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4 megatrends that emerged at chain restaurants’ big idea exchange

If the Restaurant Leadership Conference (RLC) sported a marquee, it would’ve screamed the names of Magic Johnson, Robert Gates, NFL referee Sarah Thomas and other celebrity speakers. But many of head-turning insights for the 1,200-plus restaurant chain officials in attendance came from conversations with peers and the onstage remarks of fellow executives.

Here are four takeaways that operators missed if they weren’t at the industry’s biggest gathering of C-suite executives.

Third-party delivery commissions are coming down

In the scramble to sign up restaurants in every nook and cranny of the country, the big third-party delivery services are realizing they won’t get to 100% coverage if they insist on keeping 20% to 30% of a delivery ticket. “Third parties are willing to work with restaurants more than before on fees,” said Focus Brands CIO Michael Verdesca, echoing from the stage what many of his peers told Restaurant Business in private conservations. “This makes a big difference with our franchisees.”

Verdesca, whose company operates Moe’s Southwest Grill, Jamba Juice and five other quick-service brands, said the newfound flexibility is part of a greater effort on the part of the services to act more like partners, even while they still function as competitors of sorts for customers. “They’re not there yet,” he said, but they’re trying.

More kitchen, less seating

For as long as restaurants have existed, the trend has been to shrink the amount of floor space allotted for kitchens and use the freed-up area for more revenue-generating tables and seats. But the boom in off-premise business is forcing the industry to consider an immediate U-turn. More production is needed to meet the demand for outgoing orders, which now account for 63% of total industry transactions, according to research aired at the show by the National Restaurant Association. 

But it’s not a simple matter of moving walls or gas lines. The historic shift can change what veterans call box economics, or the cost-to-sales ratio of a restaurant. The per-square-foot cost of kitchens can run four times as high as the cost of dining-room space. Labor adjustments also have to be factored into the mix, since fewer employees may end up being tipped.

A marathon approach to tech investing

The trend cited again and again during RLC was how quickly the industry is being changed by technology. Kevin Bazner, CEO of A&W, joked from the stage that the options available to operators like himself had likely increased in the minute it took him to walk from behind the curtain. But operators needn’t and probably shouldn’t move that fast in embracing it, he and others stressed.

“You can go down a lot of rabbit holes with technology,” Bazner said.  “We talk a lot in the organization about, ‘Not now.’ Not ‘Never.’ But not now.”  

“There are so many products out there now,” said Ray Blanchette, CEO of TGI Fridays and a participant on the same panel that featured Bazner. "When you’re making some of these technology investments, you want to be sure to pull the thread all the way through and think about all of the consequences. ‘What is the specific outcome we’re looking for?’”[MOU1] 

Often overlooked, said Boston Market CEO Frances Allen, are the difficulties of clearing the way for new tech. “It’s easy to go into new technology. It’s very difficult to decide to take out old technology,” she said. She noted that Boston Market is likely to shift a significant portion of its marketing budget to building an infrastructure supporting the chain’s tech initiatives. 

Where’s the beef?

Blanchette voiced from the stage what a lot of RLC attendees mentioned in casual conversations during breaks: An exhibit area that was once packed with booths hawking equipment, food and services was now chockablock with tech suppliers. But one food was mentioned almost as much as such front-and-center issues as landing labor and capitalizing on delivery: meat replacements.

Chain after chain noted that they’d made a switch to one of the burger analogs that are made from plant material. Lisa Ingram, CEO of White Castle, noted that her charge hadn’t changed its menu in the first 41 years of its existence. Yet more recently, the slider specialist has embraced no fewer than three types of meatless burgers. 

Still, there were admonitions to read and ride that trend correctly. It’s not a bid for vegetarians, as A&W’s Bazner noted. His 100-year-old brand, a root beer and burger specialist, is experimenting with a plant-based burger. The most frequently requested toppings for the item: bacon and cheese. 

RLC is presented annually in Scottsdale, Ariz., for the C-level executives of restaurant brand owners and franchisees. It is presented by Winsight, the parent company of Restaurant Business.

 

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