Operations

10 takeaways from the Restaurant Leadership Conference

Hear what operators and experts had to say about ghost kitchens and ChatGPT, takeout trends, the risks of cyber attacks, how to drive traffic and cultivating young leaders.
Restaurant Leadership Conference Phoenix
Derek Jeter on leadership: Make everyone on staff feel a part of the team./Photo courtesy of W. Scott Mitchell.

The main stage at the Restaurant Leadership Conference in Phoenix this year was action-packed, with conversations ranging from Subway CEO John Chidsey’s candid account of the sandwich chain’s mistakes (now fixed) and sale process, to Yankees’ legend Derek Jeter’s views on parenting.

The sold-out conference also put the spotlight on a number of issues the restaurant industry continues to grapple with, including labor challenges, ever-shifting technology trends and the uncertain macroeconomic climate ahead.

For those who may have missed it (or who spent the week at the J.W. Marriott’s pickleball courts), here are 10 takeaways (plus a bonus) from the four-day event.

  1. It will be a trillion-dollar year.

The foodservice industry is expected to top the $1 trillion milestone in 2023 for the first time ever, according to sister brand Technomic. That projection includes foodservice overall (nontraditional, chains and independents) but chain restaurants are expected to make up about 60% of that total.

The Top 500, which includes about 230,000 locations, in 2022 totaled $393 billion, an 8.2% increase, which were boosted by menu price increases as the industry grappled with inflation.

  1. Traffic is still a challenge. But there are opportunities to drive guests in.

Traffic trends were mostly negative in 2022, but Technomic sees opportunities to drive in both new and loyal guests. Among them:

Get up earlier. There is growing demand for breakfast as consumers see dinner becoming too expensive.

Value matters. The cost of food away from home is more than grocery for the first time since the pandemic. Consumers are pushing back from higher menu prices by reducing frequency, buying less expensive items and looking for deals.

Loyalty works: 57% of consumers are more likely to visit a restaurant with a loyalty program (though only 28% of restaurants offer one). But consumers are motivated by more than earning discounts, including perks like skipping the line or winning access to exclusive experiences.  

  1. The industry’s bullishness on ghost kitchens is waning.

“We were in ghost kitchens and we’re not in any right now,” said Lisa Ingram, CEO of White Castle. It’s not something that we’re looking at right now.” 

Damola Adamolekun, CEO of P.F. Chang’s, agreed, saying it’s not something the casual-dining chain is looking at. “It’s complicated, more so than people might realize,” and that weighs against a company-wide effort to simplify, he said.

  1. Just how costly is a foodborne illness outbreak? Very.

Conventional wisdom holds that an outbreak of a food-borne illness can threaten the very existence of a restaurant. During a presentation on changing food safety laws, a National Restaurant Association official put exact dollar amounts to the damage that is typically done. Factoring in lawsuits, the cost of detecting the source of an outbreak, retraining staff and a host of other related costs, an instance of food poisoning will cost a quick-service restaurant $1.8 million; a fast-casual outlet, $2.1 million; and a casual-dining restaurant, $2.2 million, said Larry Lynch, the association’s SVP of health, safety and regulatory services.  

The way to avoid a problem, Lynch recommended, is developing a food-safety culture within a restaurant’s staff. But what about other links in the chain that gets a meal from kitchen to consumer, like third-party delivery drivers?

Lynch recommended showing drivers waiting for a pickup order the steps that are followed within the restaurant to safeguard guests. The show-and-tell underscores the importance of safe practices, while illustrating what those practices are. 

  1. Cyberattacks are a looming threat.

The start of the conference coincided with news that big POS supplier NCR was dealing with a cyberattack, which the company addressed from the stage Monday as it continued to work through the problem. It was a real-time example of what could become a growing risk as restaurants use more technology and handle more customer data.

“You have responsibilities,” said National Restaurant Association CEO Michelle Korsmo during a panel she was moderating. “The governments are really coming down on how [companies] are treating PPI (private personal information). So it shouldn’t be treated lightly.”

Restaurants may have to become more judicious about what types of customer information they actually need to drive loyalty programs and other marketing.

“You don’t want to be in the news for something that you’re not using,” said Brinker International CIO Pankaj Patra.

  1. Operators are fascinated by ChatGPT.

It’s still not clear what the AI chatbot means for restaurants. But the consensus seems to be that it’s too ground-breaking to ignore. 

Adamolekun compared the rise of generative AI to the dawn of the internet. He has been experimenting with the bot to see what it can do, describing it as equally exciting and terrifying. 

The sheer possibilities made ChatGPT one of the most-discussed topics of the conference, both on and off the stage. It was the subject of two breakout sessions, at least one of which was too packed for a Restaurant Business editor to enter.

  1. Two takes on takeout:

Pickup and delivery traffic as a percentage of total orders has been virtually unchanged since 2020, according to Technomic. 

According to the researcher, pickup/delivery accounted for about 8% of orders before the pandemic, 17% in 2020, 16% in 2021 and 17% in 2022. It suggested that the to-go business has not only reached its ceiling but has been there for some time. 

And yet many operators said the channel is continuing to point upwards, and will be an area of investment going forward. Sean Kennedy, EVP of public affairs for the National Restaurant Association, said that 47% of operators currently offer delivery and that it’s gaining momentum, not stagnating.

“This is here. It’s not going away,” Kennedy said during a panel. 

  1. Menu innovation is back. But sometimes what’s old is new again.

After two years of menu tightening, one way to get consumers in restaurants again is with menu innovation, Technomic said. “We’re actually seeing the return of menu innovation in a strong way,” said Rich Shank, Technomic’s VP of innovation.  

Craveability is key, and hot categories include protein on protein (like beef dishes topped by an egg) and all things chocolate.

Still, Taco Bell CEO Mark King, who was named Restaurant Leader of the Year, said it’s not a bad idea to look back. Taco Bell had a huge hit last year with the return of Mexican Pizza.

“Sometimes the best and most impactful ideas are right in front of you—never throw away ideas,” he said. “The Mexican Pizza is not a new product; it’s the relaunch of an old product.”

  1. Plant-based is gender neutral.

The percentage of vegetarians remains small (about 6%) but meat eaters are seeking out plant-based alternatives more often, with 41% consuming a vegetarian dish at least once a week, according to Technomic. Restaurants are feeding that demand: almost 47% of operators offer alternative proteins on the menu.

And plant-based diners are not easy to categorize.

“We thought the plant-based guest would be primarily female, but that’s not true. It depends on the location but basically, it’s the guest with the mindset to make a difference,” said Carin Stutz, president and CEO of Native Foods.

  1. Young workers are in a hurry.

Taco Bell CEO Mark King observed that Gen Z and Millennial workers are in a big hurry to get somewhere, though they don’t always know where they’re going. As employers, we need to encourage them to enjoy learning, he said.

“What happens in today’s corporations, young people go through promotions so fast and they’re not really prepared to be the manager or leader and function at that level,” he said. “Enjoy learning and take your time.”

  1. Pickleball is the new golf.

It’s the hot theme for eatertainment concepts and LTO promotions, and the sport’s popularity is expected to continue to grow. Based on the crowd at the RLC pickleball event during the conference, restaurant operators of all ages have embraced Pickleball and conference organizers should consider booking more courts next year to allow certain Restaurant Business editors to continue their winning streak.

@restaurantbusiness Missed RLC? Don’t worry RB has you covered! Check out our takaways from last weeks Restaurant Leadership Conference on our website. #RLC#conference#food#ICYMI♬ Summer Title - Evoke Music

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