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.
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