What Restaurants Considering Third-Party Delivery Need to Consider

By Brian Harris

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I recently came across a post on the website of a business loan provider. They must be in the food space because their post was about increasing restaurant delivery sales. The top two suggestions the firm offered, in this order, were: Online partnerships with delivery services and ensuring quality.

But based on the results of a recent Technomic study, I would have to reverse those in order of importance. Quality earns repeat customers and new customers. Quality is how you grow your business. Quality improves with better communication, and the restaurant is ultimately responsible for quality, even if you’re using a third-party delivery service.

Third-party delivery will make mistakes, but ultimately your restaurant is still on the hook.  This isn’t just my opinion—your customers are thinking it. Technomic’s study, “On Demand Delivery: Disrupting the Future of Foodservice,” confirms that even if restaurants have a formal agreement with third-party ordering portals and delivery services, the majority of consumers (76%) hold the restaurant at least partially responsible for any errors.

“This puts operators’ brand reputation at risk each time a customer orders delivery through these services,” said Melissa Wilson, a principal at Technomic. “Even if delivery is not a current strategic initiative, operators should educate themselves about and understand the dynamics of the third-party delivery market so they can put guardrails in place to maintain quality and brand reputation.”

Other than demanding the best service from your third-party delivery service, what can a restaurant do to minimize risk? Maybe it’s a matter of moving faster in food preparation. Or maybe it’s using better packaging that improves presentation.

Maybe we need to find out where to start!

So here’s a better question: When a delivery problem is reported, and you know it’s something the restaurant could have done differently, do you have a way of addressing it at the restaurant level?

For instance, if the wrong meal arrives or a meal is prepared incorrectly, does the restaurant have the ability to respond quickly?  Delivering a replacement meal or missing item might depend on the contract you have with a third-party delivery service. But maybe you should set a standard policy to email the person who files a complaint a coupon for a free appetizer or a percentage off their next bill. The restaurant that doesn’t respond loses customers.

And although mistakes happen, that doesn’t mean restaurants should write off third-party delivery services. The fact remains that third-party services are generating additional business for casual dining restaurants and other concepts that do not offer delivery. More than a third of third-party users (34%) reported ordering from casual dining restaurants and 14% had ordered from family-style restaurants that did not offer delivery on their own.

Here are more important insights from the Technomic study:

Chains on top

Chain restaurants are almost twice as likely as independents to receive delivery orders. Two-thirds of delivery orders either placed with a restaurant (69%) or via third-party service (66%) were from a chain restaurant.

Burger-happy

One in five third-party service users ordered a burger. Pizza is still king in restaurant delivery, but the fact that 20% of restaurants are comfortable ordering items that restaurants have previously feared delivering themselves bodes well for the industry. It’s a sign that users are taking advantage of the wider variety of options available.

These findings are further evidence that restaurants have to think more critically about quality and how it translates to delivery of various menu items. Moreover, chain restaurants have an opportunity to create a set of best practices that can be shared across their network.

Zenput is a mobile solution that can help share those best practices and track compliance. It also provides a means of communicating real-time insights at the store-level. To learn more about how Zenput helps improve restaurant operations, click here.

Topics: Restaurants

Is Less Really More on Fast-Casual Restaurant Menus?

By Joe Skupinsky

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Mark Twain famously wrote, “Whenever you find yourself on the side of the majority, it is time to reform (or pause and reflect).”

In the quick-service and fast-food industries, we continue to see brands that take the approach of the simplified menu. Think of some modern, successful chains: Chipotle, Shake Shack, Five Guys Burgers and Fries. All keep their menus to a few items. Even The Organic Coup, an organic chicken chain backed by Costco, plans to nest in the Seattle market by basically offering three variations of the same menu item: the chicken sandwich.

So it’s worth noting when you find an exception to this modern unwritten rule of menu curation. Meet The Stand, a Southern California chain offering more than 40 entrees, burgers, sandwiches, hot dogs, salads, and more at each of its four locations.

“A lot of narrowly focused concepts have dumbed down their menu so much that it’s hard to get more than two people to agree to go to them sometimes unless it’s your once-a-month trip to Shake Shack or something like that,” CEO and Co-Manager Murray Wishengrad told QSR magazine. “We just felt that that strategy—although very common and certainly revered by customers and the financial marketplace—wasn’t what we wanted it to be.”

The Stand welcomes you and that friend in your group who always ruins your dinner plans with, “Eh, I just had that a couple of days ago.” They hope that customers will frequent locations multiple times per week. Rather than looking to Chipotle for inspiration, The Stand looks to The Cheesecake Factory, which has an extensive menu. The Stand is also differentiating itself from competitors by collaborating with local brewers to make custom brews. This sounds like one hoppin’ place, if you’ll pardon the beer joke.

Standing Up, Not Sitting Down

What’s your take on The Stand’s approach vs. the “less is more” approach? What does it mean for restaurant operations and growth? Only time will tell if the fast-casual segment sticks with the simple menu approach or sways back to longer menus.

Regardless, restaurants need to take a stand on menu strategy because it’s so fundamental to growth. Expanding a restaurant chain like The Stand and transferring an extensive menu to multiple locations is tough work that requires excellent communication. Offering new menu items and promotions across your locations is also an exercise in communication. That’s where Zenput can help. Learn more about our mobile solution for restaurant operations by clicking here.

See Also

Why Regularly Inspecting Your Franchise is Important
Menu Pricing Matters in Fast-Food Segment
Hidden Menus Build Customer Loyalty
Healthy Food Promotions: A ‘Must’ for Retailers
Restaurant Operations Lessons from In-N-Out Burger

Topics: Restaurants

The Rewards of Restaurant Employee Training and Culture

By Jennifer Hoffman

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When you think of the culture of your typical American casual dining restaurant, what do you think of? For a lot of people, myself included, it’s Jennifer Aniston’s character in the movie “Office Space.” If you haven’t already noticed, that’s a favorite movie for the Zenput team, simply for the fact that it holds universal truths about work environments, which we aim to improve.

There’s that scene where Aniston gets reprimanded by the restaurant manager for not wearing enough “flair”—the buttons that supposedly show her personality. According to the director, “Office Space” made TGI Fridays get rid of “flair,” because customers started making fun of the servers—the intersection of art and life!  It’s a silly idea that “flair” could improve a server’s mood or make a restaurant culture more fun. It reminds me of when a company has a “Fun Committee.” Just because you tack “fun” onto something, doesn’t mean your employees enjoy their environment.

We already know that the restaurant industry has high turnover. But it’s troubling when the latest statistics show that turnover rates have been pushing higher. An improving economy could mean more day-to-day, month-to-month operational challenges for managers.  It could also mean increased competition because consumers have more disposable income and restaurants are competing for their dollars.

Case in point in this market segment: Ruby Tuesday just announced the closure of 95 restaurants.

Managers in casual restaurants have enough to worry about lately. How can employee training and culture—the umbrella of employee engagement—improve? Can they improve to the point where turnover decreases?

Using Processes That Work

I recently read a fascinating account of Chili’s employee training procedures. This article was a genius pitch. Journalist Daniel Riley, who happens to be a former “Chilihead”, asked his former employer if he could go behind the scenes of the team that trains managers for restaurant openings. It’s a detailed account of what makes Chili’s successful today and, quite possibly, what has made this brand stand the test of time.

What I took away from the story was an affirmation of what I’ve learned at Zenput: Processes that encourage employees to think in “real time” and to think on their feet really do work. Implementing time-tested, best practices works. Following up on site to make sure best practices are being implemented also works. It all just works at Chili’s. They have a formula for success that’s just as flavorful as their Presidente margarita—and even that has a designated 25 shakes!

This is my favorite line of Riley’s article: “At Chili's, though, kids who start as dishwashers can wind up on an all-expenses-paid adventure to Malaysia because they did a simple job better than anyone else and had the right attitude about it the whole way. At Chili's, life gets bigger and better by fifteen new restaurants a year.”

And do you know the No. 1 fundamental of working at Chili’s? Everyone pay attention: It’s having fun!

Can you create an environment where people want to stay, if not for a career (like many do in Chili’s), but to return on their college breaks?

Recognizing good employee effort and rewarding that effort isn’t a new idea in this industry. But doing it in a consistent, measurable way is the true team effort—more so than an inspirational poster in the break room. Measuring the effectiveness of training can change a restaurant’s culture. And changing culture doesn’t just allow a brand to survive in a crowded market—it allows an organization to thrive.

Topics: Restaurants

Menu Pricing Matters in Fast-Food Segment

By Brian Harris

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It seems that if there’s one thing fast-food restaurants have learned in recent history, it’s to keep the menu simple and inexpensive—all while shouting your limited time offers (LTOs) and new products from the rooftop. Of course, fast-food innovation is often easier said than done and customer preferences change, as Burger King learned the hard way last year with the Halloween Whopper.You may also recall how Taco Bell went through 40 recipes before finalizing Doritos Locos Tacos. The hard work paid off in what became the most successful product launch in the brand’s history. Just as important as innovation (but sometimes not as fun to talk about) is pricing structure. The 2012 launch price of a Doritos Locos Taco was $1.29 for a regular and a $1.69 for a “Supreme.” These prices have since climbed 20 cents, respectively.

Now Taco Bell is poised to try a new item with another Millennial-favorite, cheese-covered snack: Cheetos Burrito or the “Bur-Cheeto.” The product is being introduced for $1 in an Ohio test market.

The “just-a-buck” offer has been successful in driving customers to stores. For instance, Arby’s sold 29 million sliders at the $1 price point last September. The brand began testing the sliders in April of last year in a select few markets and at a suggested retail price of $1.29, but also started offering them for just $1 during “Happy Hour” in participating markets.

Meanwhile, Del Taco has a two-tiered menu structure to drive average check growth. The menu that is based around the $1 price point also succeeds in driving traffic. Once customers are at Del Taco, they can decide whether they want to spend more on premium ingredients or LTOs. It’s a winning recipe. In the fiscal fourth quarter of 2015, Del Taco reported 6.1% growth from Q4 2014. Notably, company-owned comparable restaurant sales growth comprised check growth of 6.0%, including over 2% of menu growth, and approximately flat transactions.

So what about system-wide check growth? How did franchisees perform with menu and LTO promotion?

Perhaps you need to go beyond sales data for store-level insights—and it’s possible to do that with the right technology platform.

Digging in at the Store Level

When it comes to pricing, LTOs, and introduction of new menu items, you have the greatest control over your corporate-owned stores. You have to do some more legwork at the store level to ensure “participating locations” are not only participating, but also executing the marketing plan appropriately.

Marketing programs don’t exist in a vacuum. At an operational level, they are living, breathing and changing. Taco Bell will need to find out best practices for the “Bur-Cheeto” before rolling it out nationally. Even after an item is made available nationwide, the first few days of availability are crucial in driving sales and building awareness.

Is your restaurant network ready for the challenges of your next big promotion? Learn how Zenput provides real-time, actionable insights by clicking here.

Topics: Restaurants

Hidden Menus Build Customer Loyalty

By Joe Skupinsky

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Nostalgia, special experiences, customization—these are the hallmark qualities of hidden menus that are on the rise across the quick-service and fast-food segments, as well as c-stores. Secret or hidden menus now have a huge following on social media as Millennials love to share their “hidden treasures.”

The Secret to Building Loyalty

In the better-for-you realm, hidden menus present an opportunity to mix and match fresh items for tasty new creations. In either setting, customers are getting that personalized and customizable experience. In the fast-food realm, secret menus make the occult—and maybe the flat-out sloppy—deliciously taboo.

Face it: You’re more likely to divulge secrets over a pint of ice cream with your loyal friend. From where else could you walk in and order a “Suicide Burger” if not from your good ol’ buddy Burger King? And only at In N Out Burger are you comfortable looking a cashier in the face, and declaring, “I’ll take those fries ‘Animal Style.’”

No matter the style of food, there are opportunities to build loyalty… if your locations are on the same page.

A ‘Secret’ to Everyone but Your Employees

In order to build loyalty, your employees will have to be well-versed on your hidden menu offerings as well as your ingredients and the various menu possibilities. Good execution comes down to good training and good customer service.

Make a decision as a brand. If you’re going to offer a hidden menu, let your employees in on the secret. Perhaps change it up by season to keep customers interested and coming back for more.  Of course, auditing your locations for special offerings, along with employee knowledge and customer service, is something that can become part of your routine.

Use the hidden menu to your advantage to drive revenue, and you’ll be well on your way to becoming the next foodservice legend!

Topics: Restaurants

Why Pizza Hut’s ‘Easy Beats Better’ Philosophy Works

By Jennifer Hoffman

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One of my good friends from the Northeast recently said something that shocked me. We were at an event and ordered what many people from his area would call “fake pizza.” To him, “fake pizza” is anything produced outside of a mom-and-pop pizzeria. In other words, it’s any pizza created by a major chain. After a few bites he said, “You know, sometimes I really enjoy this kind of pizza.”

WHOA! The same guy who routinely argues about which pizzeria uses the correct amount of cheese suddenly conceded that national chain pizza can be tasty in its own right and in the right moment. In fact, customers routinely crave this kind of pizza.

That’s what Pizza Hut discovered after the chain’s “Flavor of Now” menu was reportedly flat-lining. True, more Americans are increasingly seeking out high-end, artisan foods. But they weren’t looking for that from Pizza Hut. Pizzas with a Honey Sriracha sauce, jalapeno peppers, or an Asiago crust just weren’t driving business. When it came down to it, customers didn’t want fancy pizza from Pizza Hut—they wanted faster pizza. That’s how Pizza Hut’s new philosophy became “easy beats better.”

‘Uber Pizza’

Greg Creed, the CEO of Pizza Hut parent company Yum Brands, has resolved to make Pizza Hut the Uber of national pizza chains. The brand’s focus has turned to ease of ordering and speed of delivery. After tying its loyalty program to its mobile app, Pizza Hut started reaping the rewards. As Pizza Monthly Quarterly reports, the company sold about $2 million more on Super Bowl Sunday in 2016 compared to the year prior. Tellingly, more than 60% of the online orders were placed through mobile Web browsers or through the Pizza Hut app.

Combined with the success of Pizza Hut’s $5 Flavor Menu, the brand is getting back on track in a highly competitive foodservice space. Although Pizza Hut recently reported flat same-store sales, the brand seems to be making the right strategic moves. Aside from faster delivery, it’s taking another page from Domino’s playbook by launching a social media chatbot. The platform will be available across Pizza Hut social media accounts this upcoming fall, and will enable customers to order through Facebook or Twitter.

In all fairness, you can argue that Pizza Hut is biting at the heels of Domino’s, which is seeing shares hit a record high after posting better-than-expected quarterly sales and profit. Domino’s has allowed customers to order a pizza by tweeting the pizza emoji for more than a year.

But as they enter new territory with technology, both chains have to keep something important in mind…

Physical Stores Needs to Keep Up

Pizza isn’t delivered by a little blue bird through your computer. It’s delivered by a nuts-and-bolts operation in a physical store, with kitchen employees and delivery drivers. If orders will increase with more technology, and if customers expect those orders to arrive sooner, will your stores and staff keep up? Do they have a solid command of the basics in recipe execution, ingredients inventory, and overall sanitation?

It’s the little things that are so easy to lose sight of when focusing on “big picture” initiatives. Don’t lose the forest for the trees… or the toppings for the pizza!

SEE ALSO

Wanna ‘Pizza’ Your Restaurant Competition? Customization and Technology Are Key
How to Perform a Pizza Franchise Inspection
Brand Auditing for QSRs
Pizza Delivery Vehicle Inspection Form

Topics: Restaurants

Wanna ‘Pizza’ Your Restaurant Competition? Customization and Technology Are Key

By Brian Harris

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BDO USA’s Restaurant Practice recently released its Benchmarking Update for FY 2015. This report is based on quarterly compilations of operating results. The good news is that restaurant sales were solid throughout 2015 largely due to an improving economy. Many brands increased menu prices, which worked well for those with higher traffic.

The pizza segment experienced the most significant growth with an increase of 6.4%. Domino’s was the leader of the pack and saw a 12.2% increase in same-store sales in 2015. The company sustained that growth throughout the year by emphasizing online ordering and capitalizing on convenience and food delivery.

Pizza has long been center stage in the evolution of food convenience. In fact, it could be argued that pizza chains like Domino’s and Pizza Hut helped pave the way for ethnic food customization. Chains like Chipotle, Qdoba and Moe’s Southwestern Grill then took burritos to a whole new level. Today, I went to the Chipotle of Greek food where my salad was prepared in a completely customizable format with optional meats and vegetables.

New-age pizza chains are now using the build-your-own model to their advantage. Following take-and-bake, delivery efficiency and online ordering, build-your-own/customizable pizza is the next frontier. Blaze Fast-Fire’d Pizza is set to open its 150th restaurant this year as it expands its national footprint. MOD Pizza is now expanding to the U.K. and is expected to reach 200 restaurants in the U.S. by the end of this year. Investors are feeling confident in this space, as evidenced by the $106 million MOD raised thus far.

Considering these trends, it’s no surprise that BDO’s Benchmarking Update shows that fast casual (4.9%) and quick serve (3.8%) followed pizza in same-store sales increases. Notably, these segments had a commanding lead over upscale casual (1.7%) and casual (1.6%).

Where the ‘Dough’ Could Rise More

The fast-casual and pizza segments both saw increases in labor costs, whereas casual/upscale casual remained flat and quick serve labor costs decreased by -0.1%. Pizza lead the way with a 0.7% increase. BDO points to the fact that Domino’s is providing larger bonuses and seeking out the proper labor mix to keep up with steadily increasing sales. With cost of sales and prime costs both decreasing across all segments in 2015, the way to drive higher profit margins is now more focused: Control costs through strategic inventory and labor management.

There are two opportunities here.

1. Offer customization 

So maybe your restaurant or foodservice operation isn’t set up for Chipotle-style service. Don’t let that deter you. Play into customization on your menu by offering different toppings, breads, cheeses and condiments. Give customers the option to build their own, whether it’s a burger/sandwich or salad.

2. Tap into technology

BDO expects more restaurants to leverage technology in “new and innovative ways” to keep inventory and labor in check. Zenput is a solution that offers digital checklists, task assignment, and real-time analysis all on one mobile platform. These tools improve communication between your team and vendors, and provide a process of accountability in your organization. Better yet, this technology is applicable to any segment of the restaurant industry.

To learn more about how Zenput helps companies in the restaurant industry, click here.

Related
Managing by Checklist: NASA Does It and So Can You!
Zenput Moment: Optimize Operations to Increase Sales, Save a Sandwich
Pizza Hut’s $5 Flavor Menu Raises Stakes in QSR Competition
How to Perform a Pizza Franchise Inspection

Topics: Restaurants

Managing by Checklist: NASA Does It and So Can You!

By Jennifer Hoffman

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If you know about space shuttle launches, you know the importance of the checklist.

In what seems like a lifetime ago (1999 to be exact), a friend of mine was vacationing in Florida and witnessed a space shuttle launch. It was one of the most incredible experiences of her life, especially after the launch was scrapped twice—once for a hydrogen level issue and the other for weather. This particular launch was scheduled at night, which was stunning to view. But what stood out to her—and which she later shared when learning about Zenput—was the massive pre-flight checklist. As detailed by Wired, there are several components of the checklist with sub-components. Part 8 is its own step to confirm that the checklist has been completed. Seriously, can you imagine having the responsibility of checking off the fuel tanks of a space shuttle?

Now consider this: If a checklist is good enough for NASA, why can’t it be good enough for your retail operation? The best and the brightest minds, arguably in the U.S. and maybe even the world, use a checklist to get the job done. Checklists keep the mission on track. Checklists account for deficiencies. Checklists are smart!

However…

Not All Checklists are Created Equal

When NASA uncovers a problem during its pre-flight checklist, what follows is a predetermined sequence of events. The outcome is determined by the type of issue and its severity. The team knows how to respond accordingly. So must it be for the checklists you use in your restaurant or retail operation. Don’t send the results into outer space—follow up to keep your team accountable!

Go paperless with a process. Gone are the days of pencil and paper. The world moves at a digital pace, and no one has time to transcribe written survey responses. That time is better spent addressing the inefficiencies you and your team have uncovered.

All Systems Go

Check everything, but don’t make it overwhelming for any one manager. NASA scientists have specialties. Consider making your managers specialized. For instance, if you were to conduct a weekly retail audit of specific locations with a checklist, you could assign specific tasks to managers in the field. Have one manager check property, another check retail promotions, and a third check kitchen sanitation. Next month, switch responsibilities among managers to gain fresh perspectives and to compare previous results. This could also help with employee engagement. Managers will gain a more well-rounded view of your operation, and it will hopefully keep them engaged in the team’s efforts to identify and resolve problems.

The most effective checklists go beyond simple yes, no, or maybe answers. Take on the role of a survey, they garner actionable insights. You can optimize the fields of your checklist by using a sliding rating scale or requiring a photo. Senior management can also be alerted to exceptions, all on the same platform. For instance: “Rate the cleanliness of the floor from 1 (very poor) to 10 (very clean).” Anything falling under a 5 could alert senior management that there’s a cleanliness issue at that particular store. The visiting manager could use their smartphone to take a photo of what they see. Resolving this problem could drastically improve sales.

Blast Off!

Above all, let your imagination soar when brainstorming how to develop your checklist. A nimble platform like Zenput allows your management team to edit surveys and respond in real time from their preferred device. Zenput also provides a way to measure industry best practices and develop your own over time, all while improving operations and building your team’s confidence to respond to real-time challenges.  

Topics: Retail, Restaurants

Zenput Moment: Optimize Operations to Increase Sales, Save a Sandwich

By Brian Harris

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Yesterday, I attempted to eat a tuna sandwich that appeared as if it had been prepared by a blindfolded Kindergartener. Lettuce, tomato and onion were slapped together carelessly while the tuna was applied to everything but the bread. I had the misfortune of learning this as I unwrapped the sandwich at my computer and was rendered immobile with tuna salad hands. Through this experience, I’ve learned that when eating a tuna sandwich, it’s unnatural to feel like you’re consuming a Sloppy Joe worthy of five napkins. Overall, it was a gross experience, and it makes me want to take a break from that restaurant. I paid a good price for that half sandwich and side salad, so they’ve temporarily lost me as a customer.

To make matters worse, I had paid at an in-store kiosk intended for faster service and watched as everyone around me received their order before me. “Can we hurry up on order #30?” a manager asked. It was her job to check the contents of the plates and take-out bags to ensure that the kitchen was filling orders accurately. Perhaps the comment rushed the employee preparing the “tuna Picasso” because my order was a disaster. I was having a full-fledged “Zenput moment.”

Lesson Learned: Operations Come Down to the Basics

Here’s a quick way to lose a customer: Make them wait long only and deliver their food poorly. Without a solid grasp of basic operations, you’re at the risk of losing sales and damaging customer loyalty.

If a regional manager had walked into the restaurant (part of a major national chain) that day, I believe they would have been displeased with what I saw. One employee was frantically filling orders by herself and then had to pause because a side dish needed replenishment. She clearly didn’t have enough support. On multiple occasions, this restaurant has been low on iced tea in the beverage dispenser. I now always check before I order an iced tea and sometimes I don’t when it hasn’t been replenished—another lost sale.

Who’s preparing my order? Have they received training on how to esthetically prepare food?  The kitchen staff seemed overwhelmed, yet I overheard a manager asking customers seated at a table if she could remove plates for them. There are no waiters or waitresses at this establishment, so you have to wonder if this employee’s time would have been better spent elsewhere. So who’s running the ship and how do we steer it back on the right course?

Documentation Increases Accountability & Sales

What if a store or regional manager, on their next visit, was charged with the task of filling out an operational checklist that could document inefficiencies? Imagine if that checklist existed on a digital, mobile platform that provided real-time feedback. The manager would report a critical shortage, maintenance problem, or another serious condition that is impacting sales. They could also have a checklist that accounts for best practices like organization and cleanliness. Through a digital platform, they could share these findings with senior management and discuss ways to improve various challenges that arise store to store.

At the end of the day, that’s what retail operations are about—optimizing efficiency to increase sales and profits.

The Takeaway

Even though I’m on a break from this particular brand, I will return. You may be wondering why I would do that when I noticed so many areas in need of improvement. If there’s one thing I’ve come to know by working at Zenput, it’s that imperfection in the convenience and foodservice industry exists. However, there are always opportunities to improve. This brand is at least trying, and I appreciate that effort.

For instance, the digital ordering kiosks and order accuracy manager are a step in the right  direction. The food always tastes good with fresh ingredients, and this location is convenient to where I work. And yes, last time I ordered a tuna sandwich, it was prepared normally.

That’s the opportunity for this franchise. They have a respected brand name and excellent customer volume during lunch hour. They shouldn’t take that for granted. Don’t just meet brand expectations—strive to exceed them. You can with the right tools.

Topics: Restaurants

McD's Channel Blurring with All-You-Can Eat Fries

By Brian Harris

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Let’s all take a moment to consider two facts about McDonald’s:

  1. Seventy percent of business comes through the drive-thru window. (Bloomberg, Nov. 15)
  2. A franchisee in Missouri is about to test a McDonald’s sit-down restaurant prototype. (St. Joseph Press-News)

Both are true—and truly opposite!  What gives?

It’s not exactly news that channel blurring has been on the rise for the past few years. Dubbed the “McDonald’s of the Future,” the restaurant will combine everything customers enjoy about modern, convenient dining. Earthy tones will evoke the feeling of a fast-casual dining atmosphere (think Panera) complete with couches, arm chairs and self-order kiosks. Touchscreen menus are not a new concept either. In another show of channel blurring with convenience stores, McDonald’s has expanded its “Create Your Taste” concept, featuring self-ordering kiosks, across the country.

While the minimum wage debate continues, self-ordering kiosks are not designed to replace employees. Rather, they are designed to enhance customer service by allowing patrons to personalize their orders, from burgers and sandwiches to desserts. But the most “restaurant-y” features of them all in the McDonald’s of the Future? All-you-can-eat french fries and tableside service!

Convenience stores have worked hard to shake their old “cokes and smokes” image. It seems that McDonald’s is also trying to reinvent itself from “fry and fly.” Indeed, the futuristic McDonald’s restaurant will encourage customers to come in and take their time. Kiosks can actually slow down the ordering process as customers select more fresh ingredients, customers can linger with a McCafé in the lounge area, and kids won’t want to leave the revamped play area, complete with digital play and tabletop video games. A separate party room with a dedicated staff will allow families to have birthdays and special occasions.

The Importance of the Other 30 Percent

Let’s revisit the first fact we shared about McDonald’s. While the 70% of customers visiting the drive-thru are crucial to success, the company is very wisely not overlooking the other 30% of its business.

Customized menu options tend to have higher prices, so the opportunity is to upsell on menu items. It’s also about brand-building and creating more loyalty with a better restaurant environment. When the foot traffic segment increases in value, the business benefits as a whole.

That’s an interesting proposition, whether you operate in the convenience store or QSR space. It’s smart to take the strongest area of your business and strive to become the best at it. But it’s just as wise to look at other areas where you can better serve your core customer. In this case, it seems McDonald’s is taking steps to appeal to Millennial parents, the upcoming generation of big spenders.

Testing these concepts at the store level will only broaden McDonald’s horizons. As a brand, these are the kinds of insights they’ll need if the restaurant of the future is to become a reality nationwide.

Topics: Restaurants