Transforming your restaurant model for success in 2023
Adoria attended the roundtable discussion organized by Food Service Vision for Food Hotel Tech. The discussions focused on the major issues that have been shaking up the restaurant industry in recent months: inflation, energy costs and the labor crisis. The speakers presented the solutions implemented within their brands, and the joint reflections brought out avenues for transforming models to succeed in 2023.
Food Service Vision: figures and findings
This roundtable was moderated by François Blouin, President-Founder of Foodservice Vision.
Florence Berger, Associate Director, opened this conference with a preview of some of the findings of their 14th strategic review entitled "the remarkable resilience of the restaurant industry". Regarding inflation, the numbers are stark:
- Rapid acceleration of the increase with 16.2n average in Q1 2023;
- Inflation affects all product categories, but particularly frozen food with a 24.6% increase;
- Catering is more affected (25 th price increase on average).
- In the top 5 most inflationary products are sugar, butter, sunflower oil and frozen ground beef, ingredients widely used in catering.
The situation of brands in early 2023
While inflation is widespread, the situation differs according to market segments. Philippe Jean, CEO of Del Arte, notes a very good start to 2023 compared to 2022, but does not expect to return to pre-Covid figures. Frédéric Pastur, CEO of Colombus coffee shops, notes that customers are coming less frequently, but are consuming more and better quality products. Finally, if Thierry Veil, CEO of Bagelstein, regrets a lower attendance than in 2019, he still notes an increase in the Average Ticket.
All brands are noticing a change in behavior: customers are coming back less often because they are careful with their budget; but when they go to the restaurant, they treat themselves. The average basket is therefore higher. We have to adapt to take advantage of this.
How are they impacted by inflation?
At Del Arte, Philippe Jean notes that inflation impacts cereal products a lot, but also mozzarella. He regrets that some manufacturers are taking advantage of the situation to increase prices "in an opportunistic way". Thierry Veil aquiesce: according to him, the inflation does not have necessarily to see with the shortages bound to the war in Ukraine, but rather with a speculative market. The balance of power has been reversed: it is now the supplier who decides, the notion of tendering no longer exists.
The cost of energy, a worrying increase
Inflation on raw materials is not the only concern. The current energy crisis is also strongly impacting the restaurant industry. The first objective, according to Frédéric Pastur, is to find a balance between a rate increase that is acceptable to customers and sufficient for the brands. Philippe Jean even put a figure on the impact of rising energy costs: where a meal at the table used to consume 35 cents of energy, today it's €1.20 : that's 3 times more than what the restaurateur earns on that dish; the situation is therefore untenable.
The labor crisis, solutions to be found
The recruitment crisis is also impacting the sector hard. Rising wages are not enough, and it is estimated that the restaurant industry is now looking for about 400,000 people. With the health crisis, nearly 250,000 employees have left the sector.
In an attempt to make the professions attractive, they need to be enhanced with improved working conditions such as: daytime hours, at least one day off on weekends, etc. Thierry Veil notes that the balance of power is on the side of the employees, which is not necessarily a bad thing since there are now efforts in terms of management and another vision of the relationship.
How to adapt the strategic model
Between inflation, the energy crisis and the lack of personnel, the brands have reviewed their strategy. It's important to revisit offerings; Bagelstein, for example, has entry-level and premium offerings to suit all budgets.
To offset declining patronage, Del Arte has introduced a 30-euro per month subscription. The goal: to attract customers with progressive offers, and to rejuvenate the clientele. The test of this monthly formula is a success since it is profitable. The subscribers are 80 new customers. They come on average 9 times a month and are often accompanied by non-subscribers.
Pierre Jean also explains that they now manage their card much more finely, because there is a subtle balance to be found between the unit margin and the volumes. Del Arte has thus had to review its offer dish by dish.
Frédéric Pastur of Colombus explains that he has not removed any products from the menu, but the objective is to put more emphasis on the most profitable products.
Digital solutions to face the crisis
Between 100 igital path, online ordering, QR code and dematerialized payment, everything is working very well for Del Arte.
Digital can also help to compensate for the lack of staff. You have to put digital on your side to improve service. Franchisees must feel free, Columbus for example does not impose a tool on them, they seek to convince them.
The future of the restaurant business
While the current context is difficult, the brands are adapting. In the medium term, tabletop catering is not going to disappear, but you have to constantly reinvent yourself. Del Arte believes that restaurants need to be transformed into destination places, but it's complicated with franchising, which leads to a certain standardization.
Frédéric Pastur wants to use technological tools to simplify daily life and focus on the customer experience.
Thierry Veil is banking on adaptation. They have never had so much data: they are therefore able to identify customers well and understand their habits.
The succession of crises forces retailers to constantly reinvent themselves. They have to know how to adapt their offer, their pricing strategy, while keeping the DNA of their brand and focusing on the customer experience.