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Operations

Finding sales and profits in a tough environment

On the second day of the Restaurant Leadership Conference, speakers focused on how to compete.

The industry is facing a huge number of changes at a time when growth is slowing, and the industry is arguably oversaturated.

That puts the onus on executives and operators to step up their games to improve operations and find ways to generate sales.

Industry executives and experts at the Restaurant Leadership Conference on Tuesday discussed many of these challenges, and how operators can work through them and increase their competitiveness.

Workforce woes get worse

We know that labor is a top problem in the restaurant industry. There are currently 991,000 unfilled jobs, according to Rob Gifford, executive vice president of the National Restaurant Association Education Foundation (NRAEF). “We’ve never seen this many openings,” he said.

The projections for the future, however, are even worse. The industry is expected to add 1.6 million restaurant jobs over the next 10 years. But the restaurant industry is also on a path to lose 250,000 16- to 24-year-olds over the next 10 years.

“We need to find 640,000 just to keep pace,” Gifford said. The industry has a recruitment and retention problem, he said. So the NRAEF is out to change the image and perception of working in the restaurant industry with a soon-to-come campaign that will highlight aspects of the industry such as career path, flexibility, diverse management and more. It will target not only the younger workforce but also parents and school guidance counselors.

The right metrics

Scott Lawton, co-founder of Bartaco, said that metrics are important in determining a restaurant’s performance.

But they have to be the right metrics.

Profit-and-loss (P&L) statements and average check “are lagging indicators,” Lawton said.

“When you read a P&L, it’s six weeks old,” he said. “It’s ancient history. If you look at check average, you’re trying to raise sales, but maybe not the right way.”

Instead, he said, metrics that measure customer experience are better to use to determine a company’s performance. They are “leading indicators,” and, ultimately, sales will follow.

Sometimes it might be the right metric. And it extends to the kitchen.

Eric Sheen, CEO of Restaurant Partners Procurement, said that operators should use grams to measure out portions, rather than ounces.

Grams are a more concise measurement. “You will get a more consistent product,” he said.

High rents

Jason Morgan, managing partner with Hargett Hunter Capital Partners and CEO of its Bellagreen and Original ChopShop chains, didn’t need long to think about his biggest cost concern while speaking at the Restaurant Leadership Conference on Tuesday.

“Rents are just too high,” he said.

Why?

Many investors “overpaid for their businesses in the past five years,” he said. As such, they need to grow to generate a return.

And that growth could be forcing some questionable decisions, he said. “They’re driving rents to the point where it’s not profitable to sign deals. But people are still signing deals.”

His brands have opted not to join that game.

Find profits in catering

Catering is a different animal from day-to-day business, but it shouldn't be ignored, because it can be a rich source of revenue, said Ed Keller, director of off-premise business development for Corner Bakery.

Creating a successful catering program means recognizing the need for specialized ordering, packaging, kitchen logistics and more, Keller said. "If you don't look at catering as a distinct channel, it's not going to work for you," he said.

Jim Rand, currently an operating partner with Act III Holdings, struggled to launch a catering program at P.F. Chang's several years ago. The original catering menu didn't mesh with consumer preferences.

"I was thinking this was going to be a layup," Rand said. "What the consumer wanted from us was a P.F. Chang's experience. They didn't want Mongolian beef in a wrap. You need to understand what you deliver and make sure catering aligns with that."

The case for artificial intelligence

Two-thirds of restaurant operators either aren’t doing anything with artificial intelligence or don’t plan to use it, according to NCR Corp.

But maybe they should. Dirk Izzo, senior vice president of industry solutions for NCR, said that AI can help restaurants cut costs, reduce errors, empower customers, improve customer experience and improve marketing results.

“The more we can have computers talk to computers, the fewer errors we’ll have,” said Izzo.

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