As a third-generation restaurant operator, I’ve learned a lot – mostly the hard way. The one constant in our world is change and change for the restaurant industry has never been more drastic or disruptive.
I’ve had countless conversations with peers, friends and clients about what the new “normal” will look like post-COVID, and I’m afraid there isn’t one. The restaurant world as we know it has been forever changed and, as only those within our industry can, we must roll with the punches.
The re-inventors, the visionaries, the ones who refuse to hear “we can’t do it that way” – those are the leaders of the future, and the ones who will persevere and emerge out of this pandemic stronger than ever.
While the industry continues to rethink its business models from the ground up, we’ve been seeing alterations on staffing approaches, adjustments to the size and shape of our dining rooms, and multiple new safety protocols put in place. Those initiatives will undoubtably have an effect on internal performance numbers, but it’s hard to say exactly what that effect will be without a proper measurement strategy in place. Perhaps most importantly, it’s key to understand how those metrics stack up against your peers and competitors in the space. This is now the one true barometer of success. A number is just a number without context.
This is what led me to the leadership team at Black Box Intelligence (formerly TDn2K) a few not-so-short months ago (pre-COVID). Like many others in our space, we’ve been heavily impacted by COVID. We’ve reacted by taking a hard look at the data we’re surrounded by. With the help of our members, we’ve been able to provide insights that are helping restaurant operators with the context they need to make smart business and staffing decisions.
We recently launched an infographic outlining what we’re seeing, but again – a number is just a number without context. So, let me help add a little color to what we see in this infographic.
1. Off-Premise Sentiment Scores Fell
In early May, 44% of restaurants were open using an “off premise only” model (likely curb-side pickup and/or delivery). When we looked into how consumers were responding to this model, we saw a few concerning points. Guest sentiment scores fell as states began to reopen. You’d think that consumers would be thrilled to have their local restaurants start to open back up again, but the data says they were disappointed by the experience they were receiving. There are a number of reasons why this may be the case…
- Inability to properly forecast sales and labor
- Lack of staff (due to the above)
- Poor throughput, which could be due to training, available technology or a kitchen layout that doesn’t support the new business model
Typically, when we see guest sentiment scores drop, it’s due to a weak structure. Restaurants should look at every day as if they’re opening a brand-new location, not “re-opening”. Forecasting immediately following this pandemic is hard, if not downright impossible. And, there are likely massive changes to your business model, cleaning procedures and even staffing structure – all of which your staff needs to be trained on. Just like a new restaurant opening, operators have only one shot at wowing the customer and generating repeat business. So, build a strong structure, over-staff, investing in training and knock out the work until you can forecast better. Any control on costs should be focused on non-guest facing aspects, protecting the guest-facing interactions.
2. Guest Check Size is Increasing
The average guest check size is increasing, especially in states that are starting to reopen. In those states specifically, we’re seeing a positive impact on beverage sales compared to national beverage sales. Which is great, but fairly expected. What I find particular interesting about the increase in average guest check size is that it indicates that consumers are purchasing more per visit than pre-pandemic. This could be attributed to a number of things:
- Take-out orders for full families, as opposed to a more limited number of people who would have eaten in the restaurant
- Over-ordering by those dining in
It’s the second point that concerns me. Limited service restaurants may want to consider borrowing from the fine dining playbook. In fine dining restaurants, servers are trained to prevent customers from over-ordering and play the role of ‘food consultant’. Fine dining restaurants have found the hard way that if they let customers over-order, the customer ends up with a bit of buyer’s remorse and feels taken advantage of.
What we may be seeing in limited service restaurants is the guests letting their excitement to be back out at a restaurant getting the better of them. As limited service restaurants reopen dining rooms, they should consider training staff on appropriate order sizes to mitigate any negative guest sentiment that may result from the customer over-ordering.
3. New Manager Starting Salaries Have Dropped
Now, this is concerning. Pre-pandemic unemployment rates were so low that restaurants had to be competitive with starting salaries for managers. But I say that with a bit of caution – if you factor in inflation, GMs actually have less earning power today, than they did 10 years ago plus their workload has increased.
I understand the need to cut costs – our industry has been hit HARD by the pandemic. But your managers and general managers are the glue that holds your restaurant together. They have more impact on your staff, food quality, guest experience and overall success of your restaurant than any other aspect of your business.
4. Many Employees are Not Expected to Return
In an industry where turnover has historically been high, this doesn’t surprise me, especially given that some part-time workers are making more on unemployment than when they were working. This won’t last forever but will cause headaches in the short term. Some organizations may have the financial freedom to offer more competitive pay, but most won’t. Operators need to start thinking now about how to attract and retain talent using incentives other than pay. This could include additional schedule flexibility, benefits and growth opportunities.
5. Changes Make a Difference
The last section of the infographic is a bit obvious – many restaurants are making big changes to ensure employee and guest safety. But what’s interesting is what’s behind that data. I got a chance to look at the raw data that makes up those numbers, and what I found interesting is that the strong performing brands have done nearly everything on that list. At Black Box Intelligence, we look at the data as “the best vs. the rest” with the “best” as defined by high sales volume, employee retention and guest sentiment results.
Not only are the best doing everything on that list, but they’re being very clear and transparent about what they’re doing. My friends at Kronos have written a couple of great blog posts on this topic that I’d encourage restaurant operators to read. One on how retailers and restaurants can focus on health and well-being, and another on how to emerge stronger through transparency.
The Data Behind the Data
Without context, data is just numbers, and decision making becomes more guesswork than science. The restaurant industry has never been more competitive or more challenging, and change is continuing. But with change comes opportunity, and I believe those who take a data-driven approach to their business will set themselves up for success as we move into a new world.
There is no doubt the challenges ahead of us are staggering and will be always changing. But this industry is scrappy, resilient, and full of people that live to serve. Each restaurant has always had its own individual heartbeat with the staff bonding over hard work and long hours. The best cultures represent a place of unity, belonging and safety for the staff and guests. They, and the world, need that now more than ever. Lead with your hearts and empathy for your people and we’ll get through these times and on to the next together.
