Thinking Outside the Box
To create your end-demic strategy. It appeared that the pandemic was beginning to recede into our rear-view mirror, and we had rounded a bend, heading to the light at the end of the proverbial tunnel. But alas, here we are with COVID-19 diagnoses surging even amongst the double vaxxed and boosted! As we try to find our balance from that tailspin, the hospitality industry continues to be plagued by painful everyday operational realities. While it appears that some operations are flourishing, for others, their task is downright Sisyphean. From where I stand, every sector of the industry is affected. I mean everything. The inability to hire labor, increasing costs, and tighter margins across the board, while simultaneously and seamlessly trying to provide great hospitality to guests. All this, of course, is coupled with the mental exhaustion of trying to continue to operate under these conditions and somehow create a pre-pandemic dining experience. As if that was not enough, operators must now contend with increasing interest in unionization. While it is hard to predict the direction of this wave, one thing is for sure, Millennials and Generation Z are driving the interest in this phenomenon much like their grandparents, the baby boomers, had in previous decades. Operators are now faced with another challenge in rebuilding their workforce – creating an environment where people want to come to work – distinguishing themselves from their competitors.
What the Rise of Loyalty Programs Means for Casual Dining
Casual-dining rewards members are looking for enhanced experiences. Loyalty has long been part of the food service industry landscape, with brands like Starbucks and Panera leading the pack for years with revolutionary programs. Even the most successful recent launches at McDonalds, Popeyes, and Taco Bell came as little surprise as loyalty has been a proven method for years to attract, retain and reward loyal customers. Yet, the adoption of loyalty programs and digital innovation, in general, has been slow for the full-service sector. Some attribute this to how far behind the industry was across their channels, requiring them to innovate almost overnight to build up systems to support delivery, curbside and online ordering. While this may be true, time may also be up. Recently, the casual dining breakfast brand Snooze an A.M. Eatery announced they had just launched their new loyalty app, one that integrated directly into their waitlist system. A few days later, Red Robin cited in their most recent earnings call that alongside improved cost measures, their new loyalty program was a critical factor in its 21 percent revenue jump. Simply put, we are seeing the rise of loyalty in full-service establishments.
Steps to Avoid Costly Hospitality Employment-Related Lawsuits
Employee rights. Understanding your employees’ rights is paramount to protecting your business. According to the Equal Employment Opportunity Commission (EEOC), the federal agency enforcing laws prohibiting employment discrimination, EEOC received 61,331 charges of employment discrimination during this period in 2021. Retaliation continues to be the most frequently filed claim included in charges with the EEOC with 56% of all charges involving a retaliation claim1. After retaliation, the EEOC reports a high number of disability, race, sex, and age claims. From discrimination to wrongful termination, employment practice claims can carry a heavy price tag when businesses fail to have the right risk management procedures and insurance coverage in place. It’s impossible to prevent all lawsuits. However, you can take mitigating steps to reduce your business’ risk and high cost associated with employment-related lawsuits through the following best practices:
COVID Caused Five Permanent Changes
In the Restaurant Industry. So much was different before March 2020. Restaurant’s safety protocols were done “behind the scenes,” and guests most likely didn’t care about the sanitation of high-touch surfaces or whether they were sitting within six feet of other tables. For many brands, an annual audit was the norm, while employees may have focused on not “getting in trouble” or “getting a good score” rather than the creation of culture. Many operators relied on gut instinct, without a comprehensive view of their data to inform their decisions. So much has changed in the past few years. The COVID-19 pandemic has been the biggest disruption that the restaurant industry has ever faced. Restaurants were unable to operate “normally” during the height of the pandemic, and many wonder if things will ever get back to “normal” for our industry again. I believe that these five things have permanently changed:
Cost and Effect
The role of value engineering in restaurant construction. How value engineering can be a restaurant construction solution in the face of rising prices and unpredictable supply chains. As the prices of construction materials skyrocket due to rising inflation and supply chain woes, budgeting for commercial development has become significantly more challenging. It isn’t just the higher price tags, but the difficulty of sticking to budget constraints over the life of a project. Fluctuating prices and increasingly prevalent and unpredictable supply chain disruptions have changed the game, adding cost (and stress) and making it tougher to complete projects on time and on budget. The good news is, there are ways for commercial construction companies and their clients to offset rising materials prices. Value engineering, creatively leveraging efficiencies and cost savings throughout the restaurant construction and reconstruction process, can mitigate some of the worst effects of an uncertain supply chain. Understanding how value engineering strategies work, how to unearth hidden opportunities for savings and efficiencies, and appreciating the difference that a dedicated commitment to value engineering can make, are all critical steps in becoming more informed and engaged restaurant clients.
Over 40% of Independent Restaurants are Behind on Rent
Inflationary pressures are undermining market progress. Forty-one percent of small restaurants couldn’t pay rent in May, a new report from Alignable shows. This rent delinquency rate is up 8% from April and 13% from February, and erases all progress made since October 2021. This change is largely attributed to rent inflation, as landlords have increased rents in recent months, according to Alignable. Fifty-two percent of small businesses have experienced rent increases, which is up 6% from April, per the report. Rent inflation is just one factor pressuring operators, however. A March Alignable report shows 66% of restaurants are struggling with high gas prices, and traffic has declined due to gas prices, per Placer.ai data. On top of higher gas and rent costs, restaurant operators are also navigating staffing shortages, higher wages and spiking food costs. More than 80% of restaurant and hospitality businesses in Michigan say they don’t have enough workers to meet demand, for example, while 77% of operators have experienced commodity inflation higher than 10% in the state.
3 Reasons Why Some Restaurants Outperform Others
The digital divide. As restaurants take steps toward recovery and set the stage for post-pandemic growth, it’s critical that they continually evaluate their execution in three key areas that can affect where they land in the widening digital divide. For two years, restaurants have faced a relentlessly challenging environment fraught with uncertainty, significant operational changes and supply chain disruptions — not to mention a labor shortage that is costing 71% of restaurants $5,000 or more per month. So, how have restaurants survived, and even thrived, with the odds stacked against them? The pandemic shined a spotlight on two important factors influencing business performance: 1) the remarkable resilience of restaurant owners and staff and 2) their level of technology usage. Whether they pivoted to online ordering or re-engineered dining room experiences, restaurants that were already more tech-enabled or quicker to adopt new technologies tended to bounce back faster and withstand additional curveballs as Covid variants made their way through the Greek alphabet. Seemingly temporary solutions became core to operations, and the increased reliance on technology will continue as restaurants look to boost guest volume, efficiency, sales and profitability. A Popmenu study of 415 U.S. restaurant owners and operators found that 51% plan to automate more online operations in 2022 and 41% plan to automate more on-premise operations.
24 Restaurants Highlighting Jersey City’s
Rich culinary diversity. With a population of around 250,000, Jersey City is the second largest city in New Jersey. It covers a vast area of cliffs and lowlands, hemmed in between the Hackensack and Hudson rivers. It possesses three institutions of higher learning within its borders, and a population so diverse that it rivals Queens. Look for any category of restaurant there, and you’re likely to find it. A few things that make it unique: India Square, one of the largest South Asian shopping strips in the tristate area, with around 25 restaurants; two competing Filipino neighborhoods with bakeries, cafes, produce stands, and food stores (some linked to chains back in the Philippines); a transplanted hamburger stand that started life at the 1939 World’s Fair; and a handsome historic downtown with a large selection of bars, bistros, and artisanal food producers, not to mention a Krispy Kreme where you can watch the doughnuts being made. Its reputation as a great culinary destination has remained sadly overshadowed by New York City’s, but hopefully that is changing.
Did You Know?
America’s last Howard Johnson’s restaurant closes, lists for $10. It’s official: There are no longer any HoJo eateries left in the US. America’s final Howard Johnson’s restaurant — a 7,500-square-foot single-story diner, which had sat off Lake George, NY’s Route 9 for almost 70 years — has closed its doors, ending an era for what was once the nation’s largest restaurant chain. It’s also now for sale — and for a price that won’t break the bank. The property is listed for just $10 by a local real estate firm, which boasts the address comes with 70 parking spots and electrical road front signage. Before closing its doors and, as the last restaurant standing, the Lake George Howard Johnson’s location had a rocky set of final years.
The rise of the whole employee. Over the past 20 years — and even more so in the past two years — loyalty has declined. The disruptions of the last few years have caused many individuals to explore more meaningful work, start their own businesses, and prioritize personal and family commitments over careers. As a result, employers must figure out how to address low job satisfaction rates and meet expectations of workers from various generations, races, gender identities, and industries. Discover how to succeed in these uncertain times.
Bielat Santore & Company – Restaurant Industry Alert
Examining the Relationship Between Restaurant Tenants and Landlords
Renting restaurant space. Landlords are an essential part of the deal when renting a restaurant location. Ideally, the hope is for a symbiotic relationship between the landlord and the tenant, with each party having the best interest of the restaurant and its success at heart. To curate and maintain a peaceful relationship, gaining clarity upfront and knowing how to negotiate through a contract are imperative for a restaurant tenant or buyer. There are two instances where the landlord and restaurant tenant must come to an agreement. The first is on the initial lease with all deal terms negotiated and memorialized in the final lease document signed by the parties. The second is when there is an assignment of the lease. This occurs when the restaurant is in contract to a new buyer who wishes to assume the terms of the existing lease.
Before you decide to lease, buy or sell, be sure to call Bielat Santore & Company. The Allenhurst, New Jersey firm has over 40 years of experience in managing restaurant acquisition and disposition transactions. The company will also arrange financing to facilitate such transactions when necessary. They are the “resident experts in New Jersey.”
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