A little-noticed side effect of the pandemic has been its reset of the topics that have a hammerlock on restaurants’ attention. Issues that once preoccupied the business have given way to new areas of focus. Such as staying in business.
If you doubt it, consider this sampling of sizzlers that turned into fizzlers during 2021.
30% delivery commissions
When they first emerged, third-party delivery services were as aggressive as loan sharks in setting the terms for their services. Thirty-percent commissions? For just carting a meal via a car the services didn’t even have to buy? Really?
Ironically, it would take a boom in demand for delivery to temper their arm-twisting. As off-premise business shifted from an added revenue stream to the only form of sales available to restaurants because of the pandemic, operators were not so quick to shrug off the commissions as a hefty marketing expense. They pushed back on the services, helped in part by heightened competition within the pack. City governments also intervened by setting caps on the fees, usually around 15%.
By year’s end, an appreciable number of operators were leveraging the volumes they generated for third parties to renegotiate the services’ cut of a sale. Several also fostered competition for their business by using several or all of the big haulers, essentially making them vie for favor. The charges came down, though they’re still a source of woe for the operators who pay them.
Having something for everyone
Few features of a restaurant have changed as much in the past two years as the menu. Phase I of the overhaul was dramatically reducing the breadth of what was offered, the universal way of contending with the pandemic’s new labor, sales and supply issues. Many chains reduced their bills of fare by 25% or more. One ended up essentially with four options when the cutting was done.
During 2021, that emergency response solidified into a new reality. Operators discovered that the advantages of smaller menus—from ease of execution to improved consistency to fewer supply chain issues—outweighed the risk of alienating fans of a particular discontinued item.
If 2020 was the Year of the Great Menu Shrink, 2021 should be remembered as the point where smaller bills of fare became the new norm.
Blockchain
If you never fully understood this preoccupation of supply chain and food safety geeks, fear not. Judging from what we’ve heard all year from restaurateurs and vendors, the topic has been shelved for the foreseeable future as the industry copes with more pressing supply chain issues. Like being able to get enough cup lids, napkins, chicken wings, chopsticks, straws or whatever product might be in short supply on any given day.
The problems that have disrupted restaurants’ supply pipeline relate more to labor issues—a shortage of people to make and transport the goods—than an inability to pinpoint where a product might be in its journey from field to plate, a key deliverable of blockchain technology.
Through precise measurements and tracking, users of a blockchain approach know exactly the location and condition of an item as it moves along the chain. That’s invaluable information if a food safety problem arises, but what does it add when the core problem is getting foods into the pipeline in the first place?
Franchise harmony
Seldom will a restaurant chain acknowledge strife between its franchisees and the home office. In 2021, there was no way to ignore the shouting. Or, in the case of McDonald’s, the silence that took hold.
For a stretch of 2021, the burger giant and its franchisees stopped speaking to one another. The franchisor had alerted operators at the end of 2020 that they owed $70 million in technology usage fees because of a shift in the scheduling of those charges. At the same time, the franchisees learned that the corporation would no longer subsidize what the chain paid for Happy Meal toys.
The changes so angered franchisees that 95% of them voted to suspend communications with McDonald’s Corporate. The parties eventually reconciled, but only to a degree.
McDonald’s wasn’t the only foodservice giant that had to muster its diplomacy skills. Subway franchisees rallied against a new toasted-sandwich line, saying workers routinely suffered burns because of the required prep. And 7-Eleven’s operators mounted an effort to drop the chain’s requirement that units remain open 24 hours a day, saying they couldn’t find employees to work the overnight shift.
Luckin Coffee
Two years ago, any discussion of hot restaurant concept had to touch on Luckin Coffee, a Starbucks challenger that became a global sensation seemingly overnight because of its rapid growth, creative use of technology and astounding initial results. It hadn’t even secured a presence in the U.S., yet domestic operators spoke of the upstart with awe because of its success in China. In two years, it flooded that market with more than 4,000 units.
They also expressed amazement that some Luckin branches could operate without any ongoing human involvement. With all the technology that was packed into a Luckin Express, it functioned essentially as a robot.
How could something that successful and innovative not eventually change the U.S. market?
By early 2021, they had a reason: Luckin was cooking the books. As investigations revealed, the upstart had lied about its sales and growth. Management ultimately acknowledged that as much as a quarter of the brand’s reported business had never materialized.
It filed for Chapter 15 bankruptcy protection in February in the U.S., where it had done its initial public offering. The brand faded almost as quickly as it’d laid claim to being The Next Big Thing.
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