An industry that was historically slow and resistant to embrace technology has technology accelerated in the past couple of years . . . .

A New Restaurant Playbook for Post-COVID Times

To say that the hospitality industry has shifted over the past two years is an understatement. And as we contemplate this “new normal,” it’s important for hospitality operators to understand that their playbook essentials need to shift if they want to remain successful.

In an industry that was historically slow and resistant to embrace technology, QR codes became the poster child of COVID operations, and customers are now used to being able to pull menus on their phones, and even order and pay on their own. This seismic shift transformed operations and service models across the industry (and even beyond the hospitality industry). And technology is not going anywhere—as customers return to dining rooms, they want to remain heavily involved in the ordering and payment experience. Staffing challenges remain, and operators are still trying to survive after two challenging years that will leave a mark on the industry (and their bottom line) forever. That’s why it’s important to have a new playbook.

Consolidation in the Food Tech Industry

A wave of consolidation is coming to the food technology industry, and as much as operators might not feel concerned, it is bound to have a direct impact on their business. As I recently mentioned to PYMNTS, the industry has too many players and too many piecemeal solutions. Nobody wants to run a separate technology solution for every channel— operators tend to seek out the best tools to run dine-in operations, takeout/curbside pickup, and delivery (sometimes through a third party). We’ll see the big players continue to aggregate all these features, and limit the ability of operators to select the right technology solutions for them.

Choosing Channel Partners Correctly

While the selection of channel partners is bound to become more limited, operators will have to pay close attention to the pricing models and payment structures they sign up for in order to ensure that their restaurant technology solution can bring a strong return on investment. This means taking a closer look at standard processing rates (card present and card not present rates), set up and maintenance fees, monthly contract costs, hardware investments, etc. Operators should be ready to have tough conversations with their technology providers and discuss payment and pricing head-on, with a full understanding of how they affect their bottom line. The industry-wide lack of transparency around pricing is sadly not going away anytime soon.

Addressing Labor Challenges

A recent study by the National Restaurant Association found that seven out of 10 restaurant operators reported having issues with staffing. While many have resorted to increasing salaries and added benefits, it has become clear that labor will remain a massive challenge for the foreseeable future. Here is the silver lining though: a recent study found that 70 percent of workers who changed jobs during the Great Resignation find that their new positions aren’t what they expected. Some are even considering asking for their former job back. As the labor market continues to tighten, operators should be prepared to have conversations with staff – former, current, new, and future staff – and highlight how technology has transformed operations and service models, making their jobs much easier and more rewarding.

Technology Enhances The Guest Experience

Before the pandemic there was a common misconception among waitstaff that technology is a detriment to the guest experience. Many servers still believe that, by using contactless ordering and payment methods, guests don’t get as much attention as when a server takes their orders. In reality, technology is what allows the waitstaff to focus on the most important aspect of the guest experience: making sure customers have the best experience, that they leave restaurants happy and want to return. By automating the easy, transactional tasks that bog down waiters, they have more time to assist guests with menu recommendations, check on their meals, and provide the true attention they deserve. Empowering guests to take control of their orders also decreases the room for error—this leads to higher guest satisfaction, usually a higher spending and higher tips for the waitstaff.

Technology Makes Jobs Better

Another misconception about technology is that it will eventually replace all jobs within a restaurant or hospitality venue. Over the past two years, advancements in technology have transformed the way operators staff their venue, which ultimately impacts the work environment. Those returning to a position within the restaurant industry will find that technology is making their jobs much easier and more rewarding.

They’ll find that, by leaning into technology, their jobs are more fulfilling, more guest-centric, and full of independence. Technology provides both front-of-house and back-of-house staff with more autonomy—it decentralizes control from the kitchen and onto each role within the restaurant—staffers are emboldened to take initiative, resolve any immediate guest incident, and do everything they can to exceed guests’ expectations. The staff ends up having the freedom to focus on guest interactions, make quick decisions to improve the guest experience, and continuously grow. For operators, it means a renewed commitment to staff training and giving everyone a chance to hone new skills and evolve them quickly. Everyone – operators and staff—benefits from a more efficient, safer, and more mindful work environment.

As the hospitality industry continues to change, operators will need to keep leaning into technology, and constantly update their playbook to find continuous success. – Source: FSR.

Tim McLaughlin has served as Co-Founder and CEO of restaurant commerce platform GoTab, Inc. since 2016. Prior to GoTab, Tim led Siteworx, Inc., a mid-sized digital experience agency with clients including PayPal, Goldman Sachs, VeriSign, Bain & Co., and Thermo Fisher Scientific, to a successful PE exit in 2013. He also co-founded and operated Caboose Brewing Co., an upscale brewery and farm-to-table concept based in Fairfax, Virginia, where most of GoTab’s features were incubated.

Just in time for Mother’s Day, TGI Fridays is introducing new sweet treats and sips to help guests celebrate . . . .

TGI Fridays Celebrate Mother’s Day with New Treats and Beverages

Sweet Treats

Moms take on many different roles, and she deserves a dessert as versatile as she is – like TGI Fridays’ new Mother of All Desserts. The dessert includes a full slice of Cinnabon Caramel Cheesecake, a house-made giant OREO Cookie topped with Cookies & Creams ice creams and sprinkles, and the ultimate side sundae with vanilla bean ice cream, diced chocolate brownie pieces, glazed pecans, chocolate sauce, caramel sauce, whipped cream, and fresh strawberries.

For moms that love a classic combo, the new Peanut Butter Fudge Obsession is a mouthwatering mix of fan-favorite peanut butter and chocolate flavors. The dessert layers peanut butter fudge and OREO Cookie crust and is topped with M&M’s, peanuts, chocolate shards, vanilla bean ice cream, chocolate sauce drizzle, and OREO Cookie crumbs.

Signature Cocktails

For anyone looking to give their mom a special toast, TGI Fridays is also introducing two new cocktails. The new Fri-Yay combines Rum Haven Coconut Rum, SKYY Vodka, Monin Classic Watermelon, fresh lime juice, and club soda to create a celebration in a glass.

The new Ten to One Lavender Lemonade features Ten to One White Rum, Lemonade, Monin Lavender Lemon, club soda, and Butterfly Pea Flower to create a lavender-colored cocktail that’s almost as beautiful as a mom. – Source: FSR.

The Casual-Dining chain earned a Q1 record $298.7 million in sales . . . .

BJ’s Wants to Become a $2 Billion Restaurant Chain

BJ’s Restaurants CEO Greg Levin feels nothing but encouragement as the calendar glides through April, and for good reason.

After seeing two-year same-store sales sink 3.3 percent in December and 6.4 percent in January, comps returned to positive at 1.2 percent in March and mid-single-digit growth in April. Restaurants are averaging $118,000 in weekly sales, a 1.2 percent increase compared to 2019. It’s a far cry from the $96,000 stores were pulling in at the start of 2022.

Even with Omicron, BJ’s earned a Q4 record $291.3 million in total sales, and the casual-dining chain followed up with a Q1 record $298.7 million.

For Levin, the bounce back paints a bright future, one where BJ’s expands to at least 425 restaurants nationwide and more than $2 billion in sales. For reference, the restaurant sits at 213 stores and earned $1.1 billion in sales in 2021.

“And look, between all of us on the call, we hope to get to $2 billion in sales with less than 425 restaurants,” Levin said during the chain’s Q1 earnings call. “That’s our goal. We’re not just wanting to get there by a double of the BJ’s restaurants. We want to grow that weekly sales average up.”

“I think we have a good opportunity in off-premises,” he added. “And I think we still have a good opportunity in the dining room.”

To Levin’s point, in 2021, average weekly off-premises sales lifted to more than $20,000 per restaurant—doubling pre-COVID levels—and it remains just as strong in April. To differentiate its takeout/delivery experience, BJ’s will soon introduce an advanced order tracker with real-time progress information to complement its text message alerts. Additionally, the brand is improving its printed order labels to increase accuracy.

Dine-in traffic is still down 10-20 percent versus 2019, proving BJ’s has the meaningful capacity it can add to already accelerating comps.

That starts with bettering the labor situation within restaurants, and BJ’s did so by reducing the number of understaffed locations. The numbers show how much of a difference that makes; in the first quarter, restaurants with pre-pandemic staffing levels saw 2.2 percent growth in comp sales against 2019, which was 10 percentage points better than those still rebuilding their teams.

“Your staffing levels might feel pretty good when we look at them on a piece of paper, but we still end up with callouts and other issues, just whether it’s COVID or something else that plays into it,” Levin said. “That will impact sales for that day or for a couple of days. So, staffing is not where it was in ‘17, ‘18 or ‘19 from that perspective. But, if I had to think about looking back on the last year-plus, 15 months or so, we’re in a much healthier place today than where we’ve been over that time frame.”

BJ’s is piloting remodels that add three large booths for extra seating capacity and new design elements that bring more entertainment value, such as bigger TVs.

Lunch and late-night, the most impacted dayparts, weighed on three-year comps by more than 4 percentage points in the first quarter. However, both times of day are showing signs of growth in early Q2. Lunch has returned to flat versus 2019, thanks to a new value menu that’s bringing in more weekday traffic. Late-night is trending positively in April because hours of operation are now only 30 minutes less per day than pre-COVID.

Levin also sees opportunities with technology, like mobile pay and QR codes, which have appeared “fairly sticky” in restaurants. They’re not at the same levels as the peak of COVID, but the simple availability of those innovations quickens transactions for guests and table turns for employees.

“I don’t see any reason why we wouldn’t get our dining room back,” Levin said. “The trend toward historical dining patterns seems to be playing out. And I know everybody wanted it to happen yesterday and so forth, but as we look at our business and people get more comfortable going out, we, all of a sudden, see late-night now in a positive comparable restaurant perspective. I don’t believe there is any issues there.”

BJ’s is also piloting remodels that add three large booths for extra seating capacity and new design elements that bring more entertainment value, such as bigger TVs. Levin said early results are “encouraging” and provide a “very attractive return.”

“There’s a model of our restaurants that’s about somewhere in the quarter to a third of our restaurants that had some unused space that we can rebuild and turn into three large booths,” CFO Tom Houdek said. “And when we look at where we have the most capacity constraints or we run waits at dinner time, the extra sales that we’re driving, again, early data here, but we’re seeing up to $1,000 or $2,000 more of sales per week.”

In terms of development, BJ’s hopes to debut as many as eight restaurants in 2022. The chain opened in Charlotte, North Carolina, in March, and held another opening in San Antonio, Texas, earlier this week. Five more stores are under construction, and the company plans to break ground on a sixth unit by the end of April.

The near-term goal is to reach 5-7 percent in annual unit growth. Chief Development Officer Greg Lynds said B sites are increasingly available with landlords’ offerings more flexibility and tenant improvement allowances. Opportunities are rising for second-generation builds inside former restaurants and retailers, as well.

“With only 213 restaurants today in 29 states, you think about Olive Garden with 800-plus, Texas Roadhouse with 600-plus, we have plenty of room within our 29 states or adjacent states to really keep our expansion within our existing markets and where we can leverage our supply chain, our supervision, our brand awareness,” Lynds said. “And that’s our goal certainly for the next two years. But we’re excited about the opportunity to not only expand in our existing markets but also take on a few new markets as we grow in the coming years.”

Food cost inflation was in the high-single digits in Q1 year-over-year, and in the low-single digits versus Q4. Labor costs, at 38.9 percent of sales, were unfavorable to 2021 and 2019. To mitigate this impact, BJ’s took 1.8 percent pricing in February and plans to take an additional 1.4 percent in June.  – Source: FSR.

Executive Chef Michael Gulotta To Open New Italian Concept in New Orleans

Old Metairie’s newest restaurant will be built upon old experiences passed down for generations. TANA is the latest concept from award-winning Executive Chef Michael Gulotta, who already oversees Mopho and Maypop in the New Orleans area. Gulotta is teaming up with longtime friend and business partner Jeff Bybee to introduce a dining experience on Metairie Road akin to something one may find in bustling major cities.

“TANA will fill a void here,” Gulotta says. “This concept is something we’ve wanted to try for a long time.”

TANA will encompass more than 5,000 square feet and feature an upscale Italian restaurant, a vibrant lounge with a 16-seat bar, a premium level of service, and delectable Sicilian dishes drawn from recipes Gulotta’s great-grandmother, Gaetana (nicknamed Tana), made from family-famous years ago.

“Her dishes were amazing,” Gulotta says. “When a passion for food mixes with generations-old Sicilian recipes, the result is an experience you will tell your friends about.”

Gulotta, who has appeared several times on NBC’s Today show, has been named one of the Top 30 Chefs to Watch in the nation by Plate Magazine, a New Orleans Rising Star by StarChefs, a Best New Chef by Food & Wine magazine, and Chef of the Year by New Orleans Magazine. He was a finalist for The James Beard Awards Best Chef South in 2020.

Jeff Bybee is a New Orleans native who, like Gulotta, attended Brother Martin High School and has worked with him for the past 20 years. He has been the operating partner at Mopho and Maypop for the past eight years and also spent time at Tony Angelo’s and Irene’s.

“We are very excited to bring this concept to Old Metairie,” Bybee says. “TANA will be one of the better restaurants in this area and similar to something you’d find in Miami, Chicago or New York, but with Old Metairie ambiance. It will truly be a dining experience to remember.”

Other features will include a rolling pasta station visible from Metairie Road, a glass dining area that allows guests to peer into the kitchen, and seating for 30 on the outdoor patio.

TANA ownership includes Gulotta and Bybee, as well as businessmen Gabe Corchiani and Christopher Keene. Construction is underway and the restaurant is slated to open at 2929 Metairie Road in the first quarter of 2023. – Source: FSR.

Starbucks Eyes Changes to Mobile App, Drive-Thrus, Taps ex-McDonald’s Exec

Starbucks has hired a former McDonald’s executive to oversee technology as returning CEO Howard Schultz explores changes to the coffee chain’s drive-thru, mobile order-and-pay, and other systems.

Deb Hall Lefevre will become Starbucks’ chief technology officer on May 2, according to a spokesperson. She takes over for Hans Melotte, who served as interim CTO for five months.

Changes are likely to include increasing personalization in the company’s mobile app for customers, as well as improvements to systems for employee training, scheduling and equipment maintenance to free up baristas to spend more time with customers, a Starbucks spokesperson said, adding Lefevre was not available to comment.

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Hiring a CTO with experience in restaurants and retail will ensure that digital transactions run smoothly, which became particularly important during the pandemic as more customers flocked to mobile apps and new payment systems, said Chas Hermann, a consultant and former vice president of marketing at Starbucks.

Schultz “wants to have someone that can really run the engine in the car,” Hermann said. “But the driver in the seat will be Howard.”

As he returns to the CEO role for the third time, Schultz is plotting a broader corporate overhaul that also includes improved employee benefits aimed at deflating a ballooning union organizing effort at hundreds of cafes, which has been driven in part by barista burnout from a deluge of mobile orders.

Schultz already freed up potentially billions of dollars for investments by suspending share buybacks. When Starbucks reports earnings on May 3, investors will look to see if the company cuts its guidance and if price hikes have offset rising costs. The coffee chain missed sales and profit estimates last quarter and its stock has since fallen another 20% and is down nearly 33% for the year.

“We have to reimagine the customer experience… We have to reimagine mobile-order-and-pay, the drive-thru,” Schultz said in an April 11 video message to store managers and seen by Reuters.

At McDonald’s Corp, Lefevre oversaw all aspects of technology for its roughly 14,000 U.S. restaurants – helping launch its first app, introducing kiosks where customers place their own orders, launching digital menu boards – before moving in 2017 to Alimentation Couche-Tard Inc, the global operator of Circle K and other convenience stores. – Source: Reuters 2022.

At this stage in the labor crisis, what is the best way to hire right-fitting candidates?….

Restaurant Recruitment Tips from McDonald’s Hiring Partner. A key component that hourly employees value is flexibility.

One of the most time-worn concepts in restaurants is the notion you hire for skill rather than experience. After all, the industry’s classic position as an entry-to-the-workforce employer lends itself to blank resumes. Wesley Suitt, head of client success—Americas at Harver, a volume hiring solution for hourly roles that work with McDonald’s and Chili’s, believes brands basing their recruitment process on CVs are falling short. That would have been true pre-COVID, he adds, but now you’re also grappling with a climate where 6 percent of the hospitality industry’s total workforce quit in February—more than any other sector.

Solving this hurdle isn’t as elementary as hiring for personality. Suitt says traits such as communication, collaboration, social skills, or availability/flexibility, can right-fit candidates into restaurant roles if operators know how to identify them. There are certain types of assessments, like situational judgment tests or personality questionnaires, which Suitt believes should be included in the application process to assess target skills as restaurants try to turn the labor corner.

Suitt chatted with QSR about recruitment best practices, what interviewers are getting wrong, and what hourly employees are looking for heading into the summer season.

Firstly, tell us about your company and what you all do, as well as some of the restaurants you’ve helped.

Harver is a volume hiring solution that helps companies around the world hire better, faster, and in a fair manner. Our goal is to help clients digitally transform their candidate selection process into an enhanced and seamless experience for recruiters, hiring managers, and candidates. Some restaurants that we’ve worked with include McDonald’s, Chili’s, and Burger King.

I’ve heard the notion, focus on skills, not experience, often from restaurants over the years, especially lately. But how do you actually identify that as a recruiter or manager?

First, you determine what kind of skills you’re looking for in a candidate based on the open position that you’re working to fill. Then, recruiters can identify if a candidate has these skills through two main assessments: Situational judgment tests (SJTs) and personality tests. With SJTs, applicants are presented with a series of scenarios that are specific to the open role and asked to select what the best and worst response would be in that scenario. This test offers the recruiter a look into how the candidate would react in real-world situations. Personality questionnaires show if a candidate is a right fit for the company’s culture and highlights their transferable skills. Technology is available to automate this assessment process to still ensure a fast experience for both candidates and recruiters.

What are interviewers in the restaurant space generally getting wrong?

Recruiters and interviewers in the restaurant space that still have outdated application processes in place are getting it wrong since it’s a candidate’s market right now. They need to focus on the candidate’s experience, remove any obstacles and ensure that it’s unburdened and informative for the candidate. Also, interviewers that are not upfront and transparent about the requirements of the open position will likely experience higher turnover rates, which can result in lost time and money.

What would you say, employees, namely hourly workers, are actually looking for from restaurants at this stage?

A key component that hourly employees value is flexibility, especially when companies provide their staff with the autonomy to adjust schedules themselves by utilizing on-demand scheduling solutions. Others include a solid work environment and culture, growth opportunities within the company, and additional benefits like an increase in wage or stay bonuses.

Talk about the job listing process itself. What are some tips and techniques for brands to get the right message across?

Standard job descriptions are no longer a viable way to attract talent. Candidates want to know more than just a quick blurb about the job along with the responsibilities and requirements. Candidates want to know about the culture of the organization, and growth opportunities, and get a sense of what it is really like working for that company. This is no doubt harder to do, but the companies that are attracting top talent have made this type of messaging a priority in job listings.

What is the kind of skills restaurants should be looking for in employees? And how do you identify them?

Some skills that are beneficial for restaurant workers to have include communication skills, collaboration, social skills, adaptability, initiative, customer orientation and result orientation. These skills are at the core of customer service roles because these roles involve constant communication, working in teams, engaging with customers, rapid change in daily tasks, and the need to enhance the customer experience.

Is retention as much about making the job better inside a restaurant today as it is offering better perks?

Yes. While companies that invest in their workers with additional benefits and perks should see more loyal and long-term staff, creating a great work environment is also key to increasing loyalty among staff. For example, if increased benefits aren’t an option, companies should focus more energy in building a close team and relationship with staff.

Broadly, where do you think this labor challenge goes from here? It seems like workers are returning, but the industry might not ever return to previous levels.

Even though some workers have returned, some workers have left the hospitality industry altogether and moved to either gig work or more reliable jobs like office positions, education, and other industries such as logistics jobs. However, the restaurant industry is a staple industry across the world and is not only an amazing part time or “for now” job, but also provides long-term careers. I believe the current labor market has brought to light some systemic problems that the industry is now addressing and in the long run, be stronger for it!  — Source: QSR.

Employee engagement, employee experience . . . .

Designing and Sustaining a Healthy Workplace Culture With Angela R. Howard

Organizations rely on the strength of their culture to attract and retain top talent. But if your culture isn’t healthy, you could be doing more damage than good to your bottom line.

You can’t separate culture from the worst actions taken by your company. “Culture becomes decayed when you have a mismatch between your words and your actions,” says Angela R. Howard, organizational culture strategist at Angela R. Howard Consulting. “It’s easier to decay culture than to build it.”

Behaviors that don’t align with your culture will erode it. But if you’re intentional and deliberate in how you design culture, you can flip the script. “Healthy culture is just healthy behaviors that align back to your values,” Howard says, “and what you want your company to stand for.”

Here’s how to build and sustain a healthy culture at your organization.

Assess Cultural Maturity

Most of us think of culture as requiring the participation of groups of people, but an intentional culture starts with one person: the founder. “When you start organizing around something — a mission, a vision — you’re starting to build culture,” Howard says. Most organizations don’t start addressing culture until they begin adding people, and that can be a mistake.

By that point, culture is already in place regardless of whether anyone tried to curate it. This can lead to company leaders giving up on culture as a strategic driver of the business, and just letting it happen because “that’s just how it is.”

But your culture doesn’t have to be accidental: You can be intentional about building and sustaining a culture you’re proud of and that represents your business.

It starts with organizational identity. “What mark are you trying to leave on the world?” Howard says. “What’s that ripple effect you want to achieve?” Every company should regularly check on those foundational elements (mission, vision, and values) and assess where they are against where they thought they’d be.

Concentrate on Leadership

Leaders often work in a silo or as their own layer of the company. They don’t necessarily think about themselves as stewards of the culture, and that’s a huge missed opportunity for designing and sustaining healthy workplace culture.

Your leaders need to completely embrace and align on what you’re trying to achieve. “Explain to them their responsibilities as a leader,” Howard says. “HR isn’t responsible for preserving culture: you are.” Create the strongest leadership team possible that’s aligned with what you want to achieve and committed to getting there.

Managers can be your biggest champions or the greatest risk to your efforts. The goal is to convert leaders into change management champions as the organization works through its cultural transformation. All too often, the business doesn’t provide change agents with talking points or resources, leading to garbled messaging that can undermine your culture.

“Make sure every leader has talking points for every big communication,” Howard says, “and that leaders feel equipped to talk to their people.”

Talk to Employees — and Actually Listen

There’s often a disconnect between what the leadership team expects and what employees are actually experiencing, and that can create significant gaps in your cultural design. “Your culture lives within your employees, too,” Howard says. Ask them how they perceive the culture if you want a better understanding of how they’re interacting with and living culture on a daily basis.

Asking employees for their thoughts can be refreshing, both for your culture and for them. Employers are always the driving force. Do employees feel involved in the business and culture, or are they just a lever for getting results? “Everybody wants to feel like they’re a part of something,” Howard says. How are you making them feel like a part of the conversation?

Define different actions, tactics, and strategies to move the needle, especially in bringing culture into policies and programs. Culture should be part of performance reviews, competency models, and employee development programs. Build out your values into real-life actions and behaviors so that everyone understands what living the culture looks like.

When goal-setting, getting input from employees can inform the business strategy because they’re the ones doing most of the work. “It’s more like a two-way partnership,” Howard says. “That’s what you should be aiming for.”

Based on employee input, fill the gaps between your present-day culture and what you thought it was — or want it to be. There will be things that employees ask for that you may not be able to do (you can’t compromise on your mission, vision, and values, for example). But even in those cases, Howard says, it’s important to be transparent with employees and to explain your decisions.

A Road Map With No Final Destination

Culture is ongoing: It’s either reinforced or eroded by the actions of each employee, every day. You’ll never really arrive at the “end” of the process, and that makes ownership of cultural outcomes even more important.

Company leaders really need to be the driver of culture. They have to model it, monitor it, and engage employees in preserving it.

External consultants, such as Howard, can help identify where you want to go, what you have now, and how to fill the gaps. But consultants can’t take you all the way. “My goal is to make this sustainable,” Howard says. “Building culture is really intentional and iterative over time.” – Source: Betterworks.

Same-store sales for the casual-dining brand are up 20.7% for the first quarter of 2022 . . . .

Cheesecake Factory Staffing Levels Rise Above Pre-Pandemic Numbers Despite Industry-Wide Labor Shortage

The Cheesecake Factory reported that staffing is no longer a problem for the casual-dining chain as it’s now above pre-pandemic staff levels despite a labor crisis in the restaurant industry.

“We now have approximately 1% more staff members than we did just prior to the pandemic,” said CEO and chairman David Overton. They also have 3% more staff than at the end of 2021.

Applicants-to-needs ratios are at the highest levels since the pandemic began for several positions, including cooks, prep cooks, and servers, according to president David M. Gordon.

But it hasn’t been all easy going for the Calabasas Hills, Calif.-based brand. Staffing levels may be rising, but costs are rising as well.

“The labor market also continues to be dynamic with a lot of moving parts. Inclusive of known minimum wage increases, we’re now modeling net total labor inflation of about 6%,” said chief financial officer and executive vice president Matthew Eliot Clark. Labor rose 70 basis points to 37.3% as higher wage rates more than offset sales leverage, with full-year wage inflation now expected at 6% versus 5% previously.

“I recognize that the environment is dynamic, and we continue to face substantial challenges with high commodity inflation, a tight labor market, and further supply chain disruptions,” said Overton.

Gordon said: “I can’t predict the future. But we are going to stay competitive. And we need to continue to not just retain those we have but attract new staff members as sales continue to grow.”

That competition is also spurred by opening dining rooms, which are currently about 85% open across the country, lagging in high tourist areas. Off-premises represented 28% of the same-store sales for the brand in the first quarter ending March 29, holding steady for the last four quarters.

“Despite these challenges, many of which are out of our control, we continue to ramp up unit development towards our 7% annual growth goal,” said Overton.

Same-store sales were up 20.7% in the first quarter at Cheesecake Factory and 32% at North Italia.

Cheesecake Factory expects to open 15 to 16 new restaurants in 2022, including four to five North Italias, and seven Fox Restaurant Concept restaurants. Cheesecake Factory is also expected to open internationally under a licensing agreement.

As of the end of the first quarter, there were 208 Cheesecake Factory units, 29 North Italia units, and 31 other Fox Restaurant Concepts. – Source: NRM.

The pasta chain, where half of all customers order a dish with chicken, is adding a temporary $1 surcharge to those items because of soaring protein costs . . . .

Chicken Prices Are causing big headaches for Noodles and Company

Noodles & Company is adding a temporary $1 surcharge to all dishes featuring chicken to fight against soaring costs for the protein, the chain said this week.

More than half of all customers at the pasta chain order chicken dishes and Noodles has watched its chicken costs climb 70% during the first quarter, compared to the year before. The price of chicken continues to increase, and Noodles said it expects to pay 80% more for the protein during the second quarter than it did in 2021. Noodles spend more money on chicken than any other food item, though it makes up about 13% of the chain’s total food basket.

“We view this temporary surcharge as one-time and fairly short-lived as the market is expected to normalize reasonably soon,” CFO Carl Lukach told analysts Wednesday, according to a transcript from financial services site Sentieo.

In addition to the $1 surcharge, Noodles said it plans to raise prices on its “core items” by 3.5% next week. Those combined increases mean customers will be paying about 10% more at the chain now than they did a year ago.

Noodles added the chicken surcharge a week ago and, so far, has not seen “any major shift into any other protein,” Lukach said.

“We anticipate that the back half of the year will include meaningful relief from these unprecedented cost levels as we have already seen green shoots in the non-breast chicken meat market in addition to pricing benefits from normal seasonality during the summer,” Lukach said.

Noodles CEO Dave Boennighausen said he doesn’t expect cost pressures to disappear anytime soon.

“What we’ve seen in the last few months is that inflation as a whole is not necessarily going to be transitory,” Boennighausen said. “But we are seeing stabilization across nearly every aspect of the basket … It’s stabilizing, but it’s not necessarily going to be coming down.”

In addition to soaring chicken costs, Noodles was hit with some COVID-related restaurant closures during the quarter that ended March 29. Nevertheless, total revenue increased 2.7% to $112.6 million and same-store sales grew 6.4% systemwide.

Noodles reported average unit volumes for the quarter of $1.25 million, up 6.8% over a year ago.

Restaurant margins were 9.7%, down from 13.6% in 2021, due to temporary restaurant closures and a 300 basis point increase in the cost of goods sold due to inflation.

Noodles’ stock price soared about 15% during mid-day trading Thursday on the solid earnings news. Source: Restaurant Business.

The brand continues to pilot a four-day workweek . . . .

How Shake Shack is Becoming an Employer of Choice

In February, Shake Shack CEO Randy Garutti told analysts that he wants the company to be better at hiring workers that “want to be with us, stay with us, and develop for the long-term.”

To attract employees of that caliber, the fast-casual bolstered multiple benefits in 2021, according to the chain’s annual sustainability and workplace report.

This includes increasing paid leave to 12 weeks for birth parents, raising bonding time to four weeks for non-birth parents, extending parental leave benefits to shift managers, and implementing company-wide eligibility for the employee assistance program, which features free counseling services and housing assistance. Shake Shack also continued to pilot its four-day workweek schedule, an initiative that began prior to the pandemic.

Pay has shifted, as well. Last year the burger concept increased wages by $9 million, including more than half of employees receiving raises and new hires getting sign-on bonuses starting in the second quarter. And for workers needing financial assistance, Shake Shack’s HUG (Help Us Give) Fund distributed more than $84,000 in grants to team members, the highest in history.

“As we move into the next chapter of the Shake Shack story, we remain committed to investing in what makes us so unique: our amazing teams, premium ingredients, innovative digital offerings, incredible spaces, and an uplifting guest experience,” Garutti said in the report.

As the company grows its workforce, leadership is making an effort to prioritize women and minorities. By 2025, the chain hopes to achieve gender parity across all leadership roles and wants 50 percent of its Shack leadership (general manager, senior general manager, area director, and regional VP of operations) and 30 percent of its Home Office leadership (director, senior director, VP, SVP, and executive) to be filled by people of color.

In 2021, Shake Shack increased the representation of people of color in Shack leadership by 4 percent and women by nearly 7 percent.

Here’s how’s diversity looked in 2021:

Overall workforce

Women: 53 percent

People of Color: 77 percent

Shack management

Women: 51 percent

People of Color: 70 percent

Shack leadership

Women: 30 percent

People of Color: 38 percent

Home Office leadership

Women: 43 percent

People of Color: 15 percent

Throughout 2021, Shake Shack created 1,522 new jobs (79 percent people of color, 54 percent women) and internally promoted more than 2,800 workers (73 percent people of color, 56 percent women, almost doubling in 2020).

The fast-casual piloted a development program in partnership with Bonfire, a company focused on helping women create systemic change in the workplace. Shake Shack said the educational approach creates “a powerful collective dynamic where women find a sense of belonging, a network for accountability, and a community for support and growth.”

In terms of diversity, equity, and inclusion, the brand launched an employee resource group for the Asian American and Pacific Islander communities and formulated two learning modules as part of its DEI curriculum.

“With where we plan to be in five years, growing and cultivating a diverse leadership team requires us to identify our gaps and be intentional with our talent strategies,” Idris Stover, director of DEI, said in the report.

Shake Shack’s report also listed key environmental milestones, including transitioning to-go bags to 100 percent recycled fiber and launching a pilot of plastic-free and carbon-negative straws and cutlery in several markets. Additionally, the chain installed solar panels at five locations, saving the equivalent of 1,427 gallons of gasoline or 29 barrels of crude oil per year, and 30 percent of new stores in 2021 saw a 20 percent reduction in kitchen exhaust system energy usage. – Source: QSR.

If the fast-casual is going to get to 7,000 locations, it’s going to have to start within. On average for Chipotle, six employees were promoted per restaurant in 2021 for a total of nearly 19,000 . . . .

Chipotle’s Focus Turns to Career Advancement for Workers

For the first time in nearly four years, Chipotle gathered GMs and field leaders at its “All Managers Conference” in Las Vegas. Roughly 3,200 people attended. At one point, executives asked employees who had been promoted over that stretch to stand up. “And you know what?” CEO Brian Niccol told investors Tuesday. “Almost every person in the room was standing up.”

This, as much as any metric, offers a glimpse into Chipotle’s blueprint as the sector’s labor challenge marches on. Last Friday, the fast casual’s annual sustainability report showed turnover rates skyrocketing across the board—but especially at the hourly level (crew, kitchen manager, service manager), where figures surged to 194 percent from 141 percent the prior year.

Chipotle in May footed the bill of higher wages, making the call to boost average rates to $15 per hour by the end of June. The upgraded scale resulted in hourly employees earning day one pay of $11–$18. Additionally, Chipotle outlined a path to “Restaurateur,” a six-figure GM position hourly workers can reach within three-and-half years. Chipotle then rolled a $200 employee referral bonus for crew members and a $750 one for apprentices and GMs.

All told, Niccol said, Chipotle’s starting rate, competitive as it appears, isn’t where progress will entirely be made. That’s become table-stakes sector-wide, with wages at restaurants running 11 percent higher, year-over-year, in March, per the BLS. “What people get really excited about is where that starting wage can take them,” he said. “And our company can take them really far and also really quick.”

Chipotle’s benefits suite, namely its debt-free degree program, is “great,” Niccol added, and something that will continue to separate the chain. But again, it’s not the deal cracker. Some 6 percent of the hospitality industry’s total workforce quit in February—more than any other field. Getting employees not to leave has become as pressing as getting them to show up. “When I’ve had the opportunity to get out in the field and talk to people, what they’re really excited about is the fact that they’re a part of a company that’s committed to its purpose and committed to growth,” Niccol said.

Despite mostly being “back to business as usual,” he said, with Omicron-triggered turnover exclusions and higher training costs sliding back, it’s a conversation Chipotle continues to have.

Niccol was asked Tuesday what’s next after “Chippy,” the company’s autonomous kitchen assistant from Miso Robotics it’s preparing to test at a Southern California location.

The answer, Niccol responded, was Chipotle asked employees what other tasks they’d like to see automated going forward to improve their jobs. “Because we know if the employee experience improves, we’ll have better retention and also we’ll have better execution for our customers,” Niccol said.

“Obviously, Chippy is our first attempt,” Niccol said, expanding on the potential of automation. “And we’ve worked with a lot of our employees to identify what are the tasks that they would love to see us bring automation to or AI so that hopefully the role can become less complicated. And then I think there are just other places in the back of the restaurant where we have the ability to automate, whether it’s on the digital make-line or other tasks.”

In 2021, alongside the lofty turnover rates, 90 percent of restaurant management roles at Chipotle came from internal promotions. On average, six employees were promoted per restaurant for a total of nearly 19,000. The company’s internal promotion rate was 77 percent for apprentice and GM roles in 2021.

Chipotle’s salary level (apprentice, GM, restaurateur) turnover in 2021 was 43 percent, higher than 31 percent the year before, but better than 49.1 percent in 2018.

Chipotle created “Emerging Leader and Mentoring” programs and launched a fresh learning management system called “The Spice Hub,” which focuses on up-skilling through gamification and immersive education. “The best thing we can do is make sure that they’re trained, so that they’re successful in their job, and then that we give them a culture and a leader that develops them so they realize they have the growth opportunities at Chipotle,” Niccol said.

“… That’s our proposition,” he added. “That’s who we are. If you want to be a part of that we’re going to be building lots of restaurants that present an opportunity for you to be a part of it.”

Chipotle is on track for 8–10 percent net new unit growth, per year, as it targets 7,000 North American units (more than half of Chipotle’s 3,000 stores have been built in the past decade). Naturally, it’s going to require more crew, GMs, and field leadership to get there. That’s why the company created the “Restaurateur,” ladder, Niccol said, and also why Chipotle zeroed in on the GM trajectory in particular. They can advance to certified training managers, field leaders, team directors, and regional vice presidents. Two GMs who started as crew members have made it to that latter, high-level role.

Niccol said Chipotle is currently in the 85–90 percent range of restaurants staffed to model. Pre-COVID was closer to 80 percent.

“Going forward, one of the things that we’re really happy to see actually is at the manager level and above we’re seeing more stability,” he said. “So we’re seeing less turnover take place there. Usually, how that works then is that cascades into the crew.”

Chipotle’s salary level (apprentice, GM, restaurateur) turnover in 2021 was 43 percent, higher than 31 percent the year before, but better than 49.1 percent in 2018.

This past year was an Omicron rollercoaster, Niccol said. Stores were understaffed. It was increasingly difficult to get people to sign up to work. Through higher wages and more defined growth paths, however, he said Chipotle made “tremendous progress” in stabilizing, especially at the manager tier. “So what the challenges were in 2022—I think we get them,” he said.

Chipotle recently introduced a labor scheduling program as well and began testing radio frequency identification technology to enhance traceability and inventory systems.

Niccol said Chipotle will use the scheduling platform to refine deployment and forecasting. One of the brand’s pressing spots today is its expeditor role or the task in between making a burrito and payment.

Chipotle’s metaverse experience that launched on National Burrito Day generated more than 4 million game plays in the first week.

Higher prices, thin margins, more Chipotlanes

Chipotle’s total revenue increased 16 percent in Q1 to $2 billion as same-store sales lifted 9 percent. In-restaurant sales jumped 33.1 percent (a reflection of more mobility in the marketplace), while digital sales represented 41.9 percent of the company’s business.

Chipotle was able to push the top-line largely due to higher prices, which climbed 4 percent at the end of March and will present year-over-year increases as high as 12.5 percent during Q2 before dropping to 8.5 percent by year’s end.

Still, the restaurant-level operating margin in Q1 declined from 22.3 percent last year to 20.7 percent. Niccol said restaurant margins remain “bumpy” due to inflation and noted Chipotle felt it would eventually recoup. For now, a higher level of commodity inflation from avocados, tortillas, and dairy led to Chipotle missing the 22 percent margin guidance it outlined last quarter. It expects to get to 25 percent in Q2, “assuming we don’t see additional inflation above our current estimates,” CFO Jack Hartung said. Cost of sales this past period was 31 percent, or an increase of about 100 basis points, year-over-year. Everything was up, Hartung said, but most notably beef, avocados, and paper. That number should remain near 31 percent as higher menu prices offset elevated costs.

Commodity inflation overall was 12–13 percent in Q1, which Hartung described as “the most difficult period I’ve ever seen in terms of commodity month to month, quarter to quarter.”

Labor costs came in at 26.3 percent, roughly 140 basis points higher. Hartung credited Chipotle’s $15 average wage move.

As is the sentiment industry-wide, for the most part, he said Chipotle has witnessed “very little resistance” to its pricing efforts thus far. Even with pricing up about 10 percent, transactions rose 5 percent (11 percent on a two-year basis). Check declined 6 percent—a visible sign in-store dining, which is generally more of an individual occasion versus digital, and appreciates lower attachment rates, is picking back up.

Chipotle’s sales trends accelerated through the quarter, too, as January was up about 5 percent due to Omicron disruption, suggesting comps improved to high-single-digit, if not low double-digit, in February and March, BTIG analyst Peter Saleh wrote Wednesday in a note.

On the topic of taking additional action, Niccol said, “I really hope we don’t have to.” Yet it’s the same line as in recent months: If Chipotle can’t find efficiencies to offset higher costs, it will leverage pricing. “I really don’t want to be ahead of it,” Niccol said. “So I think a great example is probably what you just saw over this last quarter. Look, inflation continued to move in a big way. We saw it wasn’t going away, so we had to take the pricing action that we did. And hopefully, that won’t continue to be the case. But if it has to be the case, we have, I think, the organization, the people, and the pricing power to do it. But it really is the last thing I’d like to do.”

Chipotle opened 51 new restaurants in Q1, of which 42 featured the company’s order-ahead pickup Chipotlane. Even with timelines getting stretched in the COVID dynamic, the brand expects to open between 235–250 units this year, with at least 80 percent touting the feature.

As a company, it’s taking about 10 minutes from order to pick up ready, Niccol said. And Chipotlanes are only helping matters. Also, they’re pushing added business to digital order pickup, the chain’s highest-margin transaction, Niccol said.

Mobile location analytics platform Placer.ai ran foot traffic analysis on Chipotle, which showed the company saw visit levels above pre-pandemic levels every week this year up until the week of April 11. Most recently, visits rose 12.7 percent during the week of April 11, 17.8 percent the period of April 4, and 11.7 percent leading up to March 28, compared to the same weeks in 2019. But what’s notable is how Chipotlane venues are tracked. – Source: QSR.

A loyalty program has further accelerated digital sales at McDonald’s Corp. . . .

McDonald’s Digital Sales Get Boost From Loyalty Program

“In our top six markets, digital sales, which include a mobile app, kiosks, and delivery, made up more than 30% of system-wide sales in the first quarter,” said Christopher J. Kempczinski, president and chief executive officer, in an April 28 earnings call. “This equates to nearly 60% growth over the past year.

“We did over $2 billion of digital sales in the US alone in the first quarter. One of the biggest drivers of our digital adoption is our global loyalty program, MyMcDonald’s Rewards. It’s helping us better meet our customers’ needs as we build more authentic and personal relationships.”

Global comparable store sales for Chicago-based McDonald’s in the first quarter ended March 31 increased 12% when compared with the previous year’s first quarter. The increase was 3.5% in the United States.

“Higher average check, driven by strategic price increases, continued to be a significant growth driver and strong marketing campaigns across loyalty, value bundles, and our Crispy Chicken Sandwich delivered incremental sales and continued to drive digital adoption,” said Kevin M. Ozan, chief financial officer, of US comparable-store sales.

Comparable store sales increases were 20% in the international-operated markets segment and 15% in the international developmental licensed markets segment.

“In the UK, our customers can now order delivery directly on the McDonald’s app,” Mr. Kempczinski said. “We plan to expand that capability to the US, Canada, and Australia later this year. This will let us better control the delivery experience for our most loyal customers and to learn from the data they share, ultimately about how we create more seamless, memorable and personalized experiences.”

McDonald’s net income in the quarter was $1.10 billion, equal to $1.48 per share on the common stock, a 28% decrease from $1.54 billion, or $2.05 per share, in the previous year’s first quarter. Revenues rose 11% to $5.67 billion. Pricing was up about 8% from the previous year’s first quarter.

“As expected, our company operating margins were hampered by significant commodity and labor inflation,” Mr. Ozan said. “Given macroeconomic conditions, we expect these elevated inflationary pressures to continue throughout this year.”

He added McDonald’s executives expect commodity prices to rise 12% to 14% for the fiscal year.

McDonald’s stock price on the New York Stock Exchange closed at $254.19 per share on April 28, up 2.9% from a close of $247.14 on April 27.

The emphasis will be on practicality, right down to the cooking demos and social events, according to the event’s planners . . . .

This Year’s National Restaurant Association Show Aims for a Harder Business Focus

In the three years since the National Restaurant Association Show drew the industry to Chicago, the business of running restaurants has changed in profound ways. The opportunities and challenges left by the pandemic will be squarely in focus when operators reconvene on May 21 for the trade’s largest procurement, networking, and educational event, according to the show’s organizers.

They predict that attendees will be struck by an emphasis on practicality—the products, ideas, and connections that will enable them to grow their operations in the near term.

Even one of the four-day event’s major social components will provide a serving of business intelligence. An evening reception called Industry Night Out, scheduled for the largest rooftop deck in the country will focus on food and beverage pairings, enabling attendees to file away ideas as they network and take in the Chicago skyline.

Similarly, this year’s event will again showcase cooking demos from some of the nation’s most renowned chefs, including TV stars such as Andrew Zimmern and Maria Loi. But mixed into their culinary advice and insights will be more than a dash of business information, such as managing food costs, says Lisa Malikow, SVP of event operations & programming.

One area where operators will readily find help is in navigating the disrupted supply chain, Malikow says. She notes how the procurement process has been complicated by ongoing shortages of products and crimps in the traditional means of getting the items to a restaurant’s back door.

“You’re forced to diversify the suppliers you need because you can’t use the same traditional single source,” Malikow says. “That’s easier said than done. At the show, we’ll have more than 1,700 companies gathered in one spot. You can probably see every company you need to readily fulfill your needs.”

There is also the serendipity factor. Even veteran showgoers will likely find surprises within an exhibitor area that’s larger than some towns.

“When you experience the trade show, it’s not going to feel like it did before,” Malikow continues. “One-third of our floor space is comprised of companies that have never exhibited before, some of which are brand new companies that have been born out of need and certain pain points. It’s not all about walking in and seeing the same exhibitors.”

One of the formatting changes at this year’s show will be holding the dozens of education sessions on the exhibit floor, a move that spares attendees from having to dash up to conference rooms on a different floor.

Those education sessions are also likely to feel more how-to and practical, according to Malikow.

“A really changed effort on our part was offering specific solutions through the voice of the operators themselves,” she says. “It’s for operators by operators.”

The topics range from takeout to catering, cannabis-infused beverages, and a reality check on plant-forward products. The presentations are organized into tracks, enabling executives to find the sessions most relevant to their functions or needs.

In addition to presenting the usual slew of breakout sessions, this year’s show will feature workshops on ghost kitchens and virtual concepts; technology; and fostering leadership.

One thing attendees won’t find is a single long presentation on labor, arguably the industry’s top issue at the moment. Instead, Malikow says, that issue is addressed not only in a series of presentations organized into a track that extends through the conference but in sessions focused on other topics, since it colors every aspect of the business.

“You’ll see that in our technology sessions and even our culinary sessions—how do you deal with some of these workforce issues?” she says. Content planners worked with presenters to ensure they hit on the major aspects of the labor situation, she adds.

Despite the emphasis on the practical, Malikow says, the show will aim to deliver inspiration through an unusual keynote speaker: Alexis Ohanian, the co-founder of Reddit and the venture capital firm Seven Seven Six.  He will address how business disruptions such as the emergence of cryptocurrency are changing the restaurant business.

“Alexis Ohanian is really a new twist for us,” says Malikow. “He’s probably the youngest speaker we’ve had on the stage. The topic was borne from the idea of not just looking at the changes that are being forced on business by disruption, but how do you use that disruption to build your business?”

The National Restaurant Association Show is presented by Winsight Media, the parent company of Restaurant Business.

The event is slated for May 21-24 at McCormick Place.

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