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6 Tips to Help Restaurants Combat Higher Labor Costs

Mark Kuperman | FSR Magazine

Though raising prices from the start is tempting, try these more effective solutions instead

Mark Kuperman

Mark Kuperman

More and more municipalities around the U.S. are raising the minimum wage: In all, 19 states raised the minimum wage last year, with some of the largest increases in the states of Arizona, Washington, and Massachusetts. And more increases are on the way, as cities, counties, and states react to growing political pressure around the country.

How should full-service restaurant owner/operators deal with this situation? For starters, it’s important to pay your staff at a competitive rate, so you will retain highly motivated workers—a key to customer satisfaction and loyalty. Then, as you determine what those pay rates should look like, devise a plan for covering the related costs in a way that keeps your customers at the heart of everything you are doing and won’t drive them off to your competitors.

The temptation can be to raise menu prices across the board, thinking your customer demand is so strong that such a price increase won’t have an impact on your business. But a more well-thought-out approach comes from a deeper understanding of your customers and what they are willing to pay for each item.

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9 Ways to Maximize Menu Profitability

Dora Furman | Restaurant Hospitality & Nation’s Restaurant News

Mitigate cost pressures and avoid giving guests sticker shock with these tips

Dora Furman

Dora Furman

Too often, restaurant menus have catchy descriptions, gorgeous photos and an attractive layout, but are missing a key ingredient: They aren’t driving profitability.

Certainly, you should have a visually appealing menu that matches your restaurant’s brand. But beyond doing that well, it’s important to use the menu to your advantage financially.

By using key performance metrics, both financially (such as product mix and profitability) and operationally (such as speed of service, quality and SKU utilization), you can better understand what items are good candidates for menu features, deletion or product re-engineering. This approach also takes emotions out of the picture.

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4 Alternatives to Service Charges

Justin Pridon | Nation’s Restaurant News

Mitigate cost pressures and avoid giving guests sticker shock with these tips

Justin Pridon

Justin Pridon

Costs are rising for restaurant operators everywhere. The minimum wage is going up in many places. Commodity costs are always a worry. And for many prime locations, rental rates continue to climb.

What’s a restaurant owner to do? In some cities, especially on the West Coast, some restaurants are taking an extreme approach: experimenting with added service charges to offset costs.

Cost pressures on restaurant owners and operators are certainly intense, and many restaurants need to increase revenue as much as 5 percent to 6 percent this year just to keep profit margins intact.

But, here’s the million-dollar question: How can an operator compensate for these cost challenges without either raising menu prices or introducing a flat service fee? In short, how can you avoid giving your customers sticker shock?

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How UK Hospitality Operators Can Beat 2017’s Growth Killers

Steve Cordiner, Livingbridge | Caterer, Licensee & Hotelier News

Five top tips for hospitality operators looking to turn operational burdens into growth opportunities

For the UK hospitality sector, the first half of 2017 has brought with it a wave of uncertainty. Food inflation rose to 1.5% in April – the biggest annual rise in three years – and increases in business rates and rents are eating away at operators’ bottom lines.

Looking ahead over the coming months and years the snap general election on 8th June will set the tone for Brexit negotiations and the sector is bracing itself for any potential impacts on the availability of labour.

However, it isn’t all doom and gloom, and we have seen how innovative operators are using pockets of potential to beat the growth killers and keep the momentum up. Here are five top tips for hospitality operators looking to turn operational burdens into growth opportunities:

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The Value-Driven Equation of Fast Casual

Maggie Hennessy | QSR Magazine

Consumers are demanding better-quality foods, but are they willing to pay the extra cost?

The emergence of the higher-end fast casual 2.0 category continues to blur the line separating limited and full service, particularly when it comes to price. But more consumers seem willing to shell out a few extra bucks per entrée in exchange for what they see as higher-quality fare and one-off, hospitable experiences that rival full-service casual dining.

By definition, fast casuals are more expensive than quick serves—a characteristic that alienates consumers in the lowest income bracket but doesn’t deter other diners. In fact, a November 2015 survey of 2,000 consumers by market analyst firm Mintel found that 30 percent think fast casuals are a better deal than quick serves, and 28 percent think the quality of the food justifies its price.

Value seems to become even more flexible of a notion when it comes to fast casual 2.0. Based on the definition of value as a “product, plus service, plus atmosphere, plus brand, divided by price,” fast casual 2.0 concepts get a lot of pricing leverage from product investment, says Justin Pridon, vice president of consulting services, North America at Revenue Management Solutions, a data-driven RMS provider.

“When you talk about those differentiators for 2.0, you’re really finding they’re looking to invest much more in the product—better specialization and more focus on farm to table, innovation, and trends down to the regional level—because they have those strong vendor relationships,” he says.

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6 Tips for Incorporating Applied Analytics Into Business Decisions

Alexander Cairns | Nation’s Restaurant News

Restaurant operators have access to more data than ever. Here’s how to work with it.

Alex Cairns

Alex Cairns

The adoption of more advanced POS systems in restaurants has led to data becoming more accessible than ever before. In today’s data-driven world, restaurants frequently want to capitalize on this by incorporating analytics into their decision-making.

When done correctly, analytics can be leveraged to generate actionable recommendations and guide strategic decisions, like deciding whether you should run a sales promotion again, or whether a certain item should stay on the menu.

The challenge faced by most operators is that their expertise lies in the complexities of daily operations, not necessarily in analytics. This confusion can be exacerbated when operators do their own research, as most analytical approaches (such as machine learning or econometrics) have typically been used by academics, and a lot of online resources can be difficult to decipher.

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5 Ways to Ensure a Profitable Restaurant Remodel

Bob Donofrio | Nation’s Restaurant News

Sprucing up your space can result in a same-store sales boost

Bob Donofrio RMS

Bob Donofrio

So, you’ve decided to remodel a restaurant location.

Beyond questions about design, budget and contractors, you are undoubtedly thinking about some customer-related questions:

Will your longtime customers like the new look and keep coming back? Will the remodel attract new customers? And, just as important, will customers be willing to pay higher menu prices if you spruce the place up?

The good news is that with proper planning and a deep understanding of your customers, a remodel can help you fine-tune your image in a profitable way. And with smart menu pricing decisions, you can offset the costs of the work over time without hurting customer traffic.

Analysis has shown that customer price sensitivity generally decreases when guests are enjoying an updated restaurant environment.

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How to Address Same-Store Sales Declines

Dora Furman | Nation’s Restaurant News

Don’t immediately start discounting

Since March, our inboxes have been flooded with news of same-store declines, restaurant closures, and discussions of a recession. However, this news begs the question, are customers spending less? Or are they just spending elsewhere and our data simply doesn’t capture who or what is stealing a share of customers’ stomachs? 

A number of variables should indicate that consumer spending should be up: gas prices and unemployment levels are near the lowest they have been in years, interest rates are still low, and the median household income has increased more than 5.2% from a year ago. 

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How To Utilize Food Inflation Data

Holly Simmons| Nation’s Restaurant News

Government metrics can help you compare your business to competitors

 
Holly Simmons

Holly Simmons

On a regular basis, the U.S. government measures the rate of price change throughout the country in all industries, including the restaurant and grocery sectors. 

As restaurant owners and executives, this data is one of many metrics to review that can be used to compare price changes in your organization with price changes of the restaurant industry, as well as grocers. The data can also shed light on the competitive landscape.

The U.S. Bureau of Labor Statistics (BLS) produces two indices related to the restaurant industry: Food Away From Home (FAFH) and Food At Home (FAH). FAFH measures the price of eating out, from quick-service to fine-dining establishments. FAH is the grocery index. It encapsulates food purchased from grocery stores (or other food stores), and food prepared by the consumer unit on trips. 

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10 Ways to Prevent Fraud By Restaurant Employees

Winny Daud and Philipp Laque | Nation’s Restaurant News

This major concern for operators can significantly cut into revenue

Winny Daud RMS

Winny Daud

Employee fraud should be a major concern to restaurant operators because it can significantly cut into revenue. Quite simply, this is an issue that you can’t afford to ignore.There are two main areas where employees can inflict financial harm on a restaurant: they can steal product or they can steal money. Here, we will focus on the embezzlement of money that takes place when employees commit fraudulent transactions at the point of sale, such as voided checks, refunds, coupon redemption, discounts or through other creative ideas.

In one particular case, after we conducted a thorough analysis of the client’s transactional data, we identified that 6 percent of all transactions were fraudulent. Six percent is on the high end of the scale we see, but a more prevalent figure for U.S. restaurant chains is around 2 percent.

Philipp Laque RMS

Philipp Laque

This adds up: While every brand is different, we have seen clients recover between $40,000 and $97,000 per unit each year. That’s revenue that you have to absorb if you don’t address the issue.

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