costs as drastic minimum wage and health care changes are on the way. Since their employees don’t rely on tips this makes sense (although there are changes in the works for tipped employees as well). There’s also the convenience benefit for the customer to be able to order from their phone for example, but let’s be honest rising labor costs are the driving force.

The technology has been available for years now, but I feel like recently there are more articles about customer facing technology being implemented in the restaurant industry. Wawa, the mid atlantic chain, has had ordering kiosks in their stores since 2001. Like everything else restaurant technology is going mobile. Now you can order from your phone no matter where you are, at any time. 1 less person on the phone, 1 less person at the counter taking orders, 1 less person checking out, etc and it adds up quickly.

The National Restaurant Association published an article on the topic. I have copied the full article below:

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According to NRA research, roughly one-quarter of consumers say technology options are important features that factor into their decision to choose a restaurant. This is up from the nearly one-fifth the prior year that said the same, underscoring that technology rapidly is becoming an expectation rather than a novelty when dining out.  See how three fast casual restaurants plug into technology to speed up and improve service.

It’s lunch hour in the Windy City, where time-pressed office workers head to Wow Bao for a quick bite. Even if there’s a line at the counter, they know they can order at a kiosk and get their food within a few minutes. The restaurant specializes in Asian fare, including bao — hot, doughy buns stuffed with meats and/or vegetables. Kiosk ordering is offered at all five Wow Bao locations.

When Wow Bao President Geoff Alexander introduced kiosk ordering in 2009, he expected it to speed the ordering process without increasing labor costs. The happy surprise was that kiosk ordering also upped check sizes. Depending on the unit, the check average is 89 cents to $1.49 more at kiosks. The reason? The kiosks are programmed to upsell. “With every item that you order, the kiosk asks whether you want to make it a combo and whether you want to add a drink,” says Alexander.

Today’s consumers crave customized items, so they love the control kiosks give to order exactly what they want, he adds. Plus, staff doesn’t have to worry about making mistakes when entering orders. Alexander acknowledges that the technology comes with its own headaches, including occasional crashes (which he says are few and far between).

Wow Bao received its return on the kiosk investment in eight months because of the higher check averages and labor savings. “I don’t understand why more restaurants aren’t using kiosks,” Alexander says.

One Boloco customer loves the restaurant’s “Cajun Burrito;” another prefers its “Bangkok Thai Bowl.” Likewise, consumers want a range of ordering methods to meet their preferences. An office worker sitting computer-side might prefer online ordering; college students on the run order via the app; and a retired baby boomer is happy to order at the counter.

Eleven of Boloco’s 20 units feature kiosk ordering. “It’s all about having what’s most convenient for each guest,” says Alexandra Dunk, director of marketing for the Boston-based chain, which specializes in globally inspired burritos

The challenge: how to integrate all the ordering options seamlessly with a loyalty program. The solution: Boloco ditched its plastic rewards card and launched its Passport loyalty app earlier this year. Guests register their biographical and credit/debit card information. They use the app, powered by Boston-based LevelUp, to order and pay ahead from a mobile device or for payment in-store at an iPad kiosk or at the counter. They can also use their same log-in information to order and pay online at boloco.com. Guests automatically earn and redeem reward dollars when paying with the Passport app, which displays an encrypted QR code for payment. Guests who don’t have access to the app can pick up a QR code sticker at a Boloco unit and register it online.

“Paying in the store is now superfast and convenient,” Dunk says. “All you need is your phone.” Boloco also sped up mobile ordering by improving the menu’s loading time with the help of Conshohocken, Penn.-based Zuppler.

With some customers resisting registering a credit or debit card with the app, Boloco is educating guests about security measures. “The card information is tokenized,” explains Dunk. “We at Boloco never actually see the information and neither can LevelUp.” Still, the restaurant is exploring the option of allowing consumers to load cash payments. Says Dunk: “We’re always listening to our guests.”
This fast casual giant is introducing a series of integrated technologies coined “Panera 2.0.” It aims to reduce wait times, improve order accuracy, and minimize or eliminate crowding; and create a more personalized experience,” Chairman and CEO Ron Shaich says.

As a first step, St. Louis-based Panera Bread launched an advanced ordering system for to-go orders. It lets customer place and pay for online/mobile orders, which they pick up at a designated spot in the restaurant.

Panera is rolling out an option that enables dine-in guests to place an online or mobile order from their table and have their meal delivered directly to them. The café is adding ordering kiosks in addition to cashier stations to reduce wait times. Guests who order from cashiers or kiosks will have their meals delivered to their tables by an associate using an electronic table locator.

Customization should be easier because kiosk, mobile and web ordering will store purchase history. So, guests who prefer their tuna sandwich with onions, but no tomatoes, won’t have to remember to make the request each time. The company, which operates more than 1,800 bakery-cafes under the names of Panera Bread, Saint Louis Bread Co. and Paradise Bakery & Café, expects the 2.0 technology to be in substantially all its units by 2017.

Millennial eating demands are splitting in two

I have seen and read a bunch of articles about millennials in the workplace and how to manage them etc. But this is the first I have seen about their eating habits and it’s potential effect on the restaurant business. The Indy Star had an article on this topic that was very interesting. Here are some points that stuck out for me:

  • The split between the millennial parents and the millennials without kids is posing an issue
  • Both are visiting restaurants less; 33 less per year per person for the younger and 50 less per year per person for the older in 2014 vs. 2007
  • Millennials account for $96 billion per year in spend
  • The 2 main concerns for millennials with kids are: healthy kids menu that tastes good and reasonable prices – that could be tough to pull off as costs keep rising
  • The main concern for millennials without kids is customization

Are you seeing these trends in your establishments? I was expecting to read the need for technology, but there wasn’t any of that mentioned. I was a little shocked. Interesting article still.

I have copied the full article below:

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Even as Millennials continue to cut back on restaurant visits, restaurant owners are facing a new headache: Millennial eating demands are splitting in two.

The problem: Younger Millennials are focused on what they eat. Older Millennials — many of whom are parents ◊ are more focused on what their kids eat.

It’s not so simple to please both, according to two separate restaurant industry surveys out today, one by by the research firm NPD Group, and the other by the consulting firm AlixPartners.

“Restaurants — particularly fast-food — will have to work a lot harder to get people to come in than they have in the past,” says Warren Solochek, vice president of client services at NPD Group. What’s more, he notes, there’s a “sizable difference” in attracting Millennials age 18 to 24 vs. Millennials age 25 to 34.

Restaurants have little choice but to chase after Millennials of all ages. That’s because Millennials account for about 14.5 billion annual restaurant visits and spend about $96 billion in the process. Even though Millennials have continued to cut back on restaurant visits since the recession, they still account for 23% of all domestic restaurant spending, estimates NPD. But the decline is real: Younger Millennials made 33 fewer visits per person in 2014 vs. 2007; and older Millennials made 50 few visits per person, during that same period.

“The industry used to feel, if you built a new unit, people would come,” says Solochek. But that’s no longer the case, he says. “Now, you’ve got to make it worthwhile.”

Two key issues top the lists of Millennials who have kids:

  • Healthy kids food. The kids menu must have better-for you offerings that truly are better, says NPD’s Solochek. “The days of take-it-or-leave-it kids meals won’t cut it any more,” he says. But besides the meal passing mom’s “sniff test,” he says, the kid has to actually enjoy the meal.
  • Low prices.Millennials with young kids are just starting to discover the difference between a dinner check for two, and a dinner check for three or four.

“Millennials want to eat healthy and cheap at the same time,” says Adam Werner, co-managing director at AlixPartners, who helped to oversee the company’s new study.

But younger Millennials without kids are primarily concerned with one thing:

  • Choice. They want to be able to customize their meals. “Each person in a party has to feel like they can get something different — and something made just for them,” says Solochek.

This is particularly a problem for traditional burger joints that get 60% or more of their business through the drive-through. “Customization slows down the drive-thru,” says Solochek. “Operationally, it’s a huge challenge.”

Some restaurants may need to respond with early dinner options for Millennials with kids and later dinner options for Millennials without kids, says Eric Dzwonczyk, co-managing director at AlixPartners. “Both types of Millennials want to feel in control.”

FDA: 3 People Die from Foodborne Illness Linked to Ice Cream

Blue Bell Creamery is being tied to a listeria outbreak. 5 people in Wichita were hospitalized, 3 of them wound up dying due to the foodborne illness. Blue Bell has stopped production and distribution of the products linked to the illness. They say it’s related to one piece of equipment in one production plant.

The FDA is warning consumers to stay away from and discard the following products from Blue Bell Creamery:

  • Chocolate Chip Country Cookie
  • Great Divide Bar
  • Sour Pop Green Apple Bar
  • Cotton Candy Bar
  • Scoops
  • Vanilla Stick Slices
  • Almond Bar
  • No Sugar Added Mooo Bar (regular Mooo Bars are not included)

What does something like this do to a brand? Take away all the waste ie throwing away already produced product and recalling already sold product or the lawsuits that will surely come from the deceased families. What are the long term losses in brand value and lost revenue?

I recently read a study about health inspection letter grades being posted in the restaurant window. They had found that an A could result in a 4-5% increase in sales and a C could result in a 1% decrease. I’d be interested in hearing any experiences in this area. Are these numbers accurate from your experience? Please share.

I have copied the Blue Bell article from the local ABC News affiliate below:

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(WICHITA, Kan.) — An outbreak of listeria in five patients at a Kansas hospital is being connected to ice cream products from Blue Bell Creamery.

The U.S. Food and Drug Administration announced on Friday the five people sickened were at Via Christi St Francis Hospital in Wichita, Kansas for other medical treatment when officials believe they ate the listeria contaminated ice cream.

Three of the patients who were sickened at the Wichita hospital later died.

The Texas-based company has since stopped production and distribution of several products linked to the deadly illness. A Blue Bell spokesperson said on Friday the outbreak is related to one piece of equipment in a production plant.

The ice cream contaminated was sold to convenience stores and private companies, such as hospitals.

The Kansas hospital was not aware of any listeria contamination in the Blue Bell Creameries ice cream products, and immediately removed all Blue Bell Creameries products from all Via Christi locations once the potential contamination was discovered, according to Maria Loving, Communications Coordinator for  Via Christi Hospital St. Francis in Wichita.

Health officials are warning consumers who have purchased the following Blue Bell Creameries novelty items and have not consumed the items to discard them:

  • Chocolate Chip Country Cookie
  • Great Divide Bar
  • Sour Pop Green Apple Bar
  • Cotton Candy Bar
  • Scoops
  • Vanilla Stick Slices
  • Almond Bar
  • No Sugar Added Mooo Bar (regular Mooo Bars are not included)

Potentially contaminated items have been pulled from retail locations by Blue Bell Creameries and are no longer available for purchase.

At this time, officials say no other products from Blue Bell Creameries have been linked to this outbreak.

Tipping the scales: Wage increase gets mixed reaction from restaurant industry

Read another article today, kind of a follow up to the Glens Falls article we discussed a week or so ago, about the effects of NY State upping tipped workers’ minimum wage by 50% by the end of the year. The Saratogian talked to restaurant owners, tipped workers, and customers to get a perspective on the effect on each of them as they see it.

Here are some of the opinions that came back:

Restaurant owners are nervous about the pay hike of course. They feel that it will be tough for single unit / non chains to compete and/or not to raise prices. Even if they do raise prices they would have to compete with the larger chains who have more resources to implement technology to help reduce the amount of staff they would need, while not impacting service negatively. They feel that fine dining will be the only establishments able to go on as a single unit operation as their clientele will be able to absorb the price hikes with no problem.

Tipped workers are mixed on the whole thing. Some think it will help them cover some of their taxes. Whereas others say they never pay attention to their paycheck and only rely on tips for income. Some also felt that service may suffer some as there will be less of an incentive to give great service.

The customers for the most part said the raise won’t affect the way they tip. They will tip the same as they do now based on the service they get. Although nothing was mentioned how they would feel about a price hike.

The full article is posted below:

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Tipped restaurant and bar employees making minimum wage in New York State are in for a 50 percent raise at the end of the year, but this change is expected to have a much larger impact on the industry than a few extra bucks in the workers’ pockets.

The current minimum wage for waiters and bartenders throughout the state is $5 per hour. On Dec. 31, 2015 that will change to $7.50 an hour. This is still less than the untipped worker’s pay current rate of $8 and hour, which is also set to increase to $9 in 2016.

The final decision to raise the tipped workers’ rate was made by acting Labor Commissioner Mario Musolino last month. “It increases wages for those who have been without a raise for far too long,” Musolino wrote in his ruling.

However, some are criticizing that the move is not small business friendly, despite Governor Andrew Cuomo’s expressed goals to improve the small business climate.

Though the raise may not seem like much in the grand scheme of things, it adds up. For one full time employee, paying the $2.50 more per hour calculates to $100 extra per employee, per work week. In a year, one full time employee will cost $5,200 extra. If a medium-sized restaurant has 10 full time waiters, bussers and bartenders, that equates to $52,000 a year, on top of their already-existing expenses.

Workers, management and tippers all have different perspectives on the decision.

Though The Purple Pub in Maplewood appreciates its staff and find them to be deserving, the minimum wage raise is putting the business in a tough position, said general manager Drew Rentz. The medium-sized restaurant, which offers lunch and dinner six days a week, has about 30 employees total, and 15 to 17 of them are tipped. As food costs go up, and well as minimum wage, which is what the pub’s tipped workers make upon entry, “There’s only so much we can do,” he said.

Rentz wishes to keep menu prices at a reasonable rate for customers without cutting back on quality or quantity. But with minimum wage increases, “It’s going to back us into a corner where we may have to start raising prices, or we may have to reduce some staff,” he said.

When the restaurant opened in 1972, minimum wage was $1.60. Also, a burger at the pub was just 45 cents. In the restaurant’s 43-year history it’s seen many changes, but “It just seems like in the last several years, and the next several years to come, there’s a drastic increase,” Rentz said.

“We’ve been here for 43 years and hope to be here for 43 years more,” Rentz said, but without resources like the chain restaurants have, “every year it just gets to be tougher and tougher and tougher.”

Already, Rentz said, “There’s not many mom and pop places left.”

The founder agrees, “It’s just becoming extremely hard to run a small business with all the regulations,” co-owner Greg Rentz said. “It’s entirely different than it was when we started 40 years ago.”

The Purple Pub predicts this change will cost it between $500 and $600 dollars per week, which converts to $25,000 to $35,000 per year. Put simply, “I don’t know what we’re going to do,” Greg Rentz said.

The restaurant’s workers recognize it as a problem, too. “I think it’s going to change the entire industry,” said Ken DuBois, a bartender at the pub. When DuBois first started working at the restaurant 20 years ago, tipped workers’ wages were about $2.50. Soon, it will be three times that amount.

As a tipped employee soon to be getting a raise, “I could care less about it going up,” Dubois said. Most tipped employees in the business don’t even look at their paycheck, he said. “They rely on their tips for income.”

Even though he’ll be getting more money, DuBois isn’t particularly excited. “I’m not disappointed in it, but I see it damaging the industry in the future, and that’s what scares me,” he said.

Those tips, though split between the Purple Pub employees, are reflective of the level of patron satisfaction. DuBois always strives to provide top notch customer service. However, with state government giving every tipped worker a 50 percent pay increase, DuBois is concerned that others may not learn the hard work ethic it takes to actually earn and deserve the raise. “If they’re lazy already, they’re just going to be lazier, and it’s harder for somebody that actually works hard to get what they’re worth,” he said.

For customers, if menu prices stay the same that could mean quality of food at locally owned restaurants could drop. “If it keeps going up, corporate businesses are going to have an advantage, especially in New York state, because they buy stuff in so much bulk that they can sell something cheaper than small businesses are going to be able to,” DuBois said.

“Part of the American dream is coming here and starting your own business, and it’s just going to be crushed by corporate America in New York state,” DuBois said. Looking even further, “At some point I see privately owned businesses just being fine dining, and everything else being corporate if it continues this trend,” he continued. “It’s sad.”

Upscale downtown Saratoga Springs restaurant Sperry’s will be affected, too. As a small business, “It does hurt us,” said general manager Seth Berger, who has been in the industry for 26 years. “New York is rather tough as it is right now with taxes.” While it could eventually lead to price increases on the menu, he doesn’t expect it to effect restaurant’s volume of business.

The 13 year-round waiters, waitresses and bartenders at Sperry’s, “They live off their tips,” Berger said. The good news for them is that the clientele at Sperry’s aren’t likely to tip less than average, as long as service is good.

“It seems a little foolish,” said Sperry’s co-owner Scott Johnson, “for New York state to be putting small businesses at greater risk and more burden.” The former Saratoga Springs mayor continued, “Unfortunately, this is but another example of New York State putting more burden on small businesses that are already over taxed. It’s the classic phrase of ‘penny wise but pound foolish,’ when considering the potentially negative impact to tipped employees not getting the maximum tips from patrons aware of the increased wage. It’s well known that tipped employees rely more on tips, for their livelihood, than minimum wage.”

As a former restaurant owner who used to own Daisy Baker’s in Troy and now bartends at Sperry’s, Jared Horton knows both sides of the business and has mixed feelings on the wage increase. “I went from being an employer to an employee, and I am now in the group of workers who the increase is supposed to benefit,” he said. “If I still owned my restaurant, I would have to increase prices across the board to offset the increased labor cost. I would figure a 15 to 20 percent increase depending on the menu item.” Now as an employee, Horton said of course he will appreciate a higher wage. “The question is whether or not customers will tip less after the wage increase; I certainly don’t expect that to happen at the place I work. In fact, if menu prices go up, I might even expect total gratuities to go up. It certainly depends on the the place you work, and what type of customers it draws.”

“At this point I see it almost impossible for the small, independently operated businesses to survive,” said Michael Coleman of Wilton. Having worked in the restaurant industry for many years, he predicts menu price increases resulting in less business, and eventually less restaurants for New Yorkers to enjoy.

Former Troy Cafe owner Sarah Fish noted that in addition to hourly wage increases, payroll taxes and insurances will increase in proportion to the labor hour costs. “A fifty percent increase in pay comes with other costs, and to absorb that kind of increase means prices will go up,” she predicted. Furthermore, “It will definitely hurt smaller businesses.”

Another unfortunate factor, Fish recognized, is an unhappy kitchen staff that did not receive a 50 percent raise, and already likely make less than servers once tips are considered. Rentz said he thinks his tipped staffed probably makes significantly more than his other employees at the end of the day, as is also true in many other establishments.

But will customers catch on? In Europe, it’s less common to tip well, or even tip at all, because workers tipped and untipped make the same wages.

New rules for servers worrying restaurant owners

The article below from the Glens Falls Post-Star showed up in my feed. Glens Falls is a small resort town in the Adirondack mountains in NY. Very heavy summer traffic. The rest of the year is sporadic. Foliage in the fall, some ski traffic in the winter and that’s about it.

The article is focusing on the increase in minimum wage for tipped employees in NY. A 50% increase up to $7.50/hr will take effect by December 31, 2015. In the article they interview a few local restaurant owners for feedback. For the most part:

  • They all expect to increase prices
  • Some expect to cut staff or not backfill a server position if someone leaves
  • They feel the customer will be affected in one way or another whether it’s a price increase, less staff so potentially slower service, or both

Another point raised a few times in the article is that they are so seasonal they aren’t sure how that will play into the whole situation. I guess we’ll find out in about a year.

With these increases more than likely coming everywhere sooner or later do you feel that the owners in the article are correct in their assumptions or are they way off base? Thoughts?

The full article is copied below:

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Area restaurateurs are still trying to calculate the impact of a minimum wage rule for tipped employees that will go into effect Dec. 31.

They know it’s not going to be good.

“New York State just keeps getting worse and worse and worse as a place to do business,” said Paul Bricoccoli, co-owner of the Bullpen Tavern on Glen Street in Glens Falls, the Talk of the Town restaurant in Glens Falls and the Horseshoe Inn Bar & Grill in Saratoga Springs. Among them, the operations employ around 60 tipped workers during the peak summer tourism months, Bricoccoli said.

“This is a crippling thing for us,” he said. “You’re going to see mass bankruptcy of restaurants, in my opinion.”

Bricoccoli said he’s not sure how he and his business partners will absorb the additional costs, but he suspects higher prices, reduced staff or fewer hours for existing staff will be on the table.

“I know what we pay and what we have to match,” he said. “We’re going to have to make some serious decisions on how we do business.”

Chris Mozal, owner of the Docksider Restaurant on Glen Lake Road in Queensbury, is equally concerned. She said she’s not sure what her options might be, since she doesn’t want to cut staff or hours.

“We’re a lakeside restaurant, and probably 75 percent of our business is in the summer, so we do have to maintain a full staff,” Mozal said. “I don’t want to sacrifice our service with taking people away.”

In the summer months, the Docksider has about 40 employees, three-quarters of whom are tipped workers, Mozal said.

Donna Sutton, co-owner of Sutton’s Marketplace and Cafe on Route 9 in Queensbury, is also considering her options.

“We might have to raise our prices, certainly,” she said. “We haven’t raised our prices in two years, so we really don’t want to start that now.”

Sutton, who guessed a price increase of 10 percent or more is possible, is worried about the impact that could have on customers’ willingness to dine out — or even tip generously.

A change in cost structure wasn’t part of Gary Patton’s business plan, as he was opening Superior Cantina in Glens Falls — the same week state Labor Commissioner Mario J. Musolino issued the new minimum wage order.

“All restaurants, and any service business, is going to have to raise their prices,” Patton said. “I understand people need to make a good wage, and I’m all for that, but I think it needs to be more incremental — done over a longer amount of time.”

Patton launched his restaurant with around 20 employees, mostly tipped workers, in order to ensure strong service right out of the gate. But with a new wage structure coming, he’s thinking he might cut back by 2016.

“If someone were to leave, I would consider not replacing them and try to do the same amount of work with fewer people,” he said. “As we get closer, we’ll see where we’re at and try to make it to where it doesn’t affect our customers. But the bottom line is it’s going to wind up affecting them in some way.”

The New York State Restaurant Association, which vehemently opposed the change in minimum wage for tipped workers, said the new rule “will, without a doubt, have far-reaching effects on the industry and its employees.”

The association suggested restaurants might consider paying all employees the full minimum wage and eliminating the tipping system completely.

“It’s troubling that (Musolino) ignored legislative precedent and the pleas of nearly 1,000 hospitality industry representatives who asked him for a moderate increase phased in over time,” said Restaurant Association President and CEO Melissa Fleischut, in a prepared statement. “By rubber-stamping an extreme, unprecedented 50 percent increase, it becomes hard to believe New York is really ‘open for business.’”

How are you mitigating rising beef costs?

I read this article from NRN, Restaurants find ways to mitigate beef costs (see article below), and here the bullets that I thought were most interesting:

  • Overall foodservice sales of beef in the U.S. in terms of volume fell slightly in 2014, to 7.9 billion pounds, compared with 8.7 billion pounds in 2013 – (800 million lbs is a slight decrease?)
  • Americans ordered 3 percent more hamburgers in restaurants in 2014 than in 2013, according to The NPD Group
  • Cheaper Cuts:
    • The chuck eye roast — a less expensive substitute for prime rib — is the fastest growing cut, rising by 6 million pounds in 2014 compared with 2013
    • Followed by Delmonico steak, or chuck eye steak, a less expensive substitute for a rib eye, whose sales rose by 5 million pounds in 2014
  • To help mitigate those costs, Dove suggests changing portion sizes and offering different types of protein.  “Instead of an 8-ounce sirloin, run a 6-ounce sirloin combined with a shrimp or lobster deal.
  • Kevin Good, senior analyst at CattleFax, said ranchers are working to rebuild herds that were reduced in the aftermath of multiple years of drought that drove up feed prices. Although more cattle should mean lower beef prices, it takes up to three years from gestation for cattle to reach market weight. That means prices of many cuts aren’t likely to fall significantly until 2016 or 2017.

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Fri, 2015-03-06 10:38

Beef is expensive and expected to remain so for the next year, but Americans still love it. They’re eating more hamburgers than ever and buying more premium steak. At the same time, restaurants and purchasing cooperatives are using an array of strategies to mitigate costs and get the most out of their beef.

The Centennial, Colo.-based National Cattlemen’s Beef Association reported in January that overall foodservice sales of beef in the U.S. in terms of volume fell slightly in 2014, to 7.9 billion pounds, compared with 8.7 billion pounds in 2013.

Hamburger sales remained robust: Americans ordered 3 percent more hamburgers in restaurants in 2014 than in 2013, according to The NPD Group.

Kevin Good, senior analyst at CattleFax, said ranchers are working to rebuild herds that were reduced in the aftermath of multiple years of drought that drove up feed prices. Although more cattle should mean lower beef prices, it takes up to three years from gestation for cattle to reach market weight. That means prices of many cuts aren’t likely to fall significantly until 2016 or 2017.

“You can potentially expect a little bit of relief in the second half [of 2015], but it won’t be much,” Good said.

Retail operations might see customers trading to less expensive proteins, such as pork or chicken, or from premium cuts of beef to less expensive ones, which Good said might help lower premium steak prices a little bit. However, he said he expected demand of high-end cuts in foodservice to remain robust. “That’s tied more to the stock market and corporate expense accounts,” he said.

At the high end, steakhouses are committing to even higher-end cuts of beef, as well as local steaks.

Steakhouses such as RPM Steak in Chicago and Charlie Palmer Steak’s New York City and Las Vegas locations are offering A5-grade Wagyu beef from Japan — the highest grade available.

“It’s surprising how much it actually gets ordered,” said Matt Zappoli, executive chef of Charlie Palmer Steak New York, where an 8-ounce strip costs $162.

Zappoli and other steakhouse chefs are also sourcing local steak. Houston steakhouse 60 Degrees Mastercrafted focuses on steaks from a Texas herd of Akaushi cattle, while Zappoli is sourcing naturally raised 30-day, dry-aged rib eye from a supplier that procures it mostly from New York, New Jersey and Pennsylvania.

“It’s part of what they call a local harvest program,” Zappoli said.

He also offers two different varieties of American Wagyu and a USDA Prime rib eye and New York strip.

Outside of premium, expense-account-driven venues, less expensive cuts are experiencing robust growth. The National Cattlemen’s Beef Association, citing its 2015 Technomic Usage and Volumetric Assessment of Beef in Foodservice, reports that America’s beef roast, also called the chuck eye roast — a less expensive substitute for prime rib — is the fastest growing cut, rising by 6 million pounds in 2014 compared with 2013. That was followed by Delmonico steak, or chuck eye steak, a less expensive substitute for a rib eye, whose sales rose by 5 million pounds in 2014. Although premium porterhouse is the third fastest-growing cut, rising by around 4 million pounds, it is followed by two other less premium cuts — flank or skirt steak and the ranch cut, which is a lean cut from the shoulder clod.

The popularity of such cuts might not just be due to rising prices, but to demographic shifts, said Andy D’Amico, partner and founding chef of the three-unit 5 Napkin Burger chain, based in New York City, and of 5 Napkin Grill in Miami. The latter has an expanded entrée section, including more steaks, and the skirt steak is a big seller.

“In Miami, where there’s more of a Cuban clientele, they really love skirt steak, and we sell a lot of it. “

By contrast, “New York understands hanger steak,” another flavorful, less expensive cut, and D’Amico just added it to the 5 Napkin Burger locations in New York, in a pepper sauce.

Mitigate costs during purchasing process

(Continued from page 1)

Dave Woolley, chef of restaurant consulting firm Food & Drink Resources, said he sees large and small chains continuing to push steak items.

“I think a lot of them are going into different parts of the sirloin,” he said, noting that the subprimal sirloin cut is a large piece of meat that can weigh a couple hundred pounds.

“You can call different things ‘sirloin’ on the menu that aren’t traditional sirloin,” he said, such as the tri-tip, a cut at the very bottom of the subprimal that’s popular in the western U.S. and growing in popularity elsewhere, Woolley said, “especially in the last year and change, it’s as mainstream as possible.

“Americans’ hankering for beef, the drive for it, is not going away,” he added, so restaurants are figuring out how to provide it and still turn a profit.

DeWayne Dove, vice president of risk management for the purchasing cooperative SpenDifference, said he sees both restaurants and retailers trading down to less expensive cuts, which is driving up prices of those less premium parts of the cattle.

“We have seen retailers moving from rib eyes or strips to top sirloin,” he said, which means top sirloin is now trading at record levels. He indicated top sirloin rose by 15 percent this year compared with record highs of 2014.

To help mitigate those costs, Dove suggests changing portion sizes and offering different types of protein.

“Instead of an 8-ounce sirloin, run a 6-ounce sirloin combined with a shrimp or lobster deal. … Those strategies are going to have to be in place not just this year, but pretty much through all of 2016,” he said.

Dove is figuring out ways to bring prices down at every part of the purchasing process.

“We’ll line up every component [raw materials, yield, labor, overhead, packaging and freight]. We’ll put five, six, seven suppliers side by side and figure out why one’s higher than the other,” he said.

“It’s important to understand how to dive into those opportunities, because the raw material market is working against you,” he said. “You’ve got to pull every penny out of every part of it that you can.”

Although some independent restaurants buy entire carcasses and process them in-house in an attempt to cut costs, Dove says that the journeymen meat cutters at a supplier are likely to be more skilled and get higher yields than cooks in a restaurant. However, he said, restaurants might consider purchasing whole primals and subprimals and having the supplier cut them for them.

“We work a lot on utilizing the entire subprimal,” he said, using the best parts for steak and the trim for kebabs or hamburgers.

He said suppliers are open to those solutions.

“To clean up that whole carcass and find other homes for it is very labor-intensive, so it’s definitely a door that’s always wide open” as far as suppliers are concerned, Dove said.

He also suggested buying flash-frozen meat when prices are at their lowest and having your supplier thaw them in advance of the high-cost season at the end of the year.

He pointed out that the faster meat is thawed, the more volume is lost, but good meat suppliers will have the meat undergo a thawing process that lasts between three weeks and four weeks.

Contact Bret Thorn at bret.thorn@penton.com.
Follow him on Twitter: @foodwriterdiary

Restaurant Industry Added 58,700 Jobs in February

The good news keeps on rolling in for the restaurant industry. Preliminary figures estimate that 58,700 jobs were added by the restaurant industry in February.

Here are some of the highlights:

  • 60th consecutive monthly increase and strongest gain since December 2012
  • December – February will represent the strongest three-month payroll expansion on record if the figures hold up through revisions
  • NRA expects eating and drinking places to add jobs at a 3.4 percent rate in 2015
  • That would equate to the fourth consecutive year with job growth of at least 3 percent
  • And the 16th consecutive year in which the restaurant industry will outpace total U.S. job growth, which is projected to come in at 2.3 percent in 2015

The full article from QSR is posted below:

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The National Restaurant Association’s chief economist Bruce Grindy breaks down the latest employment trends:

“Despite the challenging winter weather conditions in parts of the country, restaurants continued to add jobs at a robust pace in February, according to preliminary figures from the Bureau of Labor Statistics (BLS). Eating and drinking places added a net 58,700 jobs in February on a seasonally adjusted basis, their 60th consecutive monthly increase and strongest gain since December 2012.

“Combined with the solid gains in December (54,500) and January (37,400), eating and drinking places added more than 150,000 jobs during the last three months alone. If these figures hold through revisions, it would represent the restaurant industry’s strongest three-month payroll expansion on record.

“The extreme weather didn’t appear to dampen the overall labor market’s momentum either, as the economy exceeded expectations by adding a net 295,000 jobs in February. Total U.S. employment rose by nearly 3.3 million jobs during the last 12 months, which marks the largest 12-month gain in nearly 15 years.

“Looking ahead, the NRA expects eating and drinking places to add jobs at a 3.4 percent rate in 2015, which will mark the sector’s fourth consecutive year with job growth of at least 3 percent. It will also represent the 16th consecutive year in which the restaurant industry will outpace total U.S. job growth, which is projected to come in at 2.3 percent in 2015.”

Where have all the restaurant floor managers gone?

This blog isn’t based on a scientific study it is just an observation but where have all the restaurant floor managers gone? I very rarely see restaurant managers in the dining room managing the meal period anymore.

I try to look for managers every time I go out to eat from a curiosity perspective. I, as all restaurant people do, judge every restaurant that I eat in and will for the rest of my life. I see managers, but they are almost always in the window expediting.

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When I was a manager at a high volume full-service restaurant, we would staff at least 2 FOH managers for every weekday meal period and three on weekends. One of us would work in the window expediting meals, and the others would manage the FOH.

Expediting is very important job, ensuring that the food going to the table is cooked correctly, and the right meals are getting to the guests in a timely manner, matters. Let’s also be honest with ourselves, expediting is easier than managing the floor and is more fun because you’re not having to be on and in front of guests. You can shoot the shit and make jokes with the kitchen guys while you’re putting orders together.

In my opinion there needs to be at least one restaurant manager on the floor managing guest service. Even in a lower volume restaurant there are things that the manager can be doing to positively affect the guests experience, help servers/buss staff, and speed up table turns.

Am I wrong? Please comment and tell me the deal. I would hate to think that in my early 40’s that I’m completely over the hill on this matter.

Restaurant Industry Remained in Growth Mode During January

The good news continued through January for the restaurant industry. Foodservice Equipment & Supplies magazine posted an article on the National Restaurant Association’s Restaurant Performance Index for January 2015.

The restaurant industry again showed expansion in January with an RPI of 102.7. Here are some of the highlights from the article:

  • Seventy percent of restaurant operators reported a same-store sales gain
  • Sixty-six percent of restaurant operators reported an increase in customer traffic
  • Fifty-one percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months
  • Fifty-seven percent of restaurant operators expect to have higher sales in six months
  • Thirty-five percent of restaurant operators said they expect economic conditions to improve in six months
  • Fifty-seven percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months

The full article is posted below:

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The National Restaurant Association’s Restaurant Performance Index totaled 102.7 in January. Scores in excess of 100 indicate a period of expansion for the restaurant industry.

“A solid majority of restaurant operators reported higher same-store sales and customer traffic in January, which helped keep the RPI well into positive territory,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “In addition, nearly six in 10 operators expect their business to improve in the next six months, with plans for capital expenditures also continuing at a high level.”

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 102.7 in January – down slightly from a level of 102.9 in December. Key data points from the Current Situation Index include:

  • Seventy percent of restaurant operators reported a same-store sales gain between January 2014 and January 2015. Only 17 percent of operators reported a same-store sales decline in January.
  • Sixty-six percent of restaurant operators reported an increase in customer traffic between January 2014 and January 2015. Twenty-one percent of operators said their traffic declined in January, down slightly from 23 percent who reported similarly in December.
  • Fifty-one percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months.

The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 102.8 in January — essentially unchanged from the previous two months. Key data points from the Expectations Index include:

  • Fifty-seven percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 52 percent who reported similarly last month.
  • Thirty-five percent of restaurant operators said they expect economic conditions to improve in six months, down slightly from 37 percent last month.
  • Fifty-seven percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down slightly from 62 percent who reported similarly last month.

Businesses Balk at Obamacare Definition of Full-Time Work

US News and World Report posted an article today discussing the new provision in the Affordable Care Act that 30 hour work weeks are considered full time and it’s effects on the service industry and others. There’s a lot of debate on this topic in a lot of industries, but this hits the restaurant and hospitality industry the hardest.

This point is brought up a couple times in the article, but it’s very true that the schedule flexibility in the restaurant industry is attractive to a lot of people. I know when I was waiting tables and tending bar in a resort town it was great to be able to pick up shifts and work doubles when the snow wasn’t great or during the very busy weeks. Then take off on weeks when the snow was good and be able to give up shifts and spend more time on the mountain. I wonder how schedule flexibility is going to be affected with this change?

What are your thoughts on this provision? How is it affecting your business?

The full article is posted below:

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The controversy over what counts as a full-time job under the Affordable Care Act continues, especially for those in the service industry.

Lawmakers and several service industry associations are contesting the provision in President Barack Obama’s signature health care law known as the employer mandate, saying it is harmful for American workers. The mandate defines a full-time employee as a person who works on average 30 hours weekly, and requires that business with 50 or more full-time employees provide health insurance to at least 95 percent of those workers and their dependents up to age 26, or pay a fee.

“Lots of people who are working part-time now want to have full-time jobs, and that’s made more difficult by this provision of the health care law that discourages employers from hiring or keeping full-time employees,” said Jack Mozloom, spokesman for the National Federation of Independent Business.

The NFIB, some restaurant associations and certain community colleges support legislation in the House and Senate that aims to change the definition of a full-time employee to one working an average of 40 hours a week. Without such an alteration to the ACA, Republican-led lawmakers claim, there could be a devastating economic impact.

“The inevitable result is going to be fewer full-time employees, and I really don’t see how the other side can argue with that logic unless they completely misunderstand business,” Mozloom said.

Restaurant owners are also particularly concerned.

Thousands of jobs are at stake with the continuation of the provision, Sam Toia, CEO of the Illinois Restaurant Association, said in a statement.

“Because of the Affordable Care Act’s arbitrary 30-hour-per-week definition of a full-time employee, restaurants are being forced to restructure their workforce by reducing their employees’ hours,” he said. “Employees are losing the mobility and flexibility in their schedules they normally would enjoy when working at a restaurant. Opportunities are decreasing for young and inexperienced workers to gain entry-level employment and advance into a fulfilling career in the restaurant and hospitality industry.”

Karen Bremer, executive director of the Georgia Restaurant Association, said when she worked her way through college, having flexible hours allowed her to work less when she needed time to study for finals and work more during the holidays when others wanted time off. Less flexibility would mean workers had fewer opportunities to learn certain “soft skills.”

“We’re the industry that teaches America how to come to work on time, how to smile, how to work on a team with other people, to follow orders, and to make change and to provide customer service. We do a great service to the United States in terms…of teaching those soft skills,” Bremer said.

But Gary Burtless, an economist who researches the labor market policy at the Brookings Institution, said changing the employer mandate would hurt workers, not help them.

By raising the amount of hours classifying a full-time employee to 40 hours a week, employers are incentivized to cut workers hours to avoid providing health insurance, he said. Since those who work 40 hours per week represent a larger part of the workforce, the proposed alterations would do more harm than good, he explained.

“The whole rationale for this is so completely flipped on its head economically,” he said. “They basically want to exempt most, a huge share of employment in the United States, from mandatory coverage under the Affordable Care Act”.

The restaurant industry isn’t the only one struggling with the mandate. Some community colleges, like Ivy Tech Community College in Indiana, worry that the provision will make it difficult to find faculty members.

“We are challenged to find credentialed faculty in certain areas and if we are limited in the hours we can provide such faculty, it only makes that challenge more difficult and could put us in a position where we cannot (offer) many courses in some of the disciplines,” Ivy Tech spokesman Jeff Fanter said in an email.

Julie Garcia, director of human services at Northern Virginia Community College, said the provision has not plagued her college. But she understands how it could impact smaller schools.

Costs for personnel, the largest part of colleges’ workforce, rise every year, Garcia said. Managing this is difficult, especially for a small team juggling other things, she said.

The 30-hour provision has resulted in a smaller number of “classified part-time” employees, who work between 30 and 40 hours at NOVA, Garcia said.

The Save American Workers Act of 2015 passed the House in January without Republican dissension. It is currently in the Senate Finance Committee. The Forty Hours is Full Time Act, however, is still stalled in a Senate committee.

Obama has vowed to veto any legislation aiming to change the definition of a full-time employee.

“We can’t put the security of families at risk by taking away their health insurance,” the president said.“And if a bill comes to my desk that tries to do any of these things, I will veto it.”

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