Last week, we looked at the first three maxims bar and restaurant operators will need to focus on to manage in the current reality: leadership and core values, embrace your current reality, and health and wellness.
In this week’s installment, we’ll take a look at the next three maxims: innovation and invention, price/value elasticity, and define then redefine the experience.
4. Innovation and Invention
After every recent economic downturn since Black Friday in 1986 through the current pandemic, there has been a contraction followed by a significant and distinctive change in day-to-day operations and the philosophy of running business. Innovation and Invention have been twin pillars in coming back after economic downturns.
After Black Friday 1986, restaurants re-evaluated the market and moved towards a more casual, less restrained, yet still elegant form of hospitality. With that innovation, the industry grew at an unprecedented rate, while allowing “casual elegance” and high prices to dominate the market.
Post 9/11, technology became more entrenched, helping mitigate stress on labor and COGS. The significant changes by then simple tech, such as OpenTable, opened the door for easier access to reservations for guests and streamlined operations and labor savings for the operators.
Post 2008, the focus became even further moderating of pricing formats and more casual dining environments with more local and sustainable ingredients but less formality.
For food service and restaurants, 2023 and the post-pandemic sea change will be more dramatic. We expect the takeout and delivery space will continue to climb dramatically in 2023 as the corporate shift towards working from home continues unabated, however, the consumer need for emotional and physical connection realizes a pent-up demand for in-person dining and presents opportunities for the right concepts.
Innovation and invention will come with:
Continued changes in menu management technology from the printed menu to digital, allowing for immediate and unseen [by the guest] changes; even further, many places are allowing guests to order through an app based or tablet-based menu, minimizing service staff. Inventing new service models via technology to dramatically reduce the number of service staff will also happen--think one paid commissioned “salesperson” instead of several servers while the guest handles their own ordering. Automation in the kitchen is already happening at a rapid pace reducing heart-of-house staff. I have seen AI-powered devices that can make everything from artisanal pizza to unique beverages. Investing in the right equipment for your establishment can speed prep and save both time and labor dollars.
5. Value Elasticity
I have always stated that pricing is the fine balance between what is fair to the consumer, what is fair to the business, and what the market will bear. When those three are in harmony, the guest will feel value and the establishment will maintain a profitable cost of goods sold (COGS).
Value is subjective and relative to how a product satisfies the needs of the customer. At a time when consumers are feeling intense financial pressure themselves, stretching their dollar for more or better quality products continues to be critical. Elastic and competitive pricing can come in the form of getting more for their money (lower-priced equivalents available for purchase) or promotional and bundled products; for example, two courses for X price, inducing the customer to spend up.
Subscriptions, clubs, and membership programs are some of the innovative methods retailers use that provide perceived value and a seamless experience that caters to customers' desire for great value, ease of service, and trusted curation of products. Bars and restaurants can create clubs as well; for example, “The Wine-Down Wednesday Wine Club” at X price, or “The Sunday Supper Club” at X price. They can also curate experiences that bring in guests; for example, they can sell “group classes” where your bartender teaches a group of patrons how to mix cocktails.
For food & beverage operators, the value proposition has never been more necessary; however, the pandemic closures have forced operations to work with slim to no or even negative margins, and many will not be able to afford to put forth any discounts and promotions. However, my independent and subjective communication with operators shows that consumers of means will gladly pay a local business a higher price as long as the quality and service are maintained at a high level.
We believe food service operations will need to continue modifying and slimming down menus to mitigate upward pressure on COGS. In this way, they can maintain the appearance of a high-quality, curated menu while keeping their price higher and keeping the value high for the consumer. Think out-of-the-box in a nonlinear fashion, and you can create new products to sell within your own menu.
6. Define then Redefine the Experience
To be clear, great hospitality always has and always will be your single most important asset. Be more thankful for their business than you have ever been. Guests “want to be wanted” and will reciprocate with more visits.
Great hospitality shows the guests that they are more than just a number and instead a valued partner of the business whose needs and satisfaction are paramount. This attitude creates an emotional connection between your brand and your guest, driving loyalty, repeat visits, and long-lasting bonds that transcend pricing.
Define and redefine the guest journey by evaluating every facet of how the guest “sees” your establishment and concept. Assess every touch point the guest will experience and ensure your brand is articulated throughout your concept from design to menu offerings to service, which will create an honest, consistent, and memorable experience. This depth of concept provides touch points for consumers to embrace, identify with, and own as a part of themselves. Your brand then becomes a de facto “community” for them to join. Membership to this type of brand community creates evangelists, raving fans, loyal guests, and repeat visitors.
Own your own guests. Ask for their feedback. Information mined from the guest is pure gold and further vests them into your business. And while you are at it, adapt to people’s changing purchasing habits – with a smile. Keep up with customer’s shifting preferences and tastes. The customer today wants speed, transparency, and control of their spend. In 2023, it is more imperative than ever to stay in regular contact with your guests through social media and every other means. And please don’t overlook the power of an actual handshake, fist bump, or personal thank you.
The global sense of hospitality has never been more crucial. Guests starved for human contact may have a small window to tolerate poor or unfriendly service, but that window will close rapidly. It is imperative to promote “the answer is yes…now what’s the question?”
Check in next Tuesday for the last installment in our series on considerations for next year!
Nick Mautone has 40 years of hospitality industry experience. Mautone believes in the power of mentorship, leadership, collaboration, and possibility. A highly regarded consultant, investor, and restaurateur, Mautone is the architect of an inventive process called "Hospitality Sabermetrics"--think Moneyball for hospitality. He has a sixth sense when it comes to foreseeing trends, and he is known for nurturing sustained success, streamlining operations, and aligning core values in every sort of hospitality business.
Plan to Attend or Participate in Bar & Restaurant Expo, March 27-29, 2023
To learn about the latest trends, issues and hot topics, and to experience and taste the best products within the bar, restaurant and hospitality industry, plan to attend Bar & Restaurant Expo, March 27-29, 2023 in Las Vegas. Visit BarandRestaurantExpo.com.
To book your sponsorship or exhibit space at Bar & Restaurant Expo, contact:
Veronica Gonnello (for companies A to G) e: [email protected] p: 212-895-8244
Tim Schultz (for companies H to Q) e: [email protected] p: 917-258-8589
Fadi Alsayegh (for companies R to Z) e: [email protected] p: 917-258-5174
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