Tag Archives: Food industry

Not Delivering At All

If it’s Friday, the topic is food here on the screed. This week, it’s the food delivery services I suspect many of you have been using to support your favorite restaurants during the time we’re supposed to stay at home. Food delivery is not a new phenomenon. I know a lot of folks, myself included, who used it before all of this when they had nothing planned or bought for dinner and couldn’t bear the thought of pulling themselves together to go out.

What’s different with these services is that they’re third parties. One of my first jobs back in the day was as a food delivery guy (before I graduated to cook) for a local pizza place. Who hasn’t ordered Chinese food and had it delivered? But I worked for the pizza place and the kid making the Chinese food delivery was generally the owner’s son from the place I frequented. These services – Grubhub, Seamless, and others – are a relatively new business. For restaurants that didn’t do a large enough takeout business to hire a delivery person, they opened up new revenue streams. Of course, they come with a cost.

First, there is a human cost. These services pay very low wages and don’t make tipping mandatory (don’t be that guy – tip well, ok?). Then they charge exorbitant, often hidden fees to the restaurants. You might have read about one restaurant owner’s experience. In March, she got 93 orders through Grubhub, totaling to $6,626 in revenue. From that, GrubHub took $1,208 in commission, a $592 delivery fee, and $230 in processing fees, totaling to over 30% of the revenue. In an industry where margins are often low double digits, that’s not sustainable.

We could continue the discussion beginning with why restaurants don’t hire their own delivery people but the point I want to make today which might just apply to your business is about using third parties, especially third parties who end up owning the customer relationship. What is to stop Grubhub from promoting another restaurant to someone who is looking at your menu? Do a search on Yelp for a specific restaurant and you’ll usually see a couple of other promoted alternatives first in the listings. I don’t know what data the restaurant sees when an order comes in via one of these services but at a minimum someone else is privy to a portion of your customer base, their preferences, addresses, etc.

You might have heard of third-party cookies. Third-party cookies are created by domains other than the one you are visiting directly, hence the name third-party. They are used for cross-site tracking, retargeting, and ad-serving. They’re what makes it possible for you to see an Amazon ad for a product you just searched Amazon for on another, unrelated website. They’re going away, in part because of privacy concerns and, I believe, in part because marketers are waking up to the fact that having someone else own data that you help to generate so that they can sell it back to you as well as to your competition is silly.

Industries outsource all the time. Generally, this is because they don’t want to deal with solving a particular problem themselves for whatever reason and it becomes easier to let someone else deal with it. That’s often shortsighted, particularly when it ends up with someone else owning the customer relationship. After all, in business, that’s probably the most important relationship you have, right?

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Filed under food, Huh?

Having An Abundance Of Talent And Failing

Foodie Friday! I’ll caution you that there are some Top Chef spoilers ahead so if you’ve not watched last night’s Restaurant Wars episode, you might want to come back later. It’s no secret that I’m a huge fan of Top Chef and the pinnacle of every season is when the chefs divide into two teams for restaurant wars. Last night’s episode, which resulted in the elimination of one of the more talented chefs (who is also a fan-favorite) reminded me of a great business point.

As the chefs divided up into teams, it was very obvious that one team had four of the best chefs left in the competition. Several were James Beard Award winners, all have opened successful restaurants (several of them have multiple restaurants), and because this season is an All-Star competition, a few had advanced to the Top Chef finals in previous seasons. The other team had talent but if Vegas was setting a betting line on which team would win restaurant wars, there was no question which team would be the favorite.

When the smoke cleared and judgment had been rendered, the favorites lost and it wasn’t really close. The other team’s food was better executed, their service was more organized, and the menu was more inspired. All of that raises the point that talent alone isn’t the determining factor for success, which is our business point today.

What was evident watching the teams prepare their food was that the losing team was disorganized. They each knew what dishes they were making but other than the chef leading the team, none of them seemed to understand why the menu was the way it was nor how the flavors needed to complement one another. Teams that do well depend on an understanding of roles as well as tasks to avoid clashing, overlapping, or conflicting.

Chef Kevin, who was in charge of the team, designed a meal to be served family-style, with many dishes exiting the kitchen at once. While that works when you’re serving your own family, having to serve a full restaurant put an amazing amount of pressure on the kitchen, and not surprisingly, the service was incredibly slow. They needed to turn over tables in an hour but this style of service took longer and patrons were sitting for 90 minutes, which resulted in a backed-up restaurant. It’s nice to have a vision but had Kevin considered the team’s ability to execute his ambitious vision multiple times an hour, he might have altered his plan. That might have been the result of overconfidence, which often is a problem for the very talented. When you believe that you are unbeatable and that your successes will continue, you can get sloppy, lose concentration, or in the worst cases, slip into arrogance. Was there some of that last night? Just maybe.

Bad communication can often lie at the root of why talented teams fail but that seemed OK in the kitchen. However, the front of house staff wasn’t properly briefed because Kevin wasn’t thinking about that task and never told the chef whose job it was to do the briefing to stop what they were doing and get to the front of the house. It’s never enough to have a great plan. Without great execution, you’re lost.

I wouldn’t say the better team won. I’d say the team that executed better won. Their vision was more simple, their product was innovative, and most importantly, they maximized the talent they had. It’s something to think about as you’re working with your team, right?

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Filed under Consulting, food

Pivoting From Cocktails To Cleaning

Happy Foodie Friday! This week our food-themed screed takes us to the land of alcohol, a place that I have a feeling many of you have visited several times over the last few weeks as a scenic detour in your home confinement. Like many of you, part of my very limited activities over the last little bit has been the often quixotic search for hand sanitizer and toilet paper. The good news is that toilet paper seems to be much easier to find of late while sanitizer remains elusive.

There are many small distilleries near where I live which make everything from vodka to rum to moonshine (hey, it is the South!). Many of them have converted their processes over to produce hand sanitizer which is after all, alcohol-based. One place nearby is selling their sanitizer by the gallon at prices which are reasonable, thereby doing both their shareholders and our community a service. Why the shareholders? Because many of their customers, along with those of their competitors, happen to be restaurants and bars, which are closed except for carry-out. Booze sales are confined to beer and wine in the carry-out world for the most part. That’s our thinking point today.

These businesses have managed to pivot from making one in-demand product to another. This pandemic has caused many other businesses to rethink how they do things as well and to make some changes. For example, I represent a number of companies that run after-school programs. With no school (and no gatherings allowed), most of them have pivoted to providing those programs online. When things calm down, they’ll return to their old model but most indicate they’ll keep the new, online model as well since it seems to be working quite well.

Another example. Companies are cutting down on non-essential costs.  They are reallocating their budget from physical in-person processes such as travel, conventions, etc. into digital or virtual tactics. If your primary sales channel is trade shows, are you ready to pivot to some other model since consumers might be wary of large gatherings such as home shows and business buyers may not be allowed to travel to whatever conventions remain?

Has online commerce been an afterthought for your business? My guess is that many brick and mortar firms are rethinking how they approach digital. Yes, all retail sales have dropped. Consumers are restricting their purchasing to essentials, understandably. But it won’t be this way forever. As CNBC quoted one analyst,

“Major retailers who sell goods outside of apparel and furniture – two of the hardest-hit categories – will likely weather the downturn, along with many direct-to-consumer brands that were doing well before the pandemic. Instead of bulldozing the entire retail market, the pandemic is more likely to accelerate the decline of the “boring middle of retail,” such as Sears, J.C. Penney, Macy’s and Kohl’s.”

Those are companies that didn’t invest in the online space before and who can’t keep up with the big guys or the specialty online brands. They can’t pivot.

Being able to pivot is going to be critical as the new world emerges. Can you turn your booze into sanitizer without missing a beat or will you have to rip the whole business down and start over?

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Filed under food, Helpful Hints, What's Going On

We’re Trucked

Believe it or not, it’s Foodie Friday again (I know, you can’t keep track of what day it is). Obviously, we’re not dining out here and I’m pretty sure you’re not either. We are, however, bringing in for from some of our regular haunts in an effort to support them during this difficult time. In a couple of cases, the restaurants are moving closer to us by rolling out their food trucks into various places nearby.

Food trucks are one of the businesses I represent along with dozens of other food franchises. I can tell you that the cost to open and operate one of these beasts is significantly less than for almost any other type of food place. I haven’t pulled any of the Franchise Disclosure Documents to check out the operating and earnings claims for trucks vs. brick and mortar but I’m thinking that the trucks probably have better margins.

Margins in the restaurant industry are notoriously small. While you might expect your margin in any other type of business to be north of 25%, in the restaurant world they run 3–9%. Not much room for error and definitely no room for the type of catastrophic business environment in which they’re trying to operate. Having a truck to roll out, either in lieu of or in addition to operating the brick and mortar joint for takeout might just be a lifesaver.

I could spend the rest of today’s screed talking about why the margins are so bad and what can be done about it. The two-word solution is “charge more” but I’ll leave that for another post. What I want us to think about today is how we can “food truck” our businesses. How can we find some other way to operate, maybe even in a more efficient, consumer-friendly manner once we get to whatever the new “normal” will be?  How will you calm your customers’ frayed nerves? How does your business have to change to mirror the changes in society, media consumption, supply-chain and each of the other factors and constituencies that make up your enterprise?

I find I’m spending more time talking to people about businesses that can operate out of the home.  I also remind them that no matter what business they’re evaluating, the process will take time. 2 months for a non-retail business and maybe as long as 5 months if you’re outfitting a store/salon/restaurant etc. The time to be planning and beginning the process is now. Borrowed money is cheap, there will be a glut of real estate, and you want to be ready when the new normal eventuates.

So how are you food-trucking your business?

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Filed under Consulting, food, Franchises

Crisitunity

I think it’s Foodie Friday although it’s fairly easy to lose track when most days are pretty much the same these days as we all ride out the current pandemic crisis. While many businesses have been damaged and many people hurt, the restaurant business has been particularly hard hit. Most places have ordered them not to serve anything other than take-out. Order volume is way down. Many of the staff have been laid off or fired altogether. Couple that with the fact that the food business is generally a low-margin business to begin with and you have a dire situation.

Think for a minute how other industries are affected by the restaurant situation. Suppliers now face uncertainty. Landlords might not get paid. If they own the building that’s one thing but if they owe a lender payments, they’re in trouble as well. But as Lisa points out to Homer, a crisis is also an opportunity.



One thing I’ve noticed is that there is suddenly a much great awareness of the interconnectivity of all the constituencies of every business, restaurant and otherwise. It all starts with customers, of course, but also shows how critical everyone is and how many people touch a business. Need supplies? What if the delivery person can’t work and there aren’t replacements. What if the supply chain is interrupted due to hoarding? I’m sure you’ve seen that as stores began to see hoarding they imposed limits on the numbers of what could be bought, not to limit their sales but to make sure they were serving as many people as possible. I call it equity, you can call it fairness or whatever you like.


I’ve got friends who work in the food business. Some of them have been laid off. Others continue to work, taking the risk each day that they might become ill to help their restaurant survive during the crisis. They can’t work from home. When this is over, think about that as you’re wondering whether to tip the extra 5%.

I’m hopeful that other businesses will think more about equity. Will that mean higher wages, better working conditions, and increased benefits? I don’t know but I know we won’t be going back to the world as it was. I’m sure many great people are rethinking their choice of employer if not their career choices. I’m quite sure that many employers won’t have the same staff back, resulting in the loss of institutional memory, increased hiring and training costs, and even more lost time. What are they doing about that? Using the crisis to put the “new” world in the context of equity is a start. You can’t pretend nothing has changed. How are you going to?

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Filed under Helpful Hints, Reality checks, Thinking Aloud

Art & Science

This Foodie Friday I’d like to spend a moment thinking about what one commentator on this blog called the “cult” of Kenji. Kenji, of course, is noted food writer Kenji Lopez-Alt. He got his start working in food under some noted chefs in the Boston area, having graduated from MIT with a degree in, of course, architecture. That’s right, and to me, that makes perfect sense given his place in the food world. More about that in a second.

Kenji went on to work for Cooks Illustrated. I’ve written about Cooks before and I’m a huge fan. The way Cooks does things is very much reflected in Kenji’s work, especially in his book The Food Lab. The magazine and Kenji’s work are the result of applying the scientific method to cooking. Come up with a hypothesis and then test rigorously with skepticism about what you’re seeing until you either prove or disprove your theory. Now I realize that figuring out if you need to brown meat before you put it in a slow cooker isn’t the same sort of science as finding a cure for the coronavirus, but the process is sort of the same.

I’m a fan of this. If you’ve read more than a few of these screeds you know that I’m very much into a fact-based world. Most of Kenji’s work doesn’t involve preference although obviously when it comes to “what tastes better” it’s impossible not to be subjective. Objectivity, however, should be our goal, both in food and in life and in business. That’s why Kenji’s background in architecture makes sense to me. It combines the science of what’s “buildable” with the art of what’s beautiful. Great food is like that. It’s the art of combining flavors with the science of cooking ingredients to perfection.

Your business needs to be the same way. You can’t rely on opinions when there are facts available. You may think the pasta water needs to be salted “like the sea” until you test ziti cooked in varying levels of salinity for taste and texture. The facts say that’s too much salt, no matter what the opinion of your Italian grandmother might be. The opinion of your marketing director that a campaign is terrific is not as good as the results of A/B testing that shows what moves the needle.

We do, however, eat with our eyes and taste with our mouths. Art counts. What Kenji and his compatriots have done for cooking – combining art and science – is what you need to be doing in your business every day. You with me?

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Filed under Consulting, food

Last Night’s Lesson

It’s Foodie Friday. We went out for a bite last night to one of the places that’s in the usual rotation. On most Thursday nights the bar is crowded and there’s often a wait to grab a table. Last night we pretty much had the bar to ourselves and there were tables available without any delay.

My buddy Tina the bartender said that business wasn’t great and I think we all know it’s due to the fear of the coronavirus. It’s hard to keep a safe distance from folks in a crowded bar or when tables are close together. While you expect your servers and cooks to have clean hands, it’s not a great time to find out otherwise. Apparently, my little microcosm isn’t much different from what’s been going on around the country and, I suspect, around the world.

What a number of food businesses (this one included) are doing is a great lesson for those of us in other businesses with respect to how to behave when the proverbial pandemic hits the fan. I’ve seen Facebook posts and received several emails from places I patronize and most of them have the same message. First, they aren’t minimizing the situation with any kind of casual joking (“Hey! Come on out and play! It’s just a little flu!”). Second, they all talk about both their normal cleaning process as well as the enhanced measures they’re taking during the crisis. This includes more frequent cleaning using higher-strength disinfectants and retraining of staff.

It’s the big guys too. Starbucks, which markets itself as a gathering spot (not something we’re being encouraged to do these days) has actually taken to limiting seating, spacing seats further apart, and even closed a store temporarily after a worker fell ill. The message is loud and clear: we place our customers and their health above the short-term profit hit we’ll take. Well, duh, people. Dead customers don’t buy things, so helping to prevent the spread of this virus is smart business no matter the cost.

Some places have amped up their delivery service. I’ve heard of other places that will bring your food to the curb so you don’t have to get out of your car if they don’t deliver. Who knows – maybe those services will become a normal part of their business going forward – we all know how delivery services’ menu of menus has grown over the last year or so. Acknowledging that not everyone is comfortable or able to go out for dinner at this time and not attempting to persuade them otherwise is being supportive and adult. That’s what any of our businesses need to be.

We overtipped last night (50%). Why? These are our friends and they might be hurting for the next month or so. If you get out, do the same. Buy a gift card at your favorite place, restaurant or otherwise, and use it down the road when you go back. We’re all in this together, right?

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Filed under food, Helpful Hints, What's Going On