Consider this your essential industry cheat sheet for 2019

Skift Table moves into its second year of identifying the trends that are shaping the restaurant industry with a renewed focus on the big brands, big tech changes, and big ideas that are having the greatest impact on the business of dining out. These ideas are informed by the last year of original reporting at Skift Table, as well as by themes that emerged during this year’s inaugural Skift Restaurants Forum.

The ideas that we’ll explore over the next two weeks touch on relationships between franchisees and brands, consumers and tech, hospitality and expectations, and labor and design. They represent high-level trends and examples of innovation across the business of dining out, and are the ideas we’ll follow closely in the coming year.

The trends you read here come through the hard work of the editors and reporters at Skift Table, as well as trusted contributors. For us, these trends aren’t static, they are in motion throughout the year. The best way to keep track of ongoing coverage is with our daily newsletter, which you can subscribe to here: https://table.skift.com/subscribe/

Jason Clampet, Chief Product Officer

SKIFT TABLE 2 Research Marketing

Senior Director of Research Vice President of Marketing Haixia Wang Natalie Bonacasa

Senior Research Analyst Digital Marketing Manager, Events Rebecca Stone Gabi Donchez

Senior Research Analyst Growth Marketing Manager Seth Borko Elihn Glass

Research Analyst Design Meghan Carty Senior Designer Director, Enterprise Sales, Research Ping Chan-Li Daniel Calabrese Designer Sales Executive Masthead Andrea Yang-Yanez Anne Duffy Design Intern Customer Support Associate Joanna Gonzalez Alex Winkler Founders Advertising & Sales Technology Founder & CEO Engineering Manager VP, Head of Sales Rafat Ali Mike Linden Pamela Firestone Co-Founder & Developer Advertising Director Chief Product Officer Rachel Bronstein Danielle Wagstaff Jason Clampet Director, Business Development Operations President Lisa Weier Parilla Senior Events Manager Carolyn Kremins Executive Sales Director Regina Yuen Deborah Knudsen Chief Financial Officer Junior Events Manager Sales Director Europe Francesca De Francesco Michael Cunniff Kate Irwin Events Editorial Director Editorial Account Director Elizabeth Osder Amy Cogan Executive Editor/Founding Editor Events Editorial Producer Dennis Schaal Asia Sales Director Joanne Laipson Joey Kukielka Office Manager Managing Editor Sales Manager, Skift Table Ali McGhee Tom Lowry Jeremy Vargas Staff Accountant News Editor Account Manager Ernest Capasso Hannah Sampson Lindsay Bashan Senior Hospitality Editor Airline Weekly SkiftX Deanna Ting Managing Partner Vice President, SkiftX Seth Kaplan Senior Editor, Skift Table Katherine Townsend Kristen Hawley Publisher Director of Creative Strategy Jay Shabat Senior Aviation Business Editor Matt Heidkamp Brian Sumers Vice President Research Editor Jason Cottrell Senior Editor Jeremy Kressmann Andrew Sheivachman Editorial Strategist Travel Tech Editor Paul Brady Sean O’Neill Editor Alison McCarthy Europe Editor Patrick Whyte Strategist, SkiftX Sonali Sen Asia Editor Raini Hamdi Editor at Large Greg Oates Business Reporter, Skift Table Associate Brand Strategist Erika Adams Dawn Rzeznikiewicz

Business Reporter, Skift Table SkiftX Project Manager Danni Santana Gianna Greco

Assistant Editor Video Producer Sarah Enelow-Snyder Richard Chen

3 SKIFT TABLE Table Of Contents

TREND 1 The Battle for Loyalty Takes Place on Multiple Fronts P.5

TREND 2 Lines Between Meal Times Have Been Erased P.7

TREND 3 Labor Crunch Determines In-Restaurant Changes P.9

TREND 4 Google’s Domination of Local Discovery Is Almost Complete P.11

TREND 5 Franchisees Assert Their Power Over Chains P.13

TREND 6 Forget Main Street, It’s the Year of the Suburb P.15

TREND 7 Front of the House Hospitality Seriously Ups Its Game P.17

TREND 8 Blockchain Brings Transparency to Sourcing… P.19 If Restaurants Care

TREND 9 Restaurants Finally Create Healthier Work Cultures P.21

TREND 10 Product Development Looks to Consumers’ Micro-Feedback P.23

SKIFT TABLE 4 TREND 1 Lettuce Entertain You, a Chicago-based restaurant group that includes over 60 different restaurant brands, is no stranger to loyalty programs. The 47-year- old company has offered a diner rewards program The Battle for since the 1990s, but, until recently, it primarily existed as a physical card-based program.

Loyalty Takes Five years ago, Jennifer Bell, Lettuce Entertain You’s executive vice president of marketing, sought to change that. Bell led an initiative within the compa- Place on ny to ditch the pen-and-paper program that it had been running for decades in favor of a digital loyalty app, got rid of a $25 charge to sign up for the pro- Multiple Fronts gram, and watched member count grow exponen- tially as a result.

By Erika Adams Speaking in October 2018 at TechTable, a restaurant industry conference, Bell told the audience that the revamped loyalty program now counts 300,000 users on its platform (up from 7,500 when it first relaunched). User engagement has gone up dramat- ically with the digital program, and average checks SKIFT TAKE are significantly higher among loyalty members.

Skift Take: For restaurants, loyalty is not just “I’m not going to lie, it’s challenging, costly, and a service to thank repeat customers. It’s an maintenance is tough,” Bell said of implementing incredibly effective data acquisition strategy the program. “But it is worth it.” that is an increasingly vital component of any restaurant’s operations, from discount-driven In a future where technology informs every inch chains to fine dining experiences. of restaurant operations, the punch card trope of a restaurant loyalty program is disappearing fast. Whether the programs are built in-house or through a third party vendor, modern loyalty solutions are driving sales and producing valuable customer data that is integral to building a personalized hospitality experience.

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5 SKIFT TABLE HARNESSING LOYAL CUSTOMERS means determining how to translate the robust Over the past year, restaurant chains large and small purchase history data into personalized communi- have been focused on launching new digital loyalty cation and incremental sales,” El Pollo Loco’s CEO programs. Chipotle started testing a loyalty offering Bernard Acoca said on the company’s third-quarter in three markets in September 2018 with the intent earnings call. for a nationwide rollout in 2019. Kentucky-based Ital- ian chain Fazoli’s launched a loyalty program in late After observing how loyalty drives engagement, the 2017 and those members now account for 15 percent nationwide restaurant chain also plans to leverage of sales in some locations. its 1.1 million loyalty members to push marketing around delivery and significantly grow the chain’s Even Starbucks, often regarded as building the gold delivery sales. standard for loyalty programs in the restaurant indus- try, acknowledged that it hasn’t yet fully tapped into MORE THAN AN APP DOWNLOAD the program’s potential to drive sales and engage- ment. In the company’s November 2018 earnings call, Native apps aren’t the only way that restaurants are Starbucks’ head of marketing, Matthew Ryan, said driving loyalty. Third-party technology vendor Leve- that while the company counted 15.3 million active lUp — which was acquired by Grubhub earlier this members in its loyalty program, Starbucks has only year — offers a customer-facing loyalty app where “just begun” to fully leverage those relationships. diners can access dozens of restaurant rewards at once. Now that Grubhub owns LevelUp, the compa- “Remember that we’re not in a business of creating ny is aiming to become a one-stop shop for all of a digital relationships for digital relationships’ sake,” restaurant’s technology needs. Ryan told analysts. “They’re an enabler for us to com- municate and talk to our customers.” Credit card providers like American Express and Chase offer robust dining rewards programs that ar- In many cases, loyalty offers a better solution to drive en’t necessarily driven by discounts. World-renowned sales and produce more effective marketing. Fazoli’s fine dining institution Eleven Madison Park has a digital marketing manager Will Hanrahan told Skift longstanding loyalty relationship with American Table that the company’s year-old digital loyalty Express that is driven by exclusive, member-only program has begun to inform the company’s over- experiences. The restaurant’s seasonal pop-ups, EMP all marketing strategy. Engagement and coupon re- Summer House and EMP Winter House, are only ac- demption rates are higher through the loyalty app cessible to American Express credit card holders. versus email and print marketing campaigns, and when the chain needs a sales boost, leadership in- The most engaging restaurant loyalty programs will creasingly turns to Fazoli’s loyalty app to push out be the ones that work best for all parties involved. promotions before other marketing channels. Digitally driven, personalized experiences are key for diners, while restaurant operators need programs Like Fazoli’s, grilled chicken chain El Pollo Loco has that seamlessly integrate with the rest of their tech- also discovered the power of committed loyalty nology stack, from the point-of-sale system to deliv- members. “As with delivery, we are now focusing on ery and online ordering. optimizing our loyalty program, which in this case,

SKIFT TABLE 6 TREND 2

Lines Between Meal Times Have Been Erased

By Danni Santana LATE NIGHT WARS

The undisputed king of late-night dining is Taco Bell. The fast-food chain recently beat out McDonald’s as consumers’ favorite late-night food stop, according to SKIFT TAKE a survey of 1,000 diners published by MattressAdvisor. Instead of narrowly segmenting service into dayparts, restaurants are CEO David Gibbs said last spring that Taco Bell’s fast- thinking more fluidly, to all-day menus est-growing daypart is indeed after 5 p.m. To push and creative late-night service. that momentum forward, the company has rebrand- ed and reintroduced its multi-packs of tacos as Taco Forget everything you thought you knew about Bell Party Packs for after-dark catering. The chain restaurant dayparts: Customers are eating whatev- also began offering up 10 different store locations er they want, whenever they want it. And fast food as host sites for parties in recent months, National chains, in particular, are looking to take advantage by Restaurant News reported. luring diners back to stores throughout the day and late night too. “Taco Bell has developed a unique after-dark pro- gram, focused on fostering a culture of speed while Whether it’s happy hour afternoon menus or af- maximizing satisfaction and delivering world-class ter-dark snack options, there is a battle brewing service, targeting dinner and late-night peaks,” said outside of the infamous restaurant “breakfast wars.” Gibbs, on a conference call with investors last year. Both afternoon and evening snacking are up 1.3 per- cent and 5.3 percent respectively, as of the end of Former Taco Bell CEO Brian Niccol, now the new September, compared to the fall of 2015, according boss of Chipotle, is gunning for crown he helped to market research firm NPD Group. That number is win when he was at the helm of the Yum! Brands only projected to go up in the years to come. subsidiary. Chipotle is in the middle of its promis- ing comeback story; attempting to earn the trust of “I believe that the definition of meals, where and customers back after its food-safety scandal broke in when we have them, is becoming more fluid,” said 2016. In addition to pumping money into new “fresh David Portalatin, VP, food industry advisor at NPD ingredient” TV ads to improve sales, the chain began Group. “People are going to restaurants saying a piloting $2 tacos and drinks after 8:00 p.m. in July to hamburger, something we would consider lunch or increase foot traffic by stealing customers away from dinner, is just a snack.” Taco Bell.

7 SKIFT TABLE FINDING YOUR AFTERNOON FIX More people than ever also work from home, which For companies like McDonald’s and Starbucks, where lends itself to the ordering more takeout, he add- customer traffic continues to be an issue, promo- ed. Currently, a little less than half (49 percent) of all tions and menu changes are ways to boost numbers, meals ordered from a restaurant are eaten at home. while catering to consumer demand during the day. The result is a decrease in in-store customer traffic, and a subsequent 13 percent spike in off-premise de- Back in 2015, McDonald’s introduced all-day break- mand since 2013, says NPD Group. The firm expects fast when foot traffic was low, a move that brought digital ordering through both restaurants’ propri- much joy to its customers. The chain has since posted etary websites and third-party platforms to grow 22 13 consecutive quarters of positive same-store sales percent annually through 2020. growth, and has even reverted back to tinkering with its popular menu to boost store visits again after con- Restaurant chains are privy to this stat. About 60 secutive subpar quarters of the metric. McDonald’s percent of McDonald’s delivery orders come at off- CEO Steve Easterbrook announced the company peak hours, UberEverything boss Jason Droege said would introduce bigger, meatier breakfast sandwich- during the Skift Tech Forum in June. Uber Eats is the es by the end of 2018 on a third quarter earnings call. official delivery partner of McDonald’s.

Meanwhile, Starbucks, in attempts to win at more “We’re seeing not just dayparts, but new occasions than just breakfast, is relying on its cold platform happening where folks are ordering maybe when — including nitro, cold brew, and cold foam drinks you wouldn’t expect or because that convenience — and popular half off coffee specials for same-day offers something different for them,” Liz Meyerdirk, returning customers looking for their afternoon fix. global head of business development for Uber By moving most administrative tasks to closing time, Eats, said in a separate interview with Skift Table employees are also finding more time to engage in November. with customers in its stores, creating a more “homey” feel for coffee lovers to return to. The company, along with Grubhub, OpenTable and DoorDash, are just some of the major players in “We freed up time for the partners to interact with the delivery game equipped with multiple delivery customers throughout the afternoon daypart,” Ro- contracts with restaurants. A few chains, such as salind Brewer, Starbucks COO, group president of Wingstop and Subway, sport more than one delivery Americas, told investors in November. “And so we’re partnership themselves. seeing some nice movement between our customer connection stores that we know ultimately will re- Industry consensus is the delivery wave is here to lates to increased frequency and traffic.” stay due to convenience. But the increasing diversi- ty and cuisines available, beyond just pizza, doesn’t hurt either. DELIVERY’S IMPACT ON EATING TIMES

Industry traffic issues aren’t all on restaurants. Deliv- ery and the new gig economy are largely to blame for independents and large food chains’ troubles.

While unemployment levels are at record lows of fewer than 4 percent, it doesn’t tell the full story, Por- talatin said. Much of that figure is tied to a chang- ing U.S. demographic. Roughly 6.8 million people in the country earn income from untraditional means. Many also work unconventional hours.

“They are Uber drivers, DoorDash delivery drivers, and rent properties on Airbnb,” said Portalatin. “Going to work today is different than it was five years ago.”

SKIFT TABLE 8 again in over 20 states in 2019. In September 2018, the U.S. Bureau of Labor Statistics recorded the na- tion’s unemployment rate at 3.7 percent, the lowest TREND 3 that it’s been in nearly 50 years.

In other words, workers are both increasingly expen- Labor Crunch sive to retain and in very high demand. This is great news for restaurant employees: it’s never been easier to get a job in the industry, and employers are often Determines paying above the minimum wage in an effort to in- crease staff retention rates. For restaurateurs, howev- er, rising labor costs need to be managed. In order In-Restaurant to do that, operators are reconsidering every inch of how their restaurants are run. Changes LEVERAGING IN-RESTAURANT TECHNOLOGY

By Erika Adams At the Cheesecake Factory, labor costs accounted for 35 to 36 percent of sales throughout 2018. Five years ago, the company’s labor costs hovered in the 31 to 32 percent range. SKIFT TAKE It’s not possible to simply absorb those cost increases, From sourcing smart technology integrations at the independent restaurant level or at the national to managing staff more effectively, operators chain level. Changes to operations have to be made. are rethinking how their restaurants are run in the face of rising labor costs and an “If labor continues to be an incremental pressure, ongoing war for industry talent. you have to look holistically at the profit and loss statement. What would change is the point at which Earlier this year, the Cheesecake Factory experienced technology in the restaurant becomes more afford- the worst stock decline within one day in nearly 20 able relative to the price of labor,” Matthew Eliot years. In a dismal second-quarter earnings report, the Clark, executive vice president and chief financial of- restaurant chain revealed that it had missed revenue ficer of The Cheesecake Factory, said on the compa- estimates by enough that it had to lower its profit ny’s 2018 second-quarter earnings call. guidance for the year. The top reason for the misses? Rising labor costs. That doesn’t mean that robots are going to start dishing up cheesecakes. It does mean that the A day before Cheesecake’s earnings were released, restaurants will better leverage labor management the U.S. Department of Labor had announced a sig- tools and subtler forms of automation to implement nificant post-recession milestone. Over the past year, more effective staff training models, ensuring shifts American workers have logged the highest pay in- are properly staffed to cut down on extra costs asso- crease in the decade since September 2008, accord- ciated with either overstaffing or understaffing, and ing to the the department’s employment cost index, automate manual labor where it makes sense. which measures labor costs (including wages, sala- ries, and benefits) across the nation. Shake Shack has been slowly installing order kiosks in a handful of new restaurants in part to offset la- That also means that labor costs are skyrocketing. bor costs especially in markets like Seattle, where The minimum wage rose in eighteen states across the minimum wage is high and labor regulations are the U.S. throughout 2018, and is scheduled to rise more stringent.

9 SKIFT TABLE “When it comes to kiosks, it’s absolutely one of our and use them in different areas instead of bringing goals to decrease the payroll over time, and the in a brand new person to fulfill one need,” McFadden number of people that we need,” Shake Shack CEO said, although she noted that these fixes only go so Randy Garutti said on an earnings call in August far and might not be enough to offset labor increases 2018. “We have not stressed that in these early days. if the tipped minimum wage (set to raise to $10 in Of course, that’s a long-term goal.” 2019) is potentially eliminated while also managing the upcoming city minimum wage increase (set to The point isn’t to replace all of Shake Shack’s front-of- raise to $15 in 2019). house employees, but rather hire and train a skilled hospitality team to focus on what can’t be replaced “I want to be optimistic that we’ll figure it out, we’ll by a kiosk: supporting and guiding the customer ex- make a way, but the way we do business is going to perience to make repeat diners out of everyone who be different,” McFadden said. “It probably won’t look walks in the door. like what we do today.”

RETHINKING STAFF MANAGEMENT PINNING HOPES ON FAST CASUAL

Salar Sheik, the owner of restaurant consultancy Fast casual salad and bowl shops and counter service Savory Hospitality in California, told Skift Table in a restaurants aren’t popping up on every corner just previous interview that it’s not uncommon to see because of a sudden rise of speedy eaters who pre- restaurants in the state with labor costs that run as fer a do-it-yourself dining atmosphere. The business high as 40 percent of total sales. model thrives on lower labor costs: there’s no table service, less people are needed to staff the restau- Sheik said that soaring labor costs are frequently the rant, and employees can more easily cross train on a top reason that he gets called in to help restaurant variety of stations. operators. Technology solutions are key, but Sheik has also recommended outsourcing some of the The New York Times reported that in San Francisco, kitchen’s prep labor by considering pre-packaged one of the most challenging labor markets in the food items versus paying staff to prep every compo- country, popular Greek counter service restaurant nent on the menu. Souvla operates with labor costs in the mid-20s. Less than half a mile away, at Jardinière, a French fine “We’re really sourcing our products and our menu dining restaurant run by chef Traci Des Jardins, labor with labor as number one priority,” Sheik said. “We’re costs take up 43 percent of total sales. really nickel-and-diming ourselves.” National restaurant chains are also turning their When New York City raised its tipped minimum sights towards more profitable fast casual models. wage from $5 to $7.50 an hour in 2015, Sylvia’s, a The Cheesecake Factory will be opening a new fast decades-old staple of the dining scene in Harlem, casual concept, Social Monk Asian Kitchen, in Los An- New York, offset the increase in labor costs by raising geles in early 2019. Cracker Barrel launched a break- menu prices, getting more strategic about schedul- fast and lunch-only fast casual concept in 2016 called ing, and “making sure we had strong staff members Holler & Dash, and has since expanded it to seven and weren’t keeping underperforming employees,” locations. Stephen Joyce, the CEO of Applebee’s par- the restaurant’s director of operations, Taniedra Mc- ent company Dine Brands told Business Insider that Fadden, told Skift Table in June 2018. “We had to the company is shopping around for a fast casual keep really strong people who could make every step concept to add to its portfolio. count.” “We want to get into a category that’s growing faster At the time, McFadden said that Sylvia’s labor costs than the categories we’re in,” Joyce said last May. He typically hover at around 21 to 22 percent (lower hopes to close on a deal in 2019. than average for a full service restaurant) because she closely monitors staff training and development. “An employee is not just a dishwasher. We cross train

SKIFT TABLE 10 TREND 4

In less than two decades the battle over local dis- Google’s covery has shifted from a five pound book filled with yellow pages that sits in the kitchen to a smartphone Domination of that you can access from anywhere. In the late 1990s companies including Microsoft Sidewalk, AOL Digital Cities, and CitySearch duked Local Discovery it out digitally to be the place people discovered a new restaurant or bar online, while print outfits like Zagat, Time Out, and local newspapers did the same Is Almost in print. There were multiple ways to find a place to go in print and online.

Complete This isn’t really true anymore. Google, with it’s trifecta of Google Maps, Mobile search, and Desktop search fuels By Jason Clampet local discovery with a dominance that is daunting.

Sure, there are other ways to find a great taco: Apple Maps exists; Yelp is still important enough to worry restaurants; Foursquare hums along quietly; and res- ervation apps can point the way. Instagram has the power to inspire, but you can’t ask it where to get a SKIFT TAKE burger near you. The evolution of Google’s Search and Maps products from web-centric to IRL Thanks to our reliance on smartphones and GPS, it’s have made searching, booking, and become an indispensable tool for restaurants. At the navigating to restaurants a seamless same time, Google’s ad search business, allowing experience and handed Google the keywords to go to the highest bidder, change the lion’s share of local discovery. way restaurants must market themselves.

11 SKIFT TABLE CONSUMER LED PREFERRED PLACEMENT

The stats are daunting, whether they’re coming for If you don’t want to go for Google’s recommenda- Google itself or third parties. According to Think by tions, you can find the recommendations of compa- Google, “people are at least twice as likely to use nies with pockets deep enough to show up high on search than other online or offline sources … Not only Google results. For restaurants, there’s really just one is search the most used resource, it’s the resource company like that, the Booking Holdings-backed 87% of people turn to first.” OpenTable. In the first nine months of 2018 the par- ent company spend $3.56 billion on digital market- Over the last year the frequency of the search term ing, the lion’s share of which went to Google. That’s “restaurant near me” has grown by two to three times why it’s easy for OpenTable to be placed high on in markets around the world. In no place has this the page even for restaurants that don’t appear on search grown less than 50%. Indeed, the growing OpenTable. popularity of “… near me” searches clearly illustrates the consumer shift to a reliance on digital for the On Google Maps on smartphones, an upgraded most basic local discovery actions at an incredibly “Explore” tab automatically suggests highly rated high frequency that will only continue to increase as restaurants in the user’s immediate area (dubbed long as search results satisfy. “The Foodie List”), even if the user isn’t necessarily searching for a place to eat. There are reservations According to Moz’s 2018 Local Search Ranking Factors apps that offer curated lists, too, but the cost of cus- Survey, 64 percent of marketers now see Google as tomer acquisition is high for any app, especially one the new “homepage” for local businesses. that competes with Google’s products. This is why we are likely to see more consolidation like Resy’s pur- Don’t take our word for it. Ben Leventhal, the CEO of chase of Reserve late last year. Resy, said this at Skift Restaurants Forum in Septem- ber: “I’m opening Google Maps and not anything else. In 2019 Google will likely increase its dominance That’s the point: the funnel has changed. You used thanks to smart moves in voice search, where “find to have OpenTable at the top of the funnel and Goo- me great seafood on the beach” is much easier to gle is now at the top of the funnel. Yelp? If you want answer than “book a flight for a family of four to Am- 4,000 choices, great.” man.” For Android users, Google’s Assistant feature can pick out potential searches from other apps, Bareburger’s CEO said at a recent event “We are such as texting with friends, in order to provide local number two when we Google our own name” and other results.

On desktop and mobile search, Google offers struc- It is also far ahead meeting the needs of the next tured results for searches like “best burger in NYC” great search habit: personalization. Helping people that take users to map-based lists that show pho- decide what to do an answer the question ‘What tos, opening hours, delivery services without clicking should I get for lunch?’ will push Google further through to another website. Recent partnerships along the road to local dominance. with reservation services — Resy, OpenTable, Seven- Rooms — mean that diners don’t have to leave Goo- gle to book a table for dinner.

SKIFT TABLE 12 rectors replacing a number of other individuals who have contributed to the restaurant’s lackluster per- formance in recent quarters. Same-store sales only just returned to plus territory in the summer, at 0.5 percent. The company reported the same figure for TREND 5 the period ending Sept. 30, while also missing on rev- enue. By comparison, McDonald’s, the world’s largest restaurant chain, has reported 12 straight quarters of Franchisees positive comparable-store gains.

Jack in the Box was also hit with a complaint sub- Assert Their Power mitted by its franchisee association to the California Department of Business Oversight in November. In it, owners cited an Oct. 8 letter from the brand asking Over Chains independent landlords to transfer their lease agree- ments from Jack in the Box Inc. into a newly formed subsidiary, Jack in the Box Properties LLC, Nation’s By Danni Santana Restaurant News reported. Property owners who de- cline to do so will be subject to not receiving assets or payments for rent, franchisees said, citing the letter. Jack in the Box currently handles 1,800 master-lease SKIFT TAKE agreements, which it sublets to franchisees. Corporate initiatives and decision-making grab headlines, but a chain is only as strong “We appreciate the unwavering passion franchisees as its operators. And they are angry. have for the Jack in the Box brand,” said Comma, on the company’s earnings call with investors Mon- While fast food chains pump money into upping de- day. “While we’re currently managing through some livery capabilities, completing store makeovers, and issues with the association regarding most of our even rebranding, operators are losing patience; per- franchisees, we believe our mutual interests are very haps, rightfully so. A lack of cash flow and customer much aligned. We understand their concerns about traffic continues to hurt franchisees’ pockets, even as issues our industry is facing such as rising labor costs, average check sizes increase. traffic, and market share in a hypercompetitive en- vironment. We know that Jack in the Box can’t be Many executives have publicly acknowledged ongo- successful if our franchisees are not successful.” ing growth strategies will not succeed without fran- chisee buy-in. That is to be expected. But operators El Pollo Loco, McDonald’s, and Papa John’s are just are finding it difficult to stay quiet when returns from some of the other chains getting stick from store op- reported positive earnings haven’t yet trickled down. erators. Franchisees are really starting to take matters Training employees on aforementioned new tech- into their own hands to induce change, a trend we nologies and workflows creates yet another gripe for see continuing well into 2019. them to hold. In November, El Pollo Loco lost a lawsuit filed by a In some cases, as in Jack In The Box, perceived inept- local franchise owner after the chain tried opening itude on the part of higher ups has caused storeown- new company-operated stores near franchise lo- ers to organize and call for CEO Leonard Comma’s cations. The plaintiff argued the new stores would head. Franchisees are also keen on the board of di- hurt franchisee sales and won, Bloomberg reported. Under the court ruling, chicken chain cannot to sell new locations until it revises its franchisee contract. El Pollo Loco is currently 56 percent franchised.

13 SKIFT TABLE WHERE ARE THE SALES? Meanwhile, Chick-fil-A has won top honors as con- McDonald’s store owners, representing nearly 20 sumer’s favorite fast food chain three years running, percent of the company’s 13,000 domestic brick- according to the ACSI. The privately-held company and-mortar footprint, met in October to discuss the beat out Panera Bread, Subway and Papa John’s in creation of an independent franchisee association. 2018. Brands, such as Burger King, KFC, 7-Eleven, Dunkin’ Donuts, and Pizza Hut have all contended with asso- MAKING RELATIONSHIPS RIGHT ciations for years. So this is nothing new. Papa John’s has since fallen out of favor with its cus- Their chief complaint is site improvements are not tomers and franchisees since ACSI’s report published translating into sales quickly enough. Despite suc- last June. Dozens of the pizza chain’s U.S. outposts cessful investments by McDonald’s into new order- reported a decline in comparable-store sales in the ing kiosks, its mobile app, and a delivery partnership second quarter, ending July 1, when consumers pro- with UberEats, both earnings and revenue declined tested the brand after racist remarks made by former in the third quarter, thanks to higher labor costs and CEO John Schnatter in May. Papa John’s store sales employee training. On a recent conference call with fell 6.1 percent in the first half of 2018. investors, CEO Steve Easterbrook asked for patience from franchisees, citing that stores that have imple- Things only got worse in the third quarter. For the pe- mented said changes have far outperformed the rest. riod ending Sept. 30, Papa John’s reported a 9.8 per- cent decline in U.S. sales and a 15.7 percent drop in “We still have hard work ahead, but we’re seeing an revenue. The company spent north of $10 million in encouraging response from customers in restaurants “special charges” alone to remove Schnatter from its where many of these improvements are already marketing materials and provide financial assistance completed,” he said, in October. “As we have dis- to domestic franchisees to mitigate store closings. cussed before, the U.S. team and our franchisees are The aid, in the form of royalty reductions, was not taking on a lot all at once. The U.S. is maintaining an enough to keep the restaurant’s owners’ association aggressive pace of modernizing restaurants.” from lawyering up, however. Papa John’s franchisees hired industry attorney Robert Zarco to represent them in talks with the company and Schnatter two THE CUSTOMER KNOWS BEST days after the company last reported earnings. The restaurant industry is finding quickly that not only are franchisee relationships more difficult to To fix its growingly fragile relationship with franchi- maintain in the digital age, so too is consumer sen- sees and customers, Papa John’s needs to look no timent about a company, particularly in the “woke” further than its main competitor, Domino’s, as an millennial era. example. Though highly regarded for its tech inno- vation, longstanding sales success on the part of the According to the American Customer Satisfaction In- chain has led to operators opening even more loca- dex’s (ACSI) latest 2018 annual survey, Chick-fil-A and tions, and being more receptive to store makeovers Texas Roadhouse lead the pack in consumer approv- and new technology initiatives. al ratings for limited service and full service restau- rants, respectively. Dominos also appears to be immune from the many issues plaguing a majority of restaurant chain stores Texas Roadhouse had an impressive fiscal 2017, end- in the market — labor, customer traffic, and inno- ing in February, with a reported same-store sales vation to name a few. In fact, CEO Richard Allison growth of 5.8 percent in the fourth quarter, accord- pointed out on the company’s third quarter earnings ing to company SEC filings. Perhaps more impres- call that Stan Gage, a former member of the Domi- sive is that much of the boost was comprised of a 4.7 no’s leadership team, left the company to become a percent increase in customer traffic, at a time when 12-store franchisee in the Carolinas. Life is that good many chains are still trying to crack that code. as a Domino’s franchise operator.

SKIFT TABLE 14 Stanley estimates, food delivery will consume 40 per- cent of total restaurant sales, or $220 billion, by 2020.

It isn’t just eaters that are driving growth. Restaurants are increasingly signing up to pay third party opera- TREND 6 tors, because they can use these platforms to build an additional revenue stream and access a fleet of drivers or “dashers” as needed. In addition, restau- Forget Main Street, rants can mine the aggregated consumer data that come from tech-forward delivery platforms. Would you like to know that your poke bowl sells best be- It’s the Year of the tween the hours of 12-2pm, or that no one has or- dered the stinky shrimp scampi in six months? The Suburb answer is yes, and it’s called optimization. The potential upside for companies like Uber Eats, Grubhub, DoorDash, and Postmates is huge, and By Jennifer Parker they’re all racing to increase market share. But first-ti- er cities no longer mark the finish line. To win in the long run, they have to dominate unsaturated mar- SKIFT TAKE kets, too. As they race to dominate in the market, third WELCOME TO SUBURBIA party delivery companies are targeting large, Expansion into the suburbs (often referenced as sec- suburban markets to fuel expansion. National ond-and third-tier markets) is a big part of today’s chain partnerships boosted these efforts in 2018 third-party strategy, but each company’s efforts differ and will continue to drive growth in 2019. in speed and scale. The top three largest players are It’s a work-night-Wednesday in Weehawken, New Grubhub, Uber Eats, and DoorDash, as measured by Jersey, and the hottest spot for dinner has nothing to both revenue and market share. These three compa- do with white tablecloths or advance reservations. It’s nies alone will likely drive expansion through the end a walk in, sticky-fingers barbeque joint called House of next year and beyond. of ‘Que, which has just fêted its grand opening and is To measure their growth, it is useful to separate deliv- already delivering take-out via Uber Eats. ery data between “urban core” and “non-urban” cen- This place is so new, Dave the bartender didn’t know ters, defined as a district lying immediately outside a which delivery service his restaurant is using — but city or town. his customers do. “I order this from Uber Eats when I In urban cores — including New York, Chicago, Los don’t feel like leaving the apartment,” says Paul, the Angeles, San Francisco, Boston, Philadelphia, and patron next to me, as he tucks into a thick slab of Washington, D.C. — the dominant player is still Grub- smoked beef brisket. He likes the convenience and Hub (which includes brands Seamless and Eat24). comfort of delivery, and he’s not alone. In the past six According to Earnest Research, GrubHub captured months, Uber Eats delivery orders in New York City’s 62 percent of total urban market share in the third suburbs, including New Jersey, have increased by quarter of 2018, followed by Uber Eats and Postmates. over 50 percent.

Outside the urban cores, things get interesting. Ear- The trend is happening on a national scale. Right nest Research shows that in the rest of the U.S. market, now in the U.S., 63 percent of all restaurant traffic it’s a head-to-head battle between DoorDash (31 per- is off-premises (which includes both delivery and cent market share) and Uber Eats (with 30 percent). In drive-thru sales). “It is perhaps the most important third place is Grubhub, coming in at 27 percent. growth trend in restaurant sales,” says Hudson Riehle, Senior Vice President of Research, for the National So, they’re getting creative, and breaking into entire- Restaurant Association. And according to Morgan ly new markets. Uber Eats, for example, launched in

15 SKIFT TABLE 2015 in New York, Los Angeles, and San Francisco. Manager of Communications at GrubHub. Today, the company serves customers in Eugene, Or- egon, Burlington, Vermont, and Cedar Rapids, Iowa. All of this hinges on customers being ‘accustomed’ to one platform or another. It’s the power of human “Three years ago, this expansion wasn’t even possible. habit, coupled with one-click-away convenience. We had to test our model and prove that it worked,” Delivery platforms that personalize transactions by says Ana Mahony, head of U.S. Cities for Uber Eats. storing customer data, are — pun intended — sticky. It worked, by almost any measure. Today, Uber Eats “Once customers sign up, 80 percent never or rarely reaches more than 350 markets across 36 coun- leave for another platform,” according to McKinsey & tries. The company services approximately 200,000 Company research. That means whoever signs up the restaurant partners, and raked in $2.1 billion gross most customers in the least amount of time wins. It’s bookings in the 3rd quarter alone. And all this hap- a winner-takes-all dynamic for third party services, pened, before Uber Eats announced its partnership and technology has created a suburban battle field. with Starbucks, which grants it exclusive rights to deliver from a quarter of Starbucks’ U.S. stores. (Get Uber’s Policy Research Scientist Jonathan Wang ready for lukewarm lattés!) echoes this trend in corporate terms: “The dominant trend is for increasing service levels down the list of Competitor DoorDash is taking note. “This is very cities, reaching into smaller and smaller urban areas much a paradigm shift. Consumer expectations over time.” Uber Eats is so interested in rapid expan- across the country are changing. They are expecting sion, it is considering partnerships with municipal to get anything they want delivered instantaneously. transit authorities and senior centers to reach un- It’s true in small towns, and it’s true in urban centers. tapped demand. Bear in mind, this is the same com- In the last six months, growth has been fantastic from pany mulling the addition of food-delivery drones to a geographic perspective. And we’re just at the very its offerings — though, that’s at least a few years away beginning,” DoorDash’s COO, Christopher Payne tells from reality. Skift Table. DoorDash operates in more than 3,300 cities as of January 2019, has exclusive partnerships LEAVING MAIN STREET with both Wendy’s and the Cheesecake Factory, and Meanwhile, as costs of operation in cities rise, restau- is aggressively targeting suburban markets. rants are re-thinking locations.This has often come out of necessity, with commercial property prices at FAST-FOOD NATION record highs, according to Real Capital Analytics’ Na- The words “lucrative” and “exclusive” are music to tional Price Index. Wall Street’s ears, especially when they’re used to de- scribe partnerships with national chains. But not all restaurants need to be located on Main & Main to succeed, thanks to the ever-expanding reach In Uber Eats’ case, its exclusives with McDonald’s and of digital marketing and social media. And raising Starbucks helped sparked a sky-high proposed valu- capital might also be within closer reach than once ation of tens of billions of dollars, ahead of its parent thought. “To mitigate high rents, many brands are company’s expected initial public offering in 2019. opening in second-tier locations and that’s very at- Meanwhile, rival Grubhub currently has a market cap tractive to investors,” says Chad Spaulding, Managing of $6.9 billion, supported by partnerships with Taco Director at the U.S.-based investment firm Capital Bell, KFC, White Castle, and Subway. These partner- Spring. “We spend more of our time seeking low- ships are considered game-changers because they rent, low-investment type opportunities that provide imply proliferation, and serve as their own catalysts a value to the consumer that you can count on in for expansion. tougher times in the wider economy.”

“Many suburban areas tend to have a larger number Suburban locations not only fit this bill, they also solve of chain restaurants than independent mom and the urban issue of oversaturation. There is simply less pop restaurants, making it advantageous for Grub- competition the farther afield you go. And now, you hub to offer takeout from these familiar chains to can actually go further than before. Because Uber local residents who may not be accustomed to the Eats drivers and DoorDash dashers can soon be there idea of ordering delivery,” says Katie Norris, Senior to meet you — in 30 minutes or less.

SKIFT TABLE 16 When it comes to “touching tables,” the art of a good maitre d’ or general manager is still in high demand. Equal part host, parent and party planner, they’re the ones orchestrating staff, reservations and timing; pulling out all of the stops to make both high-profile TREND 7 regulars and newcomers feel welcome; and utilizing charm, skill and a general sense of what needs to be done at exactly the right moment. There’s a new guard, too, like Gabe Dopplet, a former Vogue editor Front of the who took over for longstanding maître d’ Dimitri Dim- itrov at the entertainment powerhouse Tower Bar in West Hollywood. Some of it is innate, but as Dimitrov House Hospitality reminds Dopplet, there’s a lot to learn.

For Sean McGinness, maître d’ at Addison in Del Mar, Seriously California, one of San Diego’s most awarded fine din- ing restaurants, it starts with hiring the right people. While he heads up an extensive six-week training Ups Its Game program for new employees — including pre-shift practice drills, much like actors rehearse a play — he By Lesley Balla doesn’t want the “dreaded robotic service.”

“One of the bigger challenges when implementing a multitude of standards with regards to movement, SKIFT TAKE like synchronized water service for multiple peo- After years of spotlighting the kitchen, ple, delivering plates with side dishes, offering chair front of house is rightfully getting its service, and placing a pedestal for a lady’s purse, is moment in the spotlight. seeing that the team performs these steps while not losing their sense of self,” he said. Yelp may have recently introduced its Nowait kiosks, but having someone greet diners at the door at most This is true of most fine dining restaurants, especially mid-priced to high-end restaurants is (thankfully) still in New York, San Francisco and Los Angeles. Eleven de rigueur. That’s because human contact is import- Madison Park has designated “dreamweavers,” staff ant in the full dining experience, be it a counter per- members who literally help create restaurant magic. son taking orders, servers reciting the day’s specials, At Curtis Stone’s Gwen and Maude restaurants in Los or a maître d’ making sure everything runs smoothly. Angeles, director of operations Ben Aviram strives for attentive service with as much invisibility as possible, For years, chefs have been given the spotlight, but which takes a robust staff. But he also wants it to feel operators are making sure their front of house is as approachable and organic, not stifling. much an extension of the brand as the food. From hiring the right people to be the face and voice of the “The big trend in fine dining is an elimination of the restaurant to solid training programs and embrac- rigidity of traditional French service,” he said. “Of any ing technology, it’s all about enhancing the guest of the world-class, three Michelin-starred meals I’ve experience. had in the past several years, more and more the ser- vice feels comfortable but still incredibly thoughtful. A less formal way is the new way. Bygone are the days of some of the tropes that come with a fine dining experience.”

17 SKIFT TABLE TECHNOLOGY’S CONTRIBUTION

While some restaurants have the ability to beef up Restaurateur Sean Feeney, co-owner of Lilia and Misi their ranks to deliver the kind of service they want in Brooklyn, agrees that front-of-house roles will only and their customers expect, fast-casual and fast food get better as more tech, and even data collection, is chains are investing in more technology over staffing embraced. “I don’t think tech integration is creepy,” for the front of the house experience. Executives at he said at the TechTable conference in October. “Al- Shake Shack spent a lot of time this year explaining though it doesn’t exist now, I can’t wait for guests that their new ordering kiosks in cities like New York to come into our restaurant, whether it’s their first and Seattle doesn’t mean they’re completely replac- time or 500th time, knowing exactly how they dine, ing human beings; they just need to adjust the roles. whether it is their average turn, where they spend, how many people they come in with, how many To roll out the new technology (after a messy launch times they’ve been out to eat. All of that information in New York last year), the company now employs makes us a better operator.” guides to help walk customers through the new system. While the kiosks will ultimately cut back on labor costs, Shake Shack execs say they still need to invest in FOH staff because, it turns out, people still want to talk to people.

As minimum wage increases continue across the country, large chains like McDonald’s, Panera and Wendy’s have also added more kiosk technology to cut back on labor. But embracing technology doesn’t always mean decreasing the workforce. In some cases, it’s helping front-of-house staff identify and understand their guests better.

Restaurant reservations system SevenRooms is work- ing on an Alexa skill that will enable restaurant op- erators to use voice commands during service. This will access information, like diner profiles and pref- erences, but also streamline table service, reminding staff to send extra ketchup to a table or replacing a dropped fork.

“By deploying SevenRooms’ technology, restaurant operators can make smarter decisions on marketing, guest relationship management, staffing, and more, and ultimately present dining guests with a more enjoyable experience,” said Paul Bernard, director of the Alexa Fund at Amazon in a statement.

SKIFT TABLE 18 TREND 8

For the uninitiated, blockchain, also known as Distrib- uted Ledger Technology (DLT), is, at its core, a shared, digital public record of activity. A “block”, or piece of Blockchain Brings digital information, is verified and added to a “chain”, creating a linearly and chronologically linked series. Editing a single block would, inherently, require ed- Transparency to iting all blocks that preceded it, which, based on the process through which each block is created, would be an incredibly challenging undertaking. And so Sourcing… the emerging technology of blockchain aims to re- cord and distribute digital information that’s difficult to edit, making it more secure and reliable by the If Restaurants Care very nature of its design.

This technology could be revolutionary in any realm By Ally Spier where traceability, documentation, and accountabil- ity are valued, which is any kind of business that re- cords information digitally, really. More secure data sharing could positively impact myriad contexts, in- cluding banking, health care, real estate, and supply SKIFT TAKE chains. And it’s the last of those that’s particularly rel- Blockchain has the potential to evant to restaurants. massively aid in identifying issues along a supply chain, but its real In the absence of standardized definitions for buzz- world applications are still being words like “sustainable,” “local,” or “ethical” that tested and validated, and large scale make a restaurant’s offerings appealing to cus- impacts still stand to be seen. tomers, radical transparency can be the thing that makes a brand successful. The ability to trace the It’s likely that you first heard the term “blockchain” exact origins of an ingredient between the time of in a context associated with cryptocurrency or some- its sourcing and the time of its consumption could, one using it as a buzzword to sound like they were conceivably, be achieved with a robust enough sys- being innovative. But the potential applications of tem, satisfying consumers’ desire for information. In this particular approach to documentation and re- addition to addressing consumer preferences, this cordkeeping aren’t limited to digital currency, nor improved life cycle tracking could also significantly should they be. impact food safety.

SKIFT TABLE 19 HEALTH AND SAFETY MADE EASIER

In 2018, the Centers for Disease Control issued 23 and industries as a whole. There’s understandably warnings for pathogens in items ranging from ro- still resistance to blockchain as, QSR explains, it’s maine to tahini. Once a possible multi-state out- associated with “highly volatile virtual currency” be- break is detected, the governmental organization cause it was initially launched alongside crypto. And conducts a public health investigation to determine if enough companies haven’t adopted it, then the the source of the outbreak. As a Bloomberg Intelli- idea of a shared network becomes less valuable. gence report elucidated, blockchain could help “dis- cover the source of a food-borne pathogen, be it a Not only does blockchain’s maximum potential effi- contaminated farm or a broken refrigeration unit.” cacy in managing food supply chains require wide- spread participation, it also requires honest and If detailed enough recordkeeping is an automatical- accurate participation. A decentralized approach to ly integrated aspect of the supply chain, the hope is data management yields greater reliability overall, that these pathogens could be more easily identified but there’s still room for human error. And, as The and the products containing them more quickly and New Food Economy explains, recording the move- effiiciently removed, helping to avoid the financial ments of tangible items that themselves can’t be costs associated with an outbreak, while also mini- digitized creates points of failure along the chain mizing lost trust in consumer brands. that don’t exist when dealing with digital assets.

It’s anticipated that blockchain could also call atten- There’s also the issue of interoperability and scalabil- tion to illegal practices like unregulated fishing or ity. Fast Company explains, “for legacy food compa- food fraud, where, Fast Company explains, “suppliers nies, supply chain transparency is a daunting task, might add something to food to lower their costs … complicated by a vast number of suppliers, plants, estimated to cost the industry $10 billion to $15 bil- distributors, and products. Different producers use lion a year.” different tagging systems and different sensors to track different things. Piecing together the details of Several companies have already embraced block- what comes from where and goes where from seed chain enabled “track and trace” tech with these to table” is admittedly challenging. The question of different goals in mind. HarvestMark, a “seed-to-ta- how systems developed by one firm might work with ble service,” is committed to building brand loyalty those of another remains to be seen. through transparency. FoodLogiQ, the choice for such clients as Whole Foods, Subway, Five Guys, and As reported by CB Insights, “companies will look to Chipotle, is another player committed to tracking see whether DLTs can help them make any efficiency food and gathering and analyzing data according- gains that give them an overall edge.” An interview ly. Startups like Clear Labs, Ancera, and SnapDNA, with QSR earlier this year perhaps summarizes it meanwhile, aim to detect viruses and bacteria on best: Juan Guerrero, senior VP and chief global sup- site, identifying pathogens “in just hours and acceler- ply chain officer for Bloomin’ Brands, explains, “For us, ating a process that typically takes weeks.” it’s really a question of data quality, low-cost interfac- es, and an application layer underneath that’s about As an emerging technology, though, blockchain fac- security more than anything else… The scope of it is es challenges if it’s to be viable across organizations really narrow… It’s very early.”

SKIFT TABLE 20 You see it happening at restaurants from high-end groups like Daniel Boulud’s Dinex Group to chains like Starbucks and Chipotle. Opening better chan-

TREND 9 nels of communication to senior leadership has led to conversations about, and solutions for, better train- ing programs, and adding unique benefit packages and perks. It’s as easy as making everyone feel like they’re integral to the team to drive higher morale, Restaurants no matter if he or she is a dishwasher, hostess, server or floor manager. Things like family meal is used to check in with employees and address new issues as Finally Create much as it is to feed staff before a shift.

Perks are being used in myriad ways. In New York, Healthier Work The Smith implemented a Bring A Friend to Work Day, which empowers staff to create a place they want to work by introducing new talent to the pool Cultures but also adds a monetary bonus for each hire. At Chi- potle, quarterly bonus programs have had “a mate- rial impact” on employee satisfaction, per a second By Lesley Balla quarter earnings call. Developing a great team is paramount providing a great experience, said newly CEO Brian Niccol.

REAL TRAINING

Because good workers are hard to find, the Phila- SKIFT TAKE delphia-based High Street Hospitality Group has developed mentoring programs for all levels at its After a rough 2018, the restaurant industry restaurants, including Fork Restaurant, A.Kitchen has made some progress toward better and High Street. Offering tools for career growth, employee treatment across the board. including mentoring, training and formal coaching programs, co-founder and CEO Ellen Lin said they try As the #metoo movement continues to churn waves to hire from within. But there’s also aid for new re- in the world of hospitality, operators are looking for cruits straight out of culinary school who may need new ways to improve the work culture for employees. life lessons, to boot. It’s no longer acceptable to say, “That’s just how restaurants are” in response to sexual harassment, “It’s great you make people know you are there to the lack of family leave, gender and racial equality, support them, but it’s not that easy,” Lin said. “So health benefits, and career growth. we’ve looked at all different programs. For example, one of our chefs believes if you’re bringing in young As the social movement picked up momentum, it CIA grads to a new city, you have to indoctrinate made everyone from employees to operators take a them into adult life and find that family support sys- good look at what was happening, how it was hap- tem, because it doesn’t really exist for them.” pening, and what needed to change. Operators large and small are finally investing in programs to change To keep good people on staff, more benefits are the status quo, making employee happiness and re- offered outside of healthcare. A job listing for Fork tention a high priority. After all, a happy staff means touted “an open environment where mutual respect a healthy business, which affects the bottom line for to all members is essential.” There’s also 401(k), trans- the better. portation benefits, and a women’s round table to

21 SKIFT TABLE help support careers of all staff (men included). At But as with any social movement, people want to see Starbucks, subsidized child care was added to its immediate and actionable change; if they don’t, they list of employee perks. For the Dinex Group, there’s suffer fatigue and lose interest. To keep the momen- been a push for mindfulness to create and maintain tum going, owners and operators, management and a healthy work culture. staff will hopefully continue communicating to find what works for their restaurant or group. New poli- “Being honest about the stress and triggers of the cies and laws from city and state governments can restaurant industry is a huge step in the right direc- only help. tion and the more we can do together as a commu- nity, the better we all, and the industry, will be,” Kris- “The reality is that we’re talking about change on a ten Diver, Dinex’s director of human resources, said. generational landscape, and that’s hard for people to “One of our main initiatives has been to give all of our wrap their heads around,” Murray said. “We’re encour- employees access to Whil, which they can person- aging women to gather and talk and keep talking to alize and use confidentially. Having something di- whittle away until we to that thing that will make the gestible and with options for mobile were key selling biggest impact. What will that be? I wish there was a points for us. Whether you have one minute or want silver bullet, and I think the needle is moving in the to create a full series of sessions, there are options to right direction. We need to really dig in because this fit the lifestyle of our team members.” is the long haul.”

Across the board, the fallout from the #metoo move- ment as well as racial tensions have made operators check themselves and their companies. In many ways, this has been a main driver for better communi- cation in the hospitality industry. Starbucks famously closed 8,000 stores in May for “sensitivity training” af- ter a Philadelphia store manager called the police on two black men waiting for a friend. Whether or not the company made back the millions in sales lost, or if the few hours of video conferencing with teams made an actual impact, is still yet to be seen. While the company did something, it’s still just the tip of the iceberg.

RATE OF CHANGE

Small and large-scale change won’t happen over- night. Women in Hospitality United was formed in an effort to give more people in the industry louder voices. According to its mission statement, the group — founded by Elizabeth Meltz, the director of envi- ronmental health for Eataly USA, Erin Fairbanks of GROUT Consulting, and Liz Murray of The Marlow Col- lective — wants to help build a stronger community in the hospitality industry; to help set new standards for equity, accountability and transparency; and find solutions to many of the problems that seemed rote.

SKIFT TABLE 22 TREND 10

In March, McKinsey published its “new rules of food Product and beverage innovation”, highlighting the impor- tance of continual refinement. To “always be in beta”, companies need to be culturally “obsessed” with Development consumers’ needs, taking advantage of the “immedi- ate feedback loop” e-commerce provides to “capital- Looks to ize on opportunities.” Restaurant-supporting startups and established brands alike have taken this to heart by utilizing Consumers’ micro-feedback, bits of information frequently col- lected throughout a customer’s interaction with a product, service, or experience that tend to be more Micro-Feedback specific and actionable than those captured on a macro level.

By Ally Spier Take OpenTable, a relative dinosaur in the reserva- tion platform space whose commitment to custom- er satisfaction has helped to prevent its extinction. The company first began offering online reservations 19 years ago exclusively in San Francisco; now, it works with 47,000 restaurants globally. It’s needed to evolve, not only as a means of keeping up with tech- nology, but to continue to compete with more re- cently established brands providing a similar service.

SKIFT TAKE Accordingly, user feedback is more important than There’s no doubt that competitive markets ever. The company redesigned its app earlier this require businesses to continually strive year in response to users seeking more immediate to meet consumer demands if they’re to reservations through the platform. Factoring in user remain relevant. Companies that provide research and both diner and employee feedback, restaurant-supporting software are no the interface now presents two choices: “book” for exception to this rule. Incorporating those wanting to eat sooner rather than later, and consumer feedback on a micro level has “discover” for those looking to browse. Each option proven to be a successful approach to takes the current time of day into account to suggest product development. the most appropriate meal.

23 SKIFT TABLE Along the same lines as the “discover” option, OpenT- They also introduced Resy surveys soon after, “to opti- able CEO Christa Quarles explained at the Skift mize and enhance the dining journey for customers.” Restaurants Forum in September that the company The reservation-integrated product “allows restau- is “tapping its user data to create lists for users based rants to completely customize private post-meal sur- on the habits of tastemakers” in an effort to become veys to gain insight into all aspects of their operation “more of a recommendation engine than it has been — from steps of service, to customer behavior, to seat- in the past, with a particular focus on appealing to ing and meal preferences. travelers.” Every survey is tied to a reservation, supplying the The platform also recently made it possible for din- restaurant with meaningful, useful and actionable ers to select their preferred seating option, wheth- insights from the customer.” And, to address a cus- er that’s at the bar or on the patio. And in October, tomers’ desire for instant gratification in a different OpenTable introduced GuestCenter, a means of way than OpenTable, Resy also allows diners to book streamlining operations and increasing bookings tables directly through both participating restau- across restaurant groups to make it easier to offer al- rants’ Instagram profiles, and Google. ternatives when the exact time and location original- ly requested by a guest aren’t available. Consumer micro-feedback has influenced third-par- ty delivery services, too. To address the desires of din- ers who wanted a no-fee option, DoorDash began FAMILIARITY VIA CUSTOMIZATION offering in-person order pickup in August. Uber Eats Resy launched in New York in 2014, and hit the modified its delivery fees that same month, replac- ground running. Its network isn’t as large as OpenT- ing the previously flat fee with a pricing tool that cal- able’s (yet, anyway), as it currently works with about culates costs based on customers’ proximity to the 10,000 restaurants, but it understand what its users restaurants they order from. want just as well, if not better. In April of this year, Resy announced its integration with Upserve, an all- And when Grubhub closed its acquisition of LevelUp in-one restaurant management platform that pro- in September, Grubhub founder and CEO Matt Ma- vides “granular insights into guest preferences — from loney explained it was with the intention of helping favorite dishes and dining companions to frequency “restaurants actively engage with their diners,” surely of booking — to make everyone feel like a regular,” as recognizing the value in doing so. When customers’ explained on the Resy blog. needs are part of product development, all associat- ed parties have the potential to better achieve de- sired outcomes.

SKIFT TABLE 24 New York City September 23, 2019

Skift Restaurants Forum is a one-day event devoted to the key trends and disruptions shaping the business of dining out. It features the nation’s top restaurateurs, key executives, and essential thought-leaders who both shape and understand the consumer behaviors at the forefront of change in the modern restaurant industry.

For more information visit table.skift.com/restaurants-forum/

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