NRN Interactive Industry Update - Summer 2023

Better, Smarter, Faster Restaurants leverage new tools to streamline operations

INTERACTIVE INDUSTRY UPDATE

GAME CHANGERS The tech, tools and people shaping the future of foodservice

NRA SHOW

Trend-spotting at the show: automation, AI, data and more

TECHNOLOGY

How ‘quiet tech’ is transforming restaurant operations

10 food and beverage trends to watch

Summer 2023

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connection and solutions to their biggest business challenges. Many of the challenges of the last few years — think: labor, supply chain and inflation — are still top of mind. Yet we’ve sensed a shift. Restaurant operators are shifting out of crisis mode and into a more intentional, strategic way of doing business. They’re back on offense: Amping up efficiencies and focusing on growth. The Nation’s Restaurant News team was out in full force at the show and we’ve gathered the highlights

in this special interactive issue. Whether you couldn’t make it this year, or were there and just couldn’t experience it all firsthand, we’ve got you covered. We’ve got the top trends in tech, including your Internet of Things cheat sheet; creative tricks for labor savings and operational efficiencies; a Gen Z marketing playbook; plus the trending food and beverages to keep an eye on. Explore the following pages for expert insights from our team and innovative ideas from throughout the industry that might just boost your optimism about the future as well.

Sam Oches Editor-in-Chief

Optimism has once again returned to the industry.

That’s the spirit coming out of the recent National Restaurant Association Show where tens of thousands of foodservice industry professionals gathered in Chicago to seek education,

CONTENT

Sam Oches Editor-in-Chief

Christi Ravneberg Director of Content Integration

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WATCH

4 tech trends from the NRA Show floor

Confused about the ‘Internet of Things’? Here’s how IoT is changing restaurant tech forever

Page 12 Operator Spotlight

Alicia Kelso Executive Editor

Leigh Anne Zinsmeister Group Managing Editor

Ron Ruggless Senior Editor

WATCH

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Page 30

How restaurants are embracing a new approach to efficiency

Targeting Gen Z consumers? It’s not so simple

Bret Thorn Senior Food and Beverage Editor

10 food trends to watch

Get In the Mix Top trends from the NRA Show WATCH Labor issues take center stage No bigger challenge than retention How restaurants can thrive as consumer confidence softens The key: Understanding your guests

Podcast Spotlight Fresh content from three podcasts: Take Away with Sam Oches, Extra Serving, and First Bite

Joanna Fantozzi Senior Editor

CREATE: The Experience Register today for this can’t-miss event in Palm Springs, California

Holly Petre Digital Editor

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IN THE MIX

Top trends from the NRA Show From robot baristas to sustainable straws that break down in three hours, these are the trends and tools that caught NRN editors’ eyes

LINK GOES HERE

The Nation’s Restaurant News team was out in full force at the 2023 National Restaurant Association Show in Chicago, checking out the latest trends and innovations on the show floor. In this special edition of In The Mix, join the team as they explore the hundreds of new

products and solutions on display at the event and hear what grabbed their attention. See how robots are gaining new skills in the kitchen — and the No. 1 consideration when adding robotics to your restaurant — plus new THC- and CBD-infused seltzers, and sustainable products that aim to make eco-friendly

choices easier and more user-friendly.

Plus, we talk to restaurant operators about how the

current economic uncertainty is impacting consumer spending.

Check out the above video as the team gets In The Mix at the NRA Show.

Subscribe to In The Mix! Get the latest trends, products and innovative ideas in foodservice straight to your inbox with the industry’s first multimedia newsletter.

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Entegra is a business performance and procurement services company with bold initiatives, creative solutions and a driven advisory team ready to partner with hospitality- driven businesses to propel them forward and achieve more than ever. As the largest food group purchasing organization in the world, we deliver the industry-specific savings solutions, digital tools, advisory services and corporate social responsibility support to help clients improve customer experiences — and achieve their goals. Explore our unmatched purchasing solutions at: www.entegraps.com

Does your restaurant need a GPO? John Csukor and Louella Burch of Entegra talk with Nation’s Restaurant news about the impact of working with a group purchasing organization, or GPO, and how to know if a GPO is right for your business. Learn how Entegra leverages $36 billion in purchasing power to help its customers navigate inflation and sourcing challenges with a full suite of purchasing, operations, analytics and menu development offerings.

info.USA@EntegraPS.com EntegraPS.com

Head of Culinary for North America Senior Director of Business Development - Restaurant Chains John Csukor Louella Burch

TECH

4 exciting technology trends from the NRA Show floor

Joanna Fantozzi Senior Editor

Operators are embracing new tech tools to position their brands for the future. Here are four trends changing the way restaurants do business

Last year’s National Restaurant Association Show had a trepidatious, uncertain tone, with so many tech solutions highlighting labor-saving tools in the shadow of some of the worst labor crises the industry has ever seen. Now, technology is more forward-

looking with less emphasis on Band-Aid solutions for an industry in crisis and more emphasis on forward-thinking change and progress. Here are four more technology trends we took note of, from AI and automation to smart, cloud-based software.

New and improved voice AI

Drive-thru voice AI has been one of the biggest tech trends over the past couple of years, and a few of the most prominent voice AI companies were showing off the latest versions of their voice technology, including Soundhound and Xina. Some of the biggest challenges of voice ordering AI in the drive-thru lane is knowing when the AI should stop listening to the customer, so Soundhound customers have to say “Ok I’m done” when finished with an order. Xina restaurant voice ordering system, doubling as a fully functioning POS system — which puts its AI software into kiosks and tablets for use in dining rooms and hotel rooms — doesn’t have this issue because customers have to press and hold a button in order for the AI to “listen” the request, and it will stop listening once you let go. AI is getting smarter and learning differences in human accents, slang, and corrections to orders. For example, Cal Sconnely, founder of Xina AI, said that the AI uses machine learning to learn that “burger” means “hamburger” and will know that for the next time someone orders a burger.

Beverage robots

While 2022 was all about the server robots, this year on the Show floor, there were plenty of beverage-making robots, from AI baristas to automated bartenders. For example, Robojo is a customizable coffee-making robot system that allows customers to input their orders on a touchscreen, Robojo will begin making the coffee, and the screen will be able to tell customers when to expect their order. The robot can even make up to four drinks at once. As a winner of the 2023 NRA Show Kitchen Innovation awards, this robot barista might not be very practical (it takes up a lot of space) but would especially be useful in nontraditional locations like hospitals and airports where there is more room.

two

The technology is outfitted with WMF-5000S+ Super Automatic Espresso machines, a nugget ice machine, two latte art printers in partnership with Ripple, a refrigerator, and a Kawasaki robotic arm. Just as Robojo can possibly replace a few baristas for cafes with staffing challenges, Cecilia the Robot bartender is also designed to replace certain aspects of a bartender’s job. When we tried Cecilia — who looks like an animated female bartender on a touchscreen — on the Show floor, she was having a lot of trouble

hearing what we were saying. However, you can both use voice activation and touchscreen options to place your order for a mixed drink. Cecilia the bartender does also have her limitations because she can only make pre-programmed cocktails, but she can offer recommendations based on taste preference and works much like a more animated cocktail vending machine. Cecilia also can detect up to 40 languages and has a built-in ID scanner to make sure the person ordering alcohol is of legal drinking age. Restaurant Association Show. Two of the biggest producers of cobots are Middleby (which makes a fry-bot arm that can dip fries into hot oil and bring the fry basket back out again), and Nala Robotics, which was showing off its dishwashing cobot. Both brands make robots that are space-savers and can be easily maneuvered around by human coworkers in the kitchen. The newest kitchen robot Nala Robotics was showing off was a bowl-making robot, which would most easily be used on an assembly line at a fast-casual restaurant to cook (meat, rice, and vegetables), and assemble lunch bowls for customers. It’s considered a mini cobot and weighs between 10-20 pounds, and much like the Middleby robots are meant to alleviate some of the labor challenges. The Bowl Bot can run 24/7 and is also self- cleaning, which again allows brands to rely on more efficient automation than human hands. An example is the stir fry machine by Botin Robotics. The stir fry machine might look like a front-facing washing machine, but it allows kitchen staff at Chinese restaurants to eliminate some of the time-consuming steps of constant cooking. On the software side, operators can input recipes and the AI will be able to spit out a recipe that tells workers exactly when to add specific ingredients while the machine is constantly tossing, stirring and cooking meals like chicken and broccoli or fried rice. The only clear downside is that the AI is clearly not meant to work on its own and requires a human being to input ingredients and sauces. But the machine is not meant to get rid of labor altogether but rather get rid of the need for skilled labor, which cofounder Giggs Huang is the number one staffing challenge for Asian restaurants. “In reality, the restaurant should have no need of a professional cook,” Huang said. “He just needs someone to prepare the food and the operator to operate this machine and input all the ingredients. You just need to know how to follow instructions.”

three

Cobots

We already spoke quite a bit about the importance of cobots — or robots that are meant to work alongside humans — and they were on display at the National

four

Upgraded kitchen automation

From automated pizza ovens to nigiri sushi machines, automation has been a huge part of the restaurant industry for decades. But on the show floor, we saw some newer models of kitchen automation equipment that use smart, cloud-based technology to improve output.

TECH

Confused about the ‘Internet of Things’? Here’s how IoT is changing restaurant tech forever

Joanna Fantozzi Senior Editor

IoT was a major trend at the 2023 National Restaurant Association Show as networks of connected, smart equipment become crucial to operations

“Your staff can actually have time to talk go customers, your ownership isn’t scrambling…IoT is the fuel that will bring us into a more efficient future and the restaurant industry is now getting to see a glimpse of that and realizing that this making our lives better.” Brewlogicx is a beverage technology solutions company that uses IoT technology and real-time analytics to gain insights into beverage performance, so that bars and breweries can know without guessing whether a specific type of beer is running out and predicts how much the bar will need for the weekend, which products are most expensive or if the bar needs to buy more product. This specific technology was in development for five years before BrewLogicx released it to the public eight months ago. “The major advantage here because then we can actually pair what’s happening in the physical world with what’s happening to digital and make a much more accurate prediction,” Garrity said. “Being able to see key financials and success markers instantly to know the health and freshness of your draft program is going to lower your costs, waste, and improve profitability.” IoT technology was also on display with equipment companies like OneEvent, which uses IoT technology to connect freezers and refrigerators with smart devices and a manager’s phone, that can track fluctuations in temperature, and send notifications if the temperature goes above a certain threshold for a pre-programmed amount of time, which means that someone either needs to close the freezer door or get a mechanic in to repair the equipment before all of the refrigerated food goes bad. “Our system will alert you no matter where you are,” Wayne Glowack, director of marketing for OneEvent said. “IoT lets us give you the ability to manage your restaurant wherever you are just with this little device.”

Last year, in 2022, the National Restaurant Association Show tech pavilion showcased labor-saving robots, including front of the house and back of the house. But as we’ve pulled away from the COVID-19 pandemic, technology trends have shied away from flashy automation and more toward invisible AI. One of the biggest trends we saw on the show floor was Internet of Things. IoT technology — which uses cloud technology to connect “dumb” devices and turn them into smart devices that can communicate with one another — was a crucial feature of many software companies on the show floor, from refrigeration to drive-thru technology. Like most trending technology, IoT allows restaurant operators to be more efficient, cost-conscious, and to reduce menial labor. “Data is the way to make great decisions, reduce waste and loss, and actually be efficient so that we can do the most we can,” Michael Garrity, director of marketing for beverage technology company, Brewlogicx, said.

Let’s Create Great Dishes Together.

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Why speed scratch cooking is key to managing restaurant labor problems Brad Nelson of J.T.M. Food Group talks with Nation’s Restaurant news about how strategic value-add ingredients can optimize your restaurant kitchen and revolutionize your menu development. Learn how J.T.M.’s signature beer cheese creates a foundation for culinary innovation while keeping things running smoothly in the back-of-the-house.

J.T.M. Food Group is a forward-thinking food-processing company still rooted in the same principles of the original butcher shop. For four generations, the food professionals at J.T.M. have provided on- trend products and solutions, including sauces, soups, sides, dips, pastas, scrambles, and taco fillings, with the same commitment to integrity and quality we’ve had since the butcher shop days.

Executive Director of Marketing Brad Nelson

bradnelson@jtmfoodgroup.com jtmfoodgroup.com

Continued: Internet of Things

Most IoT systems come with small devices that attach to equipment or computers and create an uninterrupted network—giving operators real-time data wherever they are. But besides practical uses like figuring out when your bar is running out of a best-selling IPA or alerting

using their name and date of birth, UKnoMi’s technology captures their license plate and knows when they come back again, what their taste preferences are, and if they are eligible for a reward in the loyalty program.

a manager when the fridge is broken, IoT can also improve customer service interactions. Although most of the drive-thru technology at the NRA Show in 2023 focused on voice AI, restaurant technology startup UKnoMi saw the value in using IoT technology to bring better customer service to the drive-thru lane. As the name implies, UKnoMi is a customer

“We use a number of Bluetooth devices [to connect to the IoT system] and let you know, for example exactly where a customer is in the queue, because accuracy is very important,” Johann Van Der Westhuizen, cofounder of UKnoMi said. “You need to know exactly which car is in the queue otherwise [the loyalty aspect] won’t work.”

“IoT is the fuel that will bring us into a more efficient future.” Michael Garrity, Brewlogicx

Although Internet of Things might have a confusing name, the technology is simple: use cloud and/or Bluetooth technology to connect every aspect of your kitchen or drive-thru lane (or more) and improve the capabilities and efficiency of an entire restaurant operation.

experience platform that uses systems learning technology and IoT to help drive-thru employees recognize and reward regular customers in the drive- thru lane. The visual AI can capture a customer’s digital fingerprint. After a new customer signs up at the register

Go behind the headlines as Nation’s Restaurant News’ expert editors break down the hottest issues in the industry and talk one-on-one with the newsmakers and innovators on our signature podcasts.

PODCAST SPOTLIGHT

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9 min

The latest in tech at the NRA show

Catching up: new restaurant tech

Choosing the right tech for your wallet

Want more tech trends? Click here to get your free 2023 Restaurant Technology Outlook from Nation’s Restaurant News Intelligence.

Smart software automation Rapidly driving productivity & Profit

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How AI tools can optimize restaurant kitchens Ingo Stork of PreciTaste talks with Nation’s Restaurant News during the recent National Restaurant Association Show about why AI isn’t the technology of the future — it’s here now. See how machine-learning in the kitchen can help restaurants streamline operations, support staff and create better experiences for guests.

With 2,500+ food AI systems, PreciTaste is a first-to- market, proprietary AI kitchen management software solution to optimize operations through real-time crew guidance in restaurants spanning across seven food categories. PreciTaste offers out-of-the-box Prep Assistant and Planner Assistant applications for optimizing bulk ingredient prep and order fulfillment with the option to enhance with vision sensing for full- cycle AI management across work stations. By providing crew assistance based on demand predictions with for key kitchen tasks, operators see increased labor efficiency and retention, reduced food waste, increased speed-of-service and, ultimately, profitability.

Co-Founder & CEO Ingo Stork

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INDUSTRY INSIGHTS

Operator Spotlight Restaurant leaders get candid on growth plans, drive-thru tech and TIkTok trends

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Micha Magid of Mighty Quinn’s BBQ talks with Nation’s Restaurant News’ Joanna Fantozzi about how the growing brand is bringing a fast-casual format to the barbecue experience. Hear how the brand smokes its signature meats, how it builds its beer program and how it’s branching into retail with its wing sauce. Plus, find out what markets Mighty Quinn’s is targeting next.

How Mighty Quinn’s is redefining the barbecue experience

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Joel Yashinsky of Applebee’s talked with Nation’s Restaurant News’ Alicia Kelso about how the brand is appealing to a younger, more diverse audience with its playful approach — particularly evident in its “Taste My Face” music video on TikTok. Plus hear how casual-dining is approaching loyalty and value amid an uncertain economic environment.

Applebee’s CMO on connecting with younger consumers

Smart software automation Rapidly driving productivity & Profit

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Visit Tabit

Why better restaurant POS tools means better hospitality Nadav Solomon of Tabit Technologies talks with Nation’s Restaurant News about how his company’s mobile-first POS platform empowers restaurants to streamline operations and provide better hospitality. Learn why point-of-sale technology can be a powerful tool in the difficult labor market by reducing the number of people needed on the floor by up to 25%. He’s joined by John Noble Masi of Florida International University to discuss how Tabit’s partnership with FIU is preparing hospitality students — the industry’s future leaders — to thrive in restaurant of the future.

Tabit is the MobileFirst POS that works for you. The cloud-based restaurant operating system was designed from the ground up to be truly mobile. It has restaurant point-of-sale and back office functionality at its core and utilizes tablets and smartphones as the primary touchpoints, eliminating the need for static server stations.

President & Co-Founder Tabit Technologies Nadav Solomon

Faculty of Culinary/ Industry Consulting Florida International University John Noble Masi

tabit.cloud

Operator Spotlight Restaurant leaders get candid on growth plans, drive-thru tech and TIkTok trends INDUSTRY INSIGHTS

Wienerschnitzel on how voice AI supports drive-thru staff

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Rusty Bills of Wienerschnitzel talked with Nation’s Restaurant News’ Leigh Anne Zinsmeister about how the 340-unit brand is expanding, both domestically and abroad in such markets as Ecuador and Chile. Plus, hear how the brand is testing AI at the drive- thru and navigating labor challenges with new innovations in the kitchen that support back-of-the-house staff.

Shuckin’ Shack catches on with low-tech focus on hospitality and seafood

https://youtu.be/IFxoI-IBNf8

Jonathan Weathington of Shuckin’ Shack Oyster Bar shocks Nation’s Restaurant News’ Leigh Anne Zinsmeister by ignoring the buzz around restaurant technology. For this chain built upon cold beer, fresh seafood, and authentic coastal hospitality, the focus is on the customer experience above all. Listen to how this CEO seeks specialized partners to cultivate his brand’s rabid following.

Mesero gets back to growth by investing in tech and “homegrown” talent

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Trey Dyer of Mesero shares his expansion plans with Nation’s Restaurant News editor Sam Oches, including how the chain leverages technology to develop its team members for the long haul. Discover how the brand tackles labor challenges with cutting-edge solutions like better sales forecasting and data-driven scheduling, which ultimately leads to enhanced customer service and better retention.

We champion restaurants to thrive in a digital world

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Helping restaurants thrive in a digital world

The Digital Restaurant Association is a non-profit 501(c)6 membership organization dedicated to helping restaurants thrive in the digital world. The DRA strives to be the premiere restaurant industry resource for profitable online revenue generation, innovation, public policy and growth. Led by an advisory board of leading restaurateurs and a staff with expertise in digital operations, the DRA leverages the power of the collective voice of the restaurant industry to advance policies that will protect and promote the digital restaurant business.

Joe Reinstein of the Digital Restaurant Association talks with Nation’s Restaurant News about how the organization, which launched this spring, is working to champion operators as they navigate the complexities of running a restaurant in the digital age. Learn why fee transparency, customer data sharing and price parity are such critical issues and how the DRA is advocating for its members and the industry at large.

Executive Director Joe Reinstein

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OPERATIONS

How restaurants are embracing a new approach to efficiency

Alicia Kelso Executive Editor

The idea of efficiency has changed as operators continue to manage unprecedented challenges — shifting from a balance sheet-driven focus to a holistic look at every part of the business

Last year, Starbucks introduced new brewing equipment backed by a $450 million investment, trimming the time it takes to make a drink.

It seems all anyone wants to talk about in the restaurant industry in 2023 is efficiency.

efficiencies through new equipment and kitchen display systems. It’s front-of-house efficiencies through pickup cubbies, organizational efficiencies through restructuring efforts, and it’s a totally new way of thinking about the brick-and-mortar format, from square footage to kitchen flow.

Indeed, based on an unofficial survey from Nation’s Restaurant News, “efficiency” was referenced about 25% more during the last round of earnings calls versus the same period in 2019 by restaurant companies that were public within that timeframe. Of course, efficiency has always been a top priority for any business with an objective of making money. But the definition and approach have evolved in the past several years as the industry has faced unprecedented challenges and as technology has become more accessible. Essentially, efficiency is no longer just about cutting costs from the balance sheet. It now requires a multifaceted, deep dive look at every part of the business to ensure both time and money are optimized. That means operational efficiencies through simplified and streamlined menus, labor efficiencies through scheduling technology, back-of-house

When Kevin Hochman was named CEO of Chili’s Grill & Bar parent company last year, one of his first lines of business was to reduce complexity to grow the core business.

Brinker International has become a case study in this holistic approach toward efficiency. When Kevin Hochman was named CEO of Chili’s Grill & Bar parent company last year, one of his first lines of Continue Reading

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Why restaurants need to break down ‘tech silos’

NCR helps restaurant brands transform, connect and run their technology platform. Trusted by more than 50 of the top brands, NCR provides deep industry expertise and services with a unified commerce platform that enables brands to delight their customers in every interaction, liberate staff from manual tasks and accelerate innovation. Learn more at ncr.com/restaurants.

Jessica Bryant of NCR talks with Nation’s Restaurant News about how the company is helping restaurants thrive at a time when both “physical and digital boundaries are blurry.” Learn how NCR is helping brands to own both the customer and employee experiences through seamless experiences and unified datasets. Plus, hear why an integrated approach — and avoiding “tech silos” — is key to building an effective tech stack.

VP of Marketing & Inside Sales Jessica Bryant

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Continued: New approach to efficiency

business was to reduce complexity to grow the core business. This multiyear simplification strategy includes everything from enhancing equipment to streamlining the menu. The company has so far put a robotic server test on hold, eliminated shrimp portioning during prep time and removed fry baskets. Brinker is also testing new energy-efficient and faster-cooking equipment, improving its to-go technology to reduce friction, reassessing its “pay- at-the-table” technology, improving handheld technology for guests to order directly from the table, and embracing virtual learning to remove some tasks from operators’ plates.

led by its Project Square One strategy launched last year. This focus includes ensuring proper staff on both makelines to achieve more speed and accuracy. During the company’s most recent quarter, Chipotle reported sales, margin and traffic improvements driven largely by this back-to-basics strategy. “All these things are driving toward hopefully better guest experiences, but also a better work environment for employees,” CEO Brian Niccol said during the earnings call in late April. “And then, obviously, I think it will be more efficient.” Chipotle is also turning to equipment to achieve more efficiencies, adding a new grill that cooks chicken about 10 minutes faster, according to Niccol. The company is also piloting Chippy, an automated system to cook its tortilla chips. First Watch is another example, investing in double dishwashers and wider grills that allow for more pancakes or sandwiches to cook at the same time. Freddy’s Frozen Custard and Steakburgers developed its own proprietary grill that clamps down and presses its burgers automatically, taking this tactic off team members’ to-do list while improving throughput. CEO Chris Dull said this one change reduces cooking time by up to 40 seconds. The company has also adopted a pictogram system, which shows employees what is on a customer’s burger through pictures on a device (versus them having to read a ticket) and has added a designated bagging area.

“We’re hyper-focused on making it easier and simpler to run our restaurants,” Hochman said.

This simplification strategy includes four pillars — team members, food and drink, hospitality and atmosphere — and each pillar has a senior executive owner, as well as action plans and KPIs. “Over time, we know these efforts will reduce waste, improve labor productivity, increase margins and improve retention,” Hochman said.

Examining every facet of the business

Such improvements have been yielded elsewhere from similar efforts in this so-called “year of efficiency.” For Chipotle, that means a sharpened focus on operations

Checkers/Rally’s tapped an outside firm to launch a motion study through a “fake kitchen” and concluded team members were walking one full mile more than they should be during a shift.

Portillo’s has reduced back-of-house walking by 18 linear feet, which adds up throughout the day

“It’s a simple process and we try to keep it simple. We have been innovating in our kitchens to de-skill what is difficult, and we really had to make those changes during Covid when our business model flip-flopped to mostly drive-thru. That gave us an opportunity to really execute faster and made the entire experience better,” Dull said. “We are packing a lot of volume in a relatively short window of operation and we’re doing so efficiently.” Starbucks is also embracing equipment innovation to achieve more efficiency. Last year, the company introduced new brewing equipment backed by a $450 million investment. The “siren system,” as it’s called, trims the time it takes to make a Frappuccino from almost a minute and a half to just over 30 seconds. Beyond equipment, several chains are examining how to optimize their kitchen flow in general. Take Checkers/Rally’s as an example. The company tapped an outside firm to launch a motion study through a “fake kitchen” and concluded that team members were walking one full mile more than they should be during a shift. “That’s obviously a lot and not very efficient, so we reconfigured our kitchens to take some pressure off the fry station in particular, which set us up for success. That person on fries is freed up a little and it’s just made things easier on them,” said Kris McDonald, VP of Development.

The company is preparing to conduct a similar study again to continue making such improvements and ease some labor pressures. Portillo’s, meanwhile, is undergoing a “Kitchen 23” initiative. It’s reduced back-of-house walking by 18 linear feet, which adds up throughout the day. “That’s a big opportunity for us — consolidating the kitchen line so team members take fewer steps, giving them more time to make food or interact with guests,” said Garrett Kern, vice president of strategy and culinary. The company is also looking at simplifying other kitchen tasks. Restaurants used to prep 27 different items in the morning and now prep less than a dozen after sourcing pre-cut ingredients from its vendors, for instance. Team members also used to ladle salad dressing from gallon containers into smaller portion cups and then put the lids on. The company has since found a company that does this task at scale, giving its team members more time to improve the guest experience in other ways, Kern said. “Portillo’s differentiator is the experience — there’s a bit of theater in how we interact with our guests. So we looked at tasks that were repetitive and disengaging for our team members, and tried to eliminate those, so our teams can instead take an extra few minutes to make the perfect beef sandwich or interact with a guest,” Kern said.

Continued: New approach to efficiency

Tapping vendors to simplify back-of-house work seems to have picked up, with companies from Wendy’s to Honeygrow also taking this route. Wendy’s recently shifted its salad prep tasks from in-store to suppliers, for instance, while Honeygrow switched from fresh to canned pineapple. “We sell a lot of pineapples in our stir fry, so we were buying pineapples and hacking them and it’s labor intensive, it’s inconsistent, the yield is variable based on how well you know how to cut a pineapple,” Honeygrow founder and CEO Justin Rosenberg said during the April edition of Nation’s Restaurant News’ Emerging Restaurateur Live Learning Series. “Our GM asked why we were doing this. We tested canned pineapple and everyone preferred it. We adopted canned and reduced costs by $320,000 annually. It was a really simple thing we could do to be more efficient.” Of course, all of these efforts yield more labor efficiency. Sometimes, however, that efficiency comes from the implementation of the right technology, like a kitchen display system or labor scheduling app. For Ruth’s Chris, such labor efficiency came from its recent development of a proprietary demand forecasting platform, which executives say has resulted in a 10% improvement in hours per entrée. From the kitchen layout to SKUs to the back- of-house simplification and labor optimization, restaurant companies are itemizing every facet of their businesses to achieve that goal of efficiency. And yes, that goal has become more critical than ever as operators continue to grapple with labor shortages and inflation while essentially balancing two businesses: on-site and off-premises.

better experience for team members while finding the right give and take of efficiency?” Caroline Skinner, COO at Tupelo Honey, also believes the idea of efficiency has “absolutely” changed because of the pandemic and its impact on restaurant staffing. “We’ve become smarter because of a lot of the things we learned about through the pandemic — our buildings, kitchens, products, how we get things off the line faster and into more channels and reduce ticket times,” she said. Skinner adds that becoming wiser has been a necessity as restaurants juggle more channels and traffic with less staff. “We got smarter as an industry because we had to. There was an evolution of how this industry has shifted its orientation toward the employee,” Skinner said. “Efficiency has to do with operators getting smarter by leveraging tech and tools to expand the reach of what we can do, but also recognizing we can’t continue to treat employees the way we have for so long.” In other words, the idea of efficiency has changed because there are more balls in the air and less people to juggle them. But it has also changed because it’s simply more expensive to run a business now. Inflation remains high, interest rates have ticked up, wages have reached a point of no return. Corners may be trimmed, but it is critical that consumers’ and, now more than ever, employees’ experiences aren’t compromised in the endeavor. “Industrywide, margins are being squeezed because of food costs and the availability of labor. At the same time, good brands are always looking for ways to improve the guest or team member experience,” Kern said. “So, the conversations about efficiency are happening because people want to protect these experiences while making business-smart decisions.” Improving guest and team member experiences is the north star of Brinker’s efficiency efforts. In fact, Hochman said many of the ideas the company is executing, including the elimination of shrimp portioning, have come from team members. That said, with all these initiatives underway, Hochman notes it’s important to not cut so much as to compromise the brand’s culture.

How the idea of efficiency has evolved

With these challenges in mind, the definition of efficiency has effectively changed since the onset of the pandemic in 2020. For Portillo’s, that means a different approach to KPI measurement. “In this environment, it’s hard to judge efficiency based on the traditional metric of sales per labor hour. It often doesn’t give you an accurate measure, so brands have had to think about different ways to express productivity,” Kern said. “The definition of efficiency has expanded, in part because guests are more convenience-oriented than ever before. How do you make guests who have deliberately chosen to order ahead, skip a line, etc., feel rewarded for this choice? From the employer perspective, how do you create a

“Building and maintaining our culture is sacred,” he said. “And we will continue to invest in it.”

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OPERATIONS

Labor takes center stage at the National Restaurant Association Show

Alicia Kelso Executive Editor

Several attendees talked about the importance of culture to improve employee retention, citing the pandemic as a catalyst on how the industry approaches its workforce

“The pandemic created a spark in the hospitality industry that made us realize how important it is to invest in your culture. When you do that, turnover plummets. Employees have a lot of power right now. They’re not going to put up with a crappy workplace environment,” said Anthony Lambatos, founder of Mibe (Make it Better Everyday). His company was started in 2020 to help hospitality industry leaders achieve “heart-led leadership and a strong company culture” through business coaching, workshops and more. The objective is to create a place where workers want to be and stay. “Culture is not equal to perks and benefits. Workers now want to be doing jobs where they feel they have a purpose and add value and with people they love, trust and respect, and that’s where our training is focused,” Lambatos said.“Our philosophy is if you serve your people, they’ll better serve your customers.” Indeed, if there is a sub-theme to pull from the giant labor theme, it’s training. This is what the National Restaurant Association’s ServSuccess is focused on to improve employee retention. The program was launched in 2019 to ensure restaurant professionals have clear career paths by offering certification, online training and assessments. “There is no bigger challenge in our industry than retention,” Rebecca Berry, senior sales manager, career and workforce with the association, said during a session. She cited training as the biggest opportunity to solve for this issue, noting that 87% of millennials say training is critical to their job, while 93% of employees state they would stay at a company longer if their careers were invested in.

Several themes emerged at this year’s National Restaurant Association Show, many of which weren’t all that surprising – for example, robots, invisible technology and plant-based offerings. But the recurring theme that tied much of this together was labor. Most conversations with exhibitors and operators and general attendees came back to labor in some way, shape or form. Perhaps that also shouldn’t be surprising. The industry has been through the ringer on labor throughout the past few years, experiencing an all- time-high quit rate, union organizing, recruitment challenges and then some. The environment has compromised operating hours and has left big chunks of money on the table for many establishments. The hospitality industry’s churn rate is double the national average at 5.4%, while 79% of operators are still struggling to hire. That said, mindsets seem to be changing.

“Disengaged employees cost employers $8,000 a year. It costs $1,800 to train a new employee,” Berry said. “We need to fill that gap. There is a labor and revenue challenge, and it also impacts guest satisfaction that you can’t get back. Training is the biggest asset when it comes to recruitment. When you offer training and education and a career path, you become an employer of choice.” Training, Berry said, also creates standards that previously haven’t existed in the industry, which then creates more consistency for customers. “If 2020 taught us anything, it’s that we need to be teaching our employees to be their best. That’s why we’re hearing about career pathing more in this industry,” Berry said. “The opportunity for career growth should be top of mind.” Technology Of course, the labor conversation didn’t end with training and development and culture. Technology is a huge piece of this puzzle as well, with vendors showcasing server robots running food to tables; app companies calling themselves the “Uber of

labor,” allowing operators to find employees last- minute to fill vacant shifts; automated French fry, burger, sushi stations and so much more. These companies insist their technology is a supplement to existing labor, easing the time and cost pressures of mundane, sometimes dangerous, tasks for employees so they can add more guest-facing value. It’s yet to be seen if any of this tech really does serve as a human replacement, but for now, we’ll opine that the industry is in the midst of a labor revolution, as evidenced by the National Restaurant Association Show floor. “There is no bigger challenge in our industry than retention.” Rebecca Berry, National Restaurant Association

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Why optimism is up among restaurant operators

Why labor was a big topic at the NRA Show

How restaurants can thrive as consumer confidence softens The industry is better positioned for a downturn than it has been in the past because of increased access to consumer data CONSUMER TRENDS Alicia Kelso Executive Editor

creation is still there but as that starts to soften, it’s going to hit the lower quartile,” she said. The next six months are going to be challenging, Galivan noted, but the industry is better positioned to withstand any potential downturn than it has been in the past. “That is because we have more data about our consumers and who we’re selling to. … We always talk about how it’s important to have that data to understand where your consumer sits and provide the experiences and value they’re looking for,” she said. Cadigan adds that consumers’ definition of value has changed and restaurant concepts that meet these new expectations will be largely insulated from a softening consumer set. “In earlier downturns and recessions, we saw bulk food shopping or hunkering down. But as consumers adapt to a lifestyle from at-home to mobile, convenience starts to come into play,” he said. Value now, particularly in a post-pandemic environment, also include experiences – whether you’re paying extra to have something delivered to your home to save on time, or being out and social. “People are looking for experiences for value and restaurants need to understand what experiences their consumers are looking for. Is it a good delivery experience? Is it sociability? If you’re meeting those expectations, the consumer will keep coming back. That’s why data about your consumer is so important,” Galivan said. Both analysts note that such insights are much more accessible now than they were just a few years ago, especially given the proliferation of streamlined point-of- sale systems and mobile apps/loyalty programs. “There have been enough advancements that put these types of insights closer to decision makers without the need for a data science degree,” Cadigan said. “All of the information is there and if you know what experience your customer is looking for, what they like, what keeps them coming back, you can use that data to your advantage in a crisis,” Galivan added.

The restaurant industry’s first quarter seemed almost too good to be true, with most public restaurant companies exceeding financial expectations, an improved labor environment and cooling inflation. Also, consumers have proven that their pent-up demand to dine out supersedes persistently high menu prices. But cracks are starting to appear. Consumers are visiting restaurants less often and they’re spending less money when they do visit. Consider new Circana data showing that more consumers are seeking restaurant deals, or Revenue Management Solutions data showing that quantity-per-transaction is down nearly 4% versus last year, while traffic is also declining. “We started to see consumers pull back on premium purchases in Q4 and Q1, both for food-at-home and away- from-home. The food industry in general has been waiting for the next shoe to drop,” Peter Cadigan, consumer products senior analyst at RSM US, said in a recent interview. Notably, menu inflation isn’t the only factor pushing the shoe closer to the edge. Karen Galivan, consumer products senior analyst at RSM US, said consumers in the middle and lower quartiles are running out of savings built up during the pandemic and are also “really racking up credit card debt.” Indeed, Americans are inching toward $1 trillion in credit card debt and have just recorded the highest year- over-year increase in such debt. “Consumer confidence is starting to dip. There is volatility with the Fed rising interest rates, with excess debt, job

MARKETING

Targeting Gen Z consumers? It’s not so simple

Alicia Kelso Executive Editor

According to a presentation at the National Restaurant Association Show, Gen Z consumers want authenticity, convenience and ‘a vibe’ more than price value and robots

There’s a reason nearly every brand is trying to figure out Gen Z consumers’ sweet spot right now. The demographic makes up nearly 70 million Americans, or about 20% of the U.S. population, and has amassed $360 billion in disposable income. This perhaps explains why the session “The Gen Z Effect: Redefining Dining Choices and New Experiences for a New Generation” at the National Restaurant Association Show attracted a standing-room-only crowd. The session was presented by Lindsay Lyons, group director of customer strategic insights at The Coca-Cola Company, and Robert Byrne, director of consumer and industry insights at Technomic. Their lede? A simple reminder that the generation is far from homogenous, which is a detail that often gets lost in the chase.

Of course, they’re also digital and Byrne notes this is the demographic where digital curiosity is moving into digital dependency. However, that doesn’t necessarily mean they want their entire world, including restaurants, to be fully digital. In fact, Byrne said expectations versus reality for this age group may be a bit surprising compared to their older peers. Consider that 23% of Gen Zers find food delivered via robot to be unappealing, for instance, while 38% find it to be appealing. This is compared to the 22% of millennials who find food delivered via robot to be unappealing, while 45% find it to be appealing. Further, 30% of Gen Zers find food delivered via drone to be unappealing, while 32% find it to be appealing, versus 23% and 48% of millennials, respectively. As for those robot servers? Just 32% of Gen Zers find them to be appealing, versus 47% of millennials. What does this mean? “Be careful with your extension of technology. There may be less receptivity to technology than one might think,” Byrne said. Value consciousness One of the most important attributes sought by Gen Z is value, as 46% of these consumers have a second job according to Deloitte research. Byrne said price consciousness is based on necessity as many of these consumers are living hand-to-mouth. That said, their definition of “value” extends well beyond price and their price sensitivity threshold actually decreases compared to other demographics. Sixty- eight percent of Gen Zers pay close attention to menu prices to find the best value, for instance, versus 71% of millennials who do the same. Sixty-three percent of Gen Zers “always compare prices before deciding what to buy,” versus 65% of millennials.

“They are 13-to-24, which comes with a wide spectrum of wants and needs,” Lyons said.

For added context, the younger consumers in this demographic tend to be more trendy and less eco conscious. Ages 15-to-18 are an “inflection point,” where these consumers start to drive and make money. At 18, when many go to college or start working full-time, they become more influenced by social issues, they’re more convenience seeking and they’re more likely to cook. Essentially, the older cohort of Gen Z prioritizes convenience, while the younger cohort is looking for social, fun experiences and “a vibe.” That said, they’re also extremely health conscious, but they define that focus much differently than their predecessors. “Healthy to them is comprehensive – it means things like balance, hygiene, diet, exercise, sleep, therapy. Doing things they want to do. It also means immunity, focus, natural, hydration, all of that together,” Lyons said.

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