opportunities

The challenges and opportunities of operating a foodservice business in Canada

By Alex Fraser, Cheryl Gardner and David Hopkins

The future of Canadian foodservice holds some exciting new opportunities but a few familiar challenges as well. Fresh new concepts with diversified menu offerings, along with innovations in technology, social media and marketing platforms will gain momentum. However, familiar challenges such as a weak Canadian dollar, acquiring and retaining good staff, and running profitable operations will all be central to foodservice businesses in the coming months.

Challenges

  1. Hiring

Staffing in the foodservice industry will be an ongoing challenge due to the skilled labour shortage, and it will get worse unless operators have smart hiring practices and provide an engaging environment to retain staff. Instead of hiring based only on experience, we should be looking to “hire for desire” (or “hire for engagement”) and train for skill sets (mechanics). Look for people whose values align with the company’s values. And once you make the right hire, invest time in training staff properly so they are set up for success and enjoying their role.

  1. Training

Training for great service needs to be simple, engaging and supportive, with more time devoted to teaching what’s important for the company’s service culture goals. Product knowledge should be acquired in a way that allows staff to read, discuss, define and learn the items from both engagement and mechanical perspectives. Often, we have chefs and general managers trying to train their staff on how to speak like they do about these products. We have found that this can be a roadblock to the learning process. Staff needs the opportunity to learn and speak about these products in a way that’s natural for them, using their own personalities.

  1. Retaining

During a recent B.C. Tourist Industry Conference, Amy Hamdorff, recruiting manager at Joey Restaurant Group, cited in her presentation: “There will be a severe shortage of cooks until 2020 and beyond — a shortage that will continue to increase.”

When The Fifteen Group works with our clients, we often ask: “As an operator, are you creating and fostering a service culture and environment where staff have the opportunity to be trained and developed, and where staff feel valued and can work collectively to contribute to the success of the business?”

Joey Restaurants offer on-the-job training for new cooks. “No training, no problem,” says Hamdorff.  “We will train you on the job.” Moreover, Hamdorff notes, “this effort has proven successful in Joey’s recruitment strategy, along with creating a strong and defined employment brand through Joey Careers – an array of digital initiatives via Facebook, Instagram and Twitter that showcase the advantages and opportunities of working with Joey Restaurants.”

In retaining valuable staff, we find that it’s about more than just making money for staff. Quite often it is the environment we create and how important they feel their role is to the business. It relates to how we communicate the company’s vision, goals and service culture. If the work environment we create is one where ownership and management communicate and treat staff with the same respect and importance as they do guests, that value for a positive service culture can be successfully built.

Opportunities

  1. Profitability

The focus on profitability is becoming more integral to solvency goals for foodservice businesses as margins are eroded by our two biggest challenges: Labour and product costs. The falling Canadian dollar is increasing the cost of U.S. products and global environmental issues are driving up the purchase price of international products. On the issue of labour, it simply relates to supply and demand. In an underserviced labour market, we see increased demand for higher wages to garner qualified staff for businesses.

Increased profitability in foodservice operations requires proper systems and procedures on a daily, weekly and period-based format to make better fiscal decisions.

Restaurants can also become more profitable by tightening up systems and procedures in the areas highlighted below for a theoretical restaurant with $1 million in revenues.
Increasing profit goals for a restaurant with $1 million in revenues

CostsPercentage of sales
Daily sales/labour/promotion review2%
Menu engineering4%
Scheduling to budget1%
Inventory control3%
Total increased to profit10%

 

For a restaurant with $1 million in sales, that’s a profit increase of $100,000.

  1. Menu development

As the dining landscape changes and restaurant concepts are built to suit discerning Gen X and Millennial customers, menus are developing with an informal structure that supports menu items being shared more frequently.

The dining experiences are changing with bar and lounge seating capturing more square footage in new builds, reducing the size of the dining room footprint. The need for socializing is taking more precedence than the more structured dining experience found in the past.

Recent concept menus have a more honest approach to authenticity, quality and craftsmanship. Chefs are creating smaller menus with well-crafted proprietary items that are supplemented with daily specials, representing seasonal and local products in a wide variety of concepts ranging from pub menus to upper casual concepts. This is great for the consumer as they can choose to stick with one of their favourite items and be tempted with a new seasonal go-to item.

There is also an emergence of restaurant and menu concepts that are blending healthy with delicious as consumers are starting to make more nutrition-based choices throughout their work week. Juice concepts, vegetarian and vegan items are becoming more prevalent in menu mixes throughout urban cities and shopping centres across Canada.

Foodservice concepts in Canada are going to continue to develop with more diversification of products and menus, comprising more local products prepared with better skill as our market becomes more educated, thanks in large part to expectations being built from global travel and social media platforms where we glorify all of our new food experiences.

  1. Public relations, marketing and social media

Building a strong foodservice brand with strategic public relations, marketing and social media programs has become extremely important to the success of running a restaurant in today’s market. Most foodservice operations budget too little money for PR, marketing and social media programs, either in the pre- or post-opening stages of operations. Operators and managers often take these tasks upon themselves, resulting in campaigns that may not be as effective as they could be. The challenge in hiring any PR, marketing and social media company for restaurants is seeing a tangible return on their investment for these programs. Quite often, owners and operators just want to see revenues quickly increase, and don’t value the process of why or how those revenues have been achieved.

Marketing, PR and social media have become integral to keeping connected to the market. Businesses can use these platforms to increase exposure to programs they’re promoting. The exposure opportunities are unlimited when we see accounts that have over 100,000 followers connected to their business, which was something that used to take thousands of dollars and years to build, and quite often could never have that reach.

  1. Technological innovation

Technology is notably impacting foodservice in three main areas: Guest experience, operations, and profitability. Following are some specific examples of how each of these areas is affected by technological innovation.

Online ordering apps:

QSR (Quick Service Restaurants) are benefiting from the emergence of online ordering apps including Maegan, ChowNow and Teburu.

Guest Experience: These apps enable guests to experience the convenience of ordering from their PC, tablet or phone from inside the restaurant for take-out or delivery orders. This type of technology often makes ordering in high-volume restaurants more timely, reducing wait times and making payment more efficient.

Operations: Online ordering apps help efficiently organize pre-orders to prepare for precise pick-up times and integration with the Point of Sale system enables ordering and payment transactions to be done quickly and efficiently.

Revenues and Profitability: The idea of having a more efficient way for guests to order and reduce wait times may help develop the frequency of guest visits and increase volume of business. Most of these online ordering apps offer exposure to app networks and users, increasing the potential for revenue.

Online reservations – guest management:

Although not new technology, booking a reservation online without a phone call is becoming increasingly convenient for guests with systems like OpenTable, Bookenda, and Seat Me. OpenTable and Bookenda are both accessible from mobile apps.

Guest Experience: The simplicity of making online reservations from a phone or tablet is valued by guests. Reservations are easily accessible and when guests arrive at the restaurant, it makes seating more efficient. The restaurant has an opportunity to create a profile to potentially increase the recognition of the guest and improve the service experience. Customer loyalty programs are often built into the systems, and guests are able to access other guest reviews.

Operations: We see reduced labour resources for managing reservations (someone doesn’t always have to be available to answer the phone to take a reservation). The operation now has instant access to information including guest counts, table counts and table status during service.

Revenues and Profitability: Business can grow through better exposure to the marketplace with each system’s website. The business can build a database on detailed customer information and help build a better service experience. For example, a manager can make sure the restaurant has a regular customer’s favourite wine ready for their visit after they make a reservation.

Customer loyalty and reward program apps:

Apps like Stamp Me and AppSuite are loyalty and reward program apps that target guests and offer rewards based on their order frequency, history and behaviour.

Guest Experience: Guests using loyalty cards inherently have greater perceived engagement as they feel valued for being able to use the rewards. Replacing the old style paper card, the new experience is more modern by using the app on a mobile device.

Operations: With the ability to set “geofences” around the business at certain times, it can promote lunch menus or other time-of-day related offers. Analytics solutions provide a personal web-based dashboard that can help to analyze the loyalty app usage and activities over different venues, offers and timeframes.

Revenues and Profitability:  The goal of a loyalty app is to increase visits and guest average-spend. With the marketing programs built in, reaching guests can be more effective than Facebook or e-mail via your own push messaging with claims of a 98-per-cent read rate (AppSuite).

Point of sale system and inventory control software:

The opportunities that technology presents with point-of-sale (POS) systems are typically underused in most foodservice operations. POS systems provide daily information such as labour tracking, division of sales by category, items sold over a certain period and the ability to incorporate product inventories. All of this information can be used to make better business decisions for operating efficiently and economically.

Proprietary inventory control software should be used instead of a program built in Excel.  Presently, there are many options for inventory control systems depending on your operational needs. For example, Navigator Restaurant Profitability System was designed in conjunction with The Fifteen Group to utilize our expertise and package it up in a simple-to-use process and software package housing a daily flash report, inventory control module, cost of goods report, all proprietary recipes, menu engineering program, and labour module.

There are many other aspects of technology impacting the foodservice industry that will develop in the years to come, creating new efficiencies for operations and connecting restaurants to the market in stronger capacities. Overall, the future of the Canadian foodservice industry will bring us new and exciting concepts from coast to coast as the industry grows with better experience.

15 ways to better profitability:

  • Establish regular inventory processes to create cost of goods report vs. theoretical
  • Build schedules with scheduling tool/software to target labour cost goals
  • Utilize declining budgets for operational purchases
  • Engineer food menus quarterly
  • Review and adjust sale forecasts on a daily, weekly and monthly basis
  • Ensure staff signs in and out on Point of Sale system
  • Utilize detailed bookkeeping and accounting procedures
  • Review monthly statements versus forecasted budgets
  • Preform unannounced inventory audits and deter theft
  • Tender inventory purchases to the best priced suppliers daily and weekly
  • Preform regular prep and recipe audits to address over-portioning and recipe adherence
  • Monitor waste sheet tracking and accountability
  • Establish operational reporting schedules
  • Schedule weekly manager meetings
  • Build quarterly bonuses for key managers

About the author:

David Hopkins is President, Alex Fraser is Vice President of Western Operations and Cheryl Gardner is a consultant with The Fifteen Group Inc., a consulting company dedicated to maximizing restaurant profits through effective sales generation and disciplined cost-control management. The Fifteen Group’s clients range from owner/operated establishments to multi-unit restaurant corporations. For more information, visit www.thefifteengroup.com.

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