7 restaurant trends every FSD should know
There might have been a time when non-commercial foodservice actually boasted a captive market. We hear, too, that men once wore powdered wigs, and bustles were the height of fashion for women. Anyone who’s been in the on-site business during the last two centuries is painfully aware that a consumer will opt for an off-site place to eat if a foodservice director can’t match what’s available on the street. With that in mind, FoodService Director presents this look at the trends reshaping the restaurant market. They’re strategies the competition is using to steal your customers, unless you beat them to the punch.
1. Small is the new big: the shrinking restaurant
It’s almost a natural law of the business. Smaller restaurants are more efficient, so why not maximize profits by shrinking a concept? But that’s only one reason why chains are taking the approach to extremes and planning a new generation of miniature outlets. Small, it seems, is suddenly a big thing.
Starbucks is close to opening the first of its new express stores, which feature a “concentrated” menu and few frills, such as seats or bathrooms, the company says.
At the same time, Chipotle is scouting for the first of its minis, described by CFO Paul Hartung as “a really, really small” place to grab a burrito and perhaps a limited number of other items. Just don’t expect to sit and eat.
Denny’s calls its pocket-size version The Den, which features a different menu in a dramatically scaled-down footprint. It’s already finding favor in non-traditional sites such as college campuses. Ten units are open, and management has designated the compact format as a growth vehicle.
The list goes on and on. BJ’s Restaurants, whose national chain of casual, craft beer-serving restaurants had typically measured 8,500 square feet, is trimming the floor plan of new units by 1,100 square feet. The smaller restaurants cost $1 million less to build, yet can handle as many customers and generate as much in profits as the larger stores. In addition to the savings in construction, “our labor and controllable costs will be more efficient, as well,” CEO Greg Trojan explained to investors when he revealed the new format last year.
Red Robin, a full-service restaurant with a big presence in malls, is shoehorning a smaller variation called Burger Works into urban locations. Ditto for Famous Dave’s, which calls its little brother the Famous Dave’s BBQ Shack. The units measure about 3,000 square feet, compared with the 8,000-square-foot footprint of conventional stores.
A button-size place can slip into more locations. For example, Starbucks’ express stores will enable the company to hit its ambitious goal of adding 3,500 outlets by 2017 to the 21,366 it had in operation at the end of 2014.
Non-commercial operators may not be familiar with expansion on that scale, but they are certainly no strangers to the intercept strategy that also is driving development of the express stores. Starbucks plans to put the units where urban patrons are walking to or from work, their homes or a movie.
“The evolution of our store experience is a direct reflection of how our customers are interested in both accessibility to the brand as well as speed and convenience,” said Cliff Burrows, president of Starbucks’ U.S., Americas and Teavana divisions.
Chipotle says it can cut the seating area from the floor plans of some stores because about two-thirds of its transactions are now to-go. Convenience is the hook for takeout customers, and a smaller store helps in that regard. There’s also less concern about blurring the brand’s perception because Chipotle’s core characteristics are now familiar to the public, Hartung said.
Technology also is firing the shrink ray for restaurants to reduce their footprint With mobile technology shifting a portion of cashier and counter-ordering functions to customers’ smartphones, why does so much space have to be devoted to those outmoded in-store processes?
About 8 percent of Panera Bread’s sales were being generated by digital orders by the end of 2015, according to CEO Ron Shaich. “That rate of digital adoption is more than double where we were at the end of the second quarter,” he told financial analysts. Not surprisingly, Panera is shifting some functions out of stores and into stripped-down delivery kitchens that function like commissaries.
Starbucks has described its express units as essentially production/pick-up hybrids where patrons can retrieve the lattes and espressos they’ve ordered and paid for via smartphone.
BJ’s executives have observed that employees of its full-service units like the smaller facilities because there’s less ground to cover, leaving more time and effort to spend with guests. “The fact is, smaller restaurants are a little bit easier to run,” Trojan acknowledged to investors.
2. Simplified menus
A persistent challenge for the restaurant industry has been snagging traffic, which still falls about 11 percentage points short of pre-Great Recession levels, according to Black Box Intelligence, a Dallas-based financial data company. The knee-jerk reaction was to embrace any menu lure that seemed to work for someone else, leading to bloated rosters of far afield products such as bacon milkshakes, cheeseburger pizzas and waffle tacos.
Now the pendulum is swinging the other way, as customers demonstrate a marked preference for quality over breadth of choice. Fewer menu items means more turnover of ingredients and fresher supplies, along with fewer preparations for the kitchen crew to master. Slimming down a menu also avoids the anxiety that McDonald’s detected in customers at the drive-thru. They couldn’t sort through all the options before they heard a voice pressing them for their orders.
The burger giant has pledged to simplify its menu in hopes of winning back the public’s favor. It’s not just a matter of cutting selections, explained Peter Benson, McDonald’s chief administrative officer. “It’s actually making the menu easier for the customer to order, and making the menu easier for our crew and managers to execute,” Benson said to investors.
Part of that is trimming slow-movers, part of it is not listing everything you offer and part of it is displaying items in an uncluttered, easier-to-navigate way, he said.
McDonald’s is hardly alone in that quest. After a strong recent quarter, Burger King boasted not only about its sales results but how they were engineered. Customer lures were concocted using what was already in the kitchen, requiring only five new SKUs to be shipped to stores.
Shearing choices for today’s fickle consumers might appear to be a dicey undertaking, but the Friendly’s family-restaurant chain found the risk to be grossly overstated. Its menu had grown larger than The Cheesecake Factory’s, undeniably one of the most extensive bills of fare in the business. But an analysis revealed that 65 percent of the selections accounted for only 2.6 percent of sales.
Besides, say advocates of “less is more,” look at the success bare-bones menus have enjoyed. In-N-Out Burger, whose restaurant volumes exceed McDonald’s, still has only about five items, excluding sodas. That compares to about 145 items for McDonald’s, which has added about 85 products since 2007, according to financial analysts.