Restaurant Consumers' Multidimensional Definition of Value Emphasizes the Overall Dining Experience

  As consumer attitudes shift, Technomic Inc.'s study explores current foodservice value proposition.

CHICAGO, Sept. 22, 2015 – PRNewswire

Nearly 80 percent of consumers say that "value" is very important in their decision of where to dine—but their definition of foodservice value depends on many factors, including service and, increasingly, overall ambiance and the quality of menu offerings. While price will always play a major role, delivering on these multidimensional elements of value is crucial as consumer attitudes toward dining out shift and operational costs rise. To combat this, operators must increase emphasis on the overall dining experience, finds Technomic's Value & Pricing Consumer Trend Report.

"While food quality remains essential, the overall experience is becoming more important to today's diners who are looking for fun, social and unique dining occasions," suggests Kelly Weikel, director of consumer insights. "Service and atmosphere make up about 40 percent of Gen Zers' and Millennials' value equations at all types of limited- and full-service restaurants. They are looking for experiences they can share—both by connecting with others in the dining party and through social media."

Compiling findings from more than 1,500 U.S. consumers, as well as Technomic's MenuMonitor, Consumer Brand Metrics and Top 500 Restaurant Chain Report, the Value & Pricing Consumer Trend Report also reveals:

• 47 percent of Millennials indicate they are seeking higher-quality fare more now than in 2013;
• 53 percent of  loyalty card holders are very likely to base their restaurant decision on a loyalty membership;
• The most influential deals are "Buy One Get One Free" and "Half-Off Specials."

The Value & Pricing Consumer Trend Report is one of many topics in Technomic's Consumer Trend Report series offering the most current analysis, insight and opportunities to help grow your business. Our best-in-class intelligence combines 50 years of foodservice expertise with critical findings from over 7,000 menus per year and nearly 30,000 annual consumer interviews.

About Technomic: Only Technomic, A Winsight Company, delivers a 360-degree view of the food industry. We impact growth and profitability for our clients by providing consumer-grounded vision and channel-relevant strategic insights. Our services range from major research studies and management consulting solutions to online databases and simple fact-finding assignments. Our clients include food manufacturers and distributors, restaurants and retailers, or other foodservice organizations, and various institutions aligned with the food industry. Visit us at www.technomic.com.

(via PR Newswire)

Automation: The Future of the Food Service Industry

 

With the push for $15 minimum wage gaining traction across the nation, the restaurant industry is bracing to make big changes. One trend that is picking up in popularity is automation. Basically, restaurants are eliminating the need of workers, and replacing them with robots or other electronic devices. Customers make orders, pay and receive their food without ever having to interact with a human being.

A new San Francisco restaurant, Eatsa, is doing just that. The establishment is almost entirely automated. To start, they do not have a counter, so no front-of-house employees. Customers neither can see the back-of-house staff putting the meals together. There are talks to get rid of that labor force too, thus becoming an entirely computerized business.

Consumers see that there are pros and cons to this new concept. Some see it as being more efficient and less expensive. However, others say that it leads to less jobs being available on the market, and higher rates of unemployment.

David Friedberg, a software entrepreneur who started Eatsa states, "I would call it different than a restaurant. It's more like a food delivery system."

The process of placing and receiving an order is fairly easy. It consists of selecting a customized meal on an iPad, paying and then waiting until your name and a number shows up on a screen. The number is the storage unit where you will actually be picking up your order.

Friedberg continues, "Technology allows us to completely rethink how people get their food."

He explains how automation has been monumental across all industries, and not just the food service industry. For example, robots are doing complicated tasks such as performing surgeries and operations.

In addition, reducing costs is not something new. If a business is able to cut spending and pass it along to the consumers, it's a good thing for all parties. Friedberg claims, "We can sit and debate all day what the implications are for low-wage workers at restaurants, but I don’t think that’s fair. If increased productivity means cost savings get passed to consumers, consumers are going to have a lot more to spend on lots of things."

Although Eatsa is nearly entirely automated, Friedberg mentions how it doesn't necessarily take away jobs. It can create too, which include but are not limited to, developing the tools and systems for the restaurant to run, and producing food products.

(via The Bulletin)

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Top Chef Tom Colicchio Eliminates Lunch Service Tipping

 

Famed Top Chef judge Tom Colicchio who founded New York City restaurant, Craft, in 2002, recently announced there will be no tipping during the lunch service portion of his restaurant. Patrons who eat at the establishment will see a notice at the bottom of the menu reading, "Prices are inclusive of service." Although Colicchio is removing the practice and the tip line on bills paid with card, he won't stop those who insist on leaving cash tips. There are talks to even extending this no-tipping policy for dinner services as well by the end of the year.

Under the new plan, Craft employees, such as waiters, bussers, bartenders and others, who normally would rely heavily on gratuity, will be ensured higher wages. For it to be successful, Craft will have to raise menu prices. Charging higher fees allow both the front-of-house and back-of-house staff to receive base pays. Colicchio states, "It's time for a change. It's time to pay the servers a salary."

Unfortunately, not all front-of-house employees are pleased. Under the change, the extra funds gained, which would have originally been the tip pool, now belong to employers instead. The employers can distribute the money however they choose, and there is a possibility that it would be used for other purposes, rather than payroll.

Colicchio refutes that the action will actually be beneficial for servers and waitstaff. Servers typically don't want to work during the lunch hours since there is less business, and thus less tips. However, with the change, front-of-house staff don't have to stress over that.

The tip-free system at Craft will not be a disruption to the business, as it had never offered lunch before. Colicchio said it would have been difficult for him to suddenly hike up prices by 20 percent on an already set menu. He optimistically replies, "If it doesn't work out, and I'm expecting it will, it won't have the same impact as if we disrupted dinner service. So the risks aren't as high at lunch."

This move is on the heels of New York Governor Andrew Cuomo's proposal of increasing the minimum wage to $15 an hour for all workers. Others in the food and service industry are also reeling the effects of the announcement, as the minimum wage was already raised to $8.75 this year in January, and will continue to rise in the years to come.

(via Eater NY)

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Restaurant Performance Index Rose in July

  Driven by stronger same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) posted a solid gain in July. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.7 in July, up 0.7 percent from June and the first gain in three months. In addition, July represented the 29^th consecutive month in which the RPI stood above 100, which signifies expansion in the index of key industry indicators.

“July’s RPI gain was fueled primarily by an improvement in the current situation indicators,” said Hudson Riehle, Senior Vice President of the Research and Knowledge Group, National Restaurant Association. “Although a solid majority of operators reported higher same-store sales and customer traffic levels in July, their outlook for both sales growth and the economy is more cautious compared to recent months.”

The RPI is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators. The Index consists of two components – the Current Situation Index and the Expectations Index.

Current Situation Index

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 103.7 in July – up 1.2 percent from June and the strongest increase since December 2014. In addition, the Current Situation Index stood above 100 for the 17^th consecutive month, which signifies expansion in the current situation indicators.

• Same store sales: A majority of restaurant operators reported higher same-store sales for the 17^th consecutive month, with July’s results representing the strongest performance since April.  Seventy-three percent of restaurant operators reported a same-store sales gain between July 2014 and July 2015, up from 64 percent who reported higher sales in June.  In comparison, 16 percent of operators reported a same-store sales decline in July, down from 20 percent in June.

• Customer Traffic: Restaurant operators also reported stronger customer traffic results in July.  Fifty-nine percent of restaurant operators reported an increase in customer traffic between July 2014 and July 2015, up from 47 percent who reported higher traffic in June.  Twenty-three percent of operators said their traffic declined in July, down from 28 percent in June.

• Capital spending: Along with positive same-store sales and customer traffic levels in recent months, restaurant operators continued to make capital expenditures.  Seventy-two percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which marked the 10^th consecutive month in which a majority of operators reported making an expenditure.

Expectations Index

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 101.7 in July – up slightly from a level of 101.5 in June. Overall, July represented the 33^rd consecutive month in which the Expectations Index stood above 100, which indicates restaurant operators remain generally positive about business conditions in the months ahead.

• Sales outlook: Restaurant operators’ outlook for sales growth softened somewhat in recent months.  Forty percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), which represented the fourth consecutive month of declining optimism.  In comparison, 12 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, the highest level in 12 months.

• Overall economy: Similarly, restaurant operators are less bullish about the direction of the overall economy.  Only 16 percent of restaurant operators said they expect economic conditions to improve in six months, while 21 percent expect conditions to worsen.  This marked the second consecutive month with a net negative outlook, the first such occurrence in nearly three years.

• Capital expenditure planning: Despite the dampened outlook, a majority of restaurant operators said they are planning for capital expenditures in the months ahead.  Sixty-six percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 59 percent who reported similarly last month.

(via Restaurant News)

Staffing Challenges in the Restaurant Industry

In addition to the challenge of hiring cooks and chefs to work the kitchen, waiters and waitresses are becoming harder to find. Based on a recent survey conducted by the National Restaurant Association, more than 50 percent of restaurant owners say that it is extremely difficult to find and keep good workers.

The reason, simply, because of supply and demand.

There is a huge need for restaurant workers, both front of house and back of house, since the U.S. Department of Agricultures reports that people are spending more time and money dining out. Americans are spending approximately 43 cents of every food dollar away from home. Michael Latour, a restaurant owner from New Jersey states, "The economy is good, and people are spending more money than ever in the hospitality industry. We're living in an area that's saturated with restaurants."

However, there just isn't enough workers to support all the restaurants. (Or at least, not enough workers willing to.)

Restaurant owners and managers understand that it is not so easy working in the restaurant environment. Tony Del Gatto says to work at his country club, a chef has to work six days a week, 12 hours a day, for both lunch and dinner services. That's more than 70 hours a week! The long hours are not only burdensome for both cooks and waiters, they are also taxing on their health, as they have to be on their feet all the time.

In addition, workers are not willing to accept low salaries anymore. According to the National Restaurant Association, restaurant wages range from a measly $8 an hour for dishwashers and to almost $20 for bartenders. Chefs earn about $12 an hour, while waiters and waitresses get about $16 (with tips included). Christine Nunn, a restaurant owner and chef states, "People come out of the Culinary Institute of America with a lot of debt, and they're not paying it off at $12 an hour."

Sadly, restaurants are unable to afford to pay more. Most restaurants already work on thin profit margins of only 4 to 6 percent.

Some analysts have noted that a slowdown in immigration may be another cause. The U.S. Bureau of Labor Statistics' reports reveal that 11 percent of Hispanic workers hold jobs in the restaurant and hospitality field. Furthermore, workers have difficulty in finding accessible transport to suburban restaurant jobs.

Fortunately, there are those who continue to stay and work in the fast paced environment of restaurants. Servers express that they love the bonds and interactions that make with customers, and chefs enjoy working with food too much to leave.

Michael De Vincenzi, a maitre d' states, "I want to be busy. I want it to be hectic. I like the stress. It's all adrenaline."

(via

The News Tribune

)

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