4 Business Lessons Every Restaurant Should Apply

Marketing a restaurant may seem like one of the most challenging job imaginable considering the enormous amount of competition faced in most cities and towns around the country. It’s easy to rely on basic tactics like specials, menu changes, and word-of-mouth. In reality, though, a restaurant could learn a lot from the business lessons that most service-based companies are now applying that are helping get results faster and more efficiently than ever before.

Here are some marketing lessons related to technology and data that restaurants may want to consider adding onto their menu to generate greater results, add efficiencies, and improve the bottom line.

Appetizer: Streamline Your Processes

Main Dish: Use Data to Understand Changes in Business Flow

Dessert: Identify Lost Revenue Opportunities And Capitalize On Them

The Check

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The 9 hottest trends you’ll see in restaurant design this year

We poll some of the hottest architect and design firms to identify which trends will pilot restaurant design in 2017 and which formerly popular movements are going the way of those Oliver Peoples bifocals you wore in the 90s. Here, nine designers share their predictions for the hottest restaurant trends in the months to come.

1. Your Burger Joint and Special-Occasion Restaurant Will Share an Address

2. Edison Bulb Fatigue Has Set In

3. Tiles Aren’t Just for Bathrooms

4. Pastels Are the New Neutrals

5. Garden Party Chic Is the New Urban Farmhouse

6. You’ll Want to Take Off Your Shoes (but Please Don’t)

7. Neon Will Go Dark

8. Warm and Modern Are Not Mutually Exclusive

9. The Best Trend Is No Trend

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Diners Are Finding $13 Burgers Hard to Swallow

All restaurant tabs have climbed in recent years as labor costs have risen due largely to state and local minimum wage increases. The cost of eating out — especially when cooking at home has gotten cheaper — is one major reason hamburger chains are seeing less foot traffic, NPD restaurant analyst Bonnie Riggs said.

Many burger places also have been placing a premium on their food. Those places have found they can beef up profits by charging extra for additional toppings.

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Consumers prefer independent restaurants over chains

Why are independent concepts winning, or at least outperforming chains?

It’s partly a result of urbanization, said Bob Goldin, a partner in Pentallect. But consumers also rate independent restaurants as more superior on 12 of 15 attributes studied.

“In the top 10 and 20 major metros, independent restaurants are absolutely knocking it out of the park,” Goldin said. “I hear this anecdotally and from all the distributor clients. Restaurants in urban areas, in particular, are doing fantastic. People, especially Millennials, are moving downtown to more gentrifying neighborhoods, and they’re frequenting local establishments that are winning on these factors.”


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The Cost of Avocado Toast, Explained by a Restaurateur

Jessica Sackler, one of the partners in Oakland’s Calavera and a graduate of Cornell’s business and hospitality program, finally got tired of answering questions from people (including her own mother) about the cost of menu items, penning a breakdown of what exactly goes into the creation and costs associated with the much maligned toast. Here’s Sackler’s explanation in full.

“For those, like my mom, who *really* don’t understand why avocado toast costs $10, here is a quick & dirty breakdown from the perspective of the restaurant operator.* I hope this sheds some light on the issue:

1. Food cost: $3.50 (35%)

Check here for how and why avocado prices are at a historic high: https://www.bloomberg.com/…/guacamole-costs-to-jump-as-avoc…

Let’s say this $10 avocado toast uses a whole avocado, organic of course, which now run almost $3.00 each. We will throw in another seventy-five cents for thick, whole grain bread, sesame seeds, & other garnish.

2. Labor Cost: $3.00 (30%)

So, avocado toast doesn’t grow on trees. You need someone to order the avocados (chef/manager), prep the avocado and toast (especially if you are making the bread), take the order, serve the order, and then clean the dish it was served on.

Minimum wage in SF is currently $13.00 but most reports claim you need to make more than double that to actually live in the city. (https://ww2.kqed.org/…/how-much-to-afford-a-1-bedroom-apar…/) So, it’s not like there is much of a chance the people serving you can afford to live where they work, but let’s assume this cafe is running a tight ship, and paying their staff above minimum, with some limited benefits. Add in payroll tax and local health insurance mandates, and you’re likely looking at a labor cost of *at least* 30%

So, after your controllable expenses, you have a contribution margin of $3.50 left to pay your rent, insurance, supplies, utilities, linens, smallwares, equipment, office costs, accounting, PR, etc, etc, etc. Let’s look at the big ones:

3. Rent/Utilities: $1.20 (12%)

If you are very, very lucky, your rent in SF is less than 10% of your overall sales. Let’s say your rent at this particular avocado toast cafe is 9% of sales, and we will tack on another 3% for lights/gas/water/wifi/CAMS/trash/compost/grease removal.

4. Everything else: $1.5 (15%)

Now, there are a LOT of other expenses. We won’t do them individually, but it’s fairly common for other operating expenses to be at least 15%. This also includes paper supplies (menu), printing, advertising, accounting, worker’s comp insurance, disaster insurance, computer expense, postage, repairs & maintenance, flowers, janitorial services, reservation service, recruiting, HR services, and the other million things needed to run a restaurant.

So now, what is left of that $10.00?

Seventy cents, or a 7% EBITDA on your $10 avocado toast. Sounds about right. So how many avocado toasts would you need to sell to break even from the $750,000 in start-up costs you spent on build out, permits, a basic beer/wine license, etc?

Almost one million. (1,071,428 to be exact)

And that’s before taxes.

So, next time you complain that something is too expensive because you know that you can get an avocado at the store for $2.99, think about all the other things that go into it being served by healthy people, in a pleasant environment, in a convenient location.

*this applies to primary, notoriously pricey US cities only, namely: The Bay Area/NY/DC/LA/anywhere in Hawai’i

**these numbers vary greatly depending on the type of operations, but a 7% net profit before taxes, interest, and depreciation is fairly standard.”

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How Restaurants and Technology Are Coming Together

Tech is changing the nature of service at restaurants across the country.

“I think the restaurant industry is interesting because fast-casual might take share from quick service, the broad industry might see weakness due to excessive expansion, like in this case. But in the end, people have to eat, they love eating out. And as a result, I think execution becomes a really clear differentiator between different chains, and there’s not as much of an industry boogeyman that you can pin your problems to.

But on the flip side, you have the success stories, and some of the big trends I get excited for the restaurant industry include loyalty programs, restaurants trying to source ingredients locally, and also, there’s technology. That’s where we will focus.

I think previously, we spoke about how robots, for example, eliminate the need for human employees all together. But a lot of the technology initiatives that we’ll talk about today seem to be previews of how that might work.”

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Factors shaping the future of food service

Technology may offer distinct competitive advantages, too. About two-thirds of consumers equate technology with convenience, and nearly as many said technology options speed up service, said Annika Stensson, director of research communications for the N.R.A.

But many consumers hesitate to adopt cutting-edge technology, and operators face such barriers as cost of implementation and transaction fees.

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Couch to Table: Adapting to New Consumer Habits

Weekend dinner reservations are hard to come by, and that hot new place in town has a line snaking down the block.

This must mean that business is booming, right? The answer is complicated. Data shows that traffic and revenue in many segments in the restaurant industry is flat or even down.

So where have the diners gone?

They’re staying home: 82 percent of meals are now consumed at home (NPD Group). This represents an upward trend that is validated by the fact that restaurant foot traffic has been basically flat since 2009.

They’re trying to save money: 75 percent of respondents to an NPD group survey said they are eating out less, with many citing prices as a reason.

They’re learning how to cook: Meal Kit services (Hello Fresh, Blue Apron, etc) are currently a $400M market and are expected to increase tenfold in the next five years (Technomic). Despite market consolidation, funding is still flowing to these companies, including a $32M Series A to Habit, among others (CB Insights).

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10 Highlights of the 2017 NRA Show

The National Restaurant Association’s 2017 NRA Show, held May 20-23, brought many concepts and trends—from new ways to use doughnuts to c-stores’ threat to restaurants—to Chicago that reflect on the convenience-store industry’s foodservice efforts.

Here are 10 highlights that CSP’s editors brought back from the annual conference and trade show

1. The retail threat
2. Tracking retail
3. Clear and present
4. Move over, kale
5. Smooth and creamy, meet dense and foamy
6. Next-generation mobile
7. More than meets the eye
8. Chew on this
9. In other doughnut news …
10. Another five

Learn more about how xtraCHEF fits into the #6 trend here.


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Why Restaurant Tech Is Good For Visitors and Business

Restaurant tech doesn’t merely improve operations on a logistical level – it also creates a more rewarding and fun experience for diners. According to Hospitality Technology, half of all consumers believe that technology makes a dining experience more fun. More than one-third of consumers admitted that they would actually choose one restaurant over another if it effectively utilized technology for the customer’s benefit.

The reasons why self-service dining technology is in demand are many:

1. Digital Dining is More Convenient for Customers
2. The Customer Experience Has More Possibilities
3. Technology Improves Your Operations
4. You Can Increase Your Average Check Size


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