QSR May 2022

MAY 2022 / NO. 291 THOUGHT LEADERSHIPFOR25YEARS

®

POPEYES, 50 YEARS YOUNG

National Restaurant Association Show 2022 •

p. 70

President Sami Siddiqui is ready to build RQ ɍ YH GHFDGHV of history and a FKLFNHQ VDQGZLFK WKDW FKDQJHG HYHU\WKLQJ

/ P. 32

Plus

Inside Greg Flynn’s Franchising Empire P. 42 KFC Races Into the Future P. 50

The Tech Fallout of COVID-19 P. 58

REFRESHMENT RUNS IN THE FAMI LY

We are Coca-Cola and so much more, offering the preferred categories and leading brands to drive your sales and profit growth. Contact your Coca-Cola representative, call 1-800-241-COKE, or visit www.coca-colacompany.com. Stop by and see us at NRA Show 2022 - booth #4402.

©2022 The Coca-Cola Company

Breakfast Done Right

! " # $$ $ % & % % & # %' ( " # & $ # # $ "

©2022 Johnsonville, LLC • *IRI 1/2/22

May

+

T A B L E O F C O N T E N T S

The National Restaurant Association Show Preview BY TREVOR GRINER P. 70

M A Y 2 0 2 2 # 2 9 1

QSR / LIMITED-SERVICE , UNLIMITED POSSIBILITIES

32 / One For The Record Books BY DANNY KLEIN Popeyes’ famed chicken sandwich wasn’t the end-all for the 50-year-old

D E P A R T M E N T S

F E A T U R E S

N E W S 9 SHORT ORDER 26 FRANCHISE FORWARD

No Time Like the Present Brands are racing to get franchise programs off the ground. BY BRYAN REESMAN 92 CL IMATE RESPONSIBI L ITY Growing Up Is vertical, soilless farming the future of food? BY RACHEL PITTMAN 96 INNOVATE The Robot Restaurants Easier jobs and happier guests are a combo brands are chasing. BY AMANDA BALTAZAR I N S I G H T 15 FRESH IDEAS The Delicate Art of Pricing It's a balancing act unlike anything we’ve seen in decades. BY BARNEY WOLF 22 ONES TO WATCH Southern Grounds Sustainably sourced food meets coffee bar. BY BEN COLEY 98 OUTSIDE INSIGHTS Winning the Delivery-Only Game Off-premises guests deserve the same attention as in-house ones. BY GEOFF MADDING 104 START TO FINISH Nikki Stead Donatos continues to put its people first.

chain—it merely set the stage for something bigger.

POPEYES

42 The Origin of Restaurant Royalty BY BEN COLEY What does it take to build one of the biggest franchise companies in restaurant history? Let's ask Greg Flynn.

50 From Roots to Revival BY DANNY KLEIN KFC’s multi-year

58 What the Restaurant Guest Wants Today BY DANNY KLEIN A cross-channel digital world has emerged out of the pandemic, and it’s not going anywhere.

turnaround is taking a step up in 2022—with a look that both reflects its past and a future full of possibility.

4 BRANDED CONTENT

6 EDITOR’S LETTER

103 ADVERTISER INDEX

O N T H E C O V E R Popeyes president

Sami Siddiqui is leading the classic chain into the future. PHOTOGRAPHY: POPEYES / BOLD MAN & THE SEA MEDIA, CHICAGO SKYLINE *5$3+,& $'2%( 672&. .h5ù$7 h16$/

QSR is a registered trademark ® of Journalistic, Inc. QSR is copyright © 2022 Journalistic, Inc. All rights reserved. 101 Europa Drive, Suite 150, Chapel Hill, NC 27517-2380, (919) 945 0700. Printed in USA. The opinions of columnists are their own. Publication of their writing does not imply endorsement by Journalistic, Inc. QSR (ISSN 1093-7994) is published monthly. Periodicals postage paid at Chapel Hill, NC, and additional entry points. SUBSCRIPTIONS: (800) 662-4834, www.qsrmagazine.com/subscribe. QSR is provided without charge upon request to individuals residing in the U.S. meeting subscription criteria as set forth by the publisher. ABC member since 2001. POSTMASTER: Send address changes to QSR, 101 Europa Drive, Suite 150, Chapel Hill, NC 27517-2380. All rights reserved. No part of this magazine may be reproduced in any fashion without the expressed written consent of Journalistic, Inc.

PERIODICALS POSTAGE PAID AT CHAPEL HILL, NC, AND ADDITIONAL ENTRY POINTS.

www.qsrmagazine.com | QSR | MAY 2022

3

BRANDED CONTENT

E D I T O R I A L E D I TOR I A L D I R E C TOR , FOOD NEWS ME D I A : Danny Klein danny@qsrmagazine.com MANAG I NG E D I TOR , F OOD NEWS ME D I A : Nicole Duncan nicole@qsrmagazine.com D I R E C TOR O F C US TOM CON T EN T: Peggy Carouthers peggy@qsrmagazine.com C US TOM CON T EN T A S S OC I AT E ED I TOR : Charlie Pogacar charlie@qsrmagazine.com C US TOM CON T EN T A S S OC I AT E ED I TOR : Kara Phelps kara@qsrmagazine.com CON T EN T ED I TOR : Ben Coley ben@qsrmagazine.com S TA F F WR I T E R : Trevor Griner Trevor@qsrmagazine.com A R T & P R O D U C T I O N ART D I R E C TOR : Tory Bartelt tory@qsrmagazine.com ON L I N E ART D I R E C TOR : Kathryn “Rosie” Rosenbrock rosie@qsrmagazine.com A D V E R T I S I N G 800 . 6 62 . 4 8 3 4 NAT I ONA L S A L E S D I R E C TOR // E X T E N S I ON 1 2 6 : Eugene Drezner eugene@foodnewsmedia.com NAT I ONA L S A L E S MANAG E R // E X T E N S I ON 1 49 : Edward Richards edward@foodnewsmedia.com NAT I ONA L S A L E S MANAG E R // E X T E N S I ON 1 4 1 : Amber Dobsovic amber@foodnewsmedia.com NAT I ONA L S A L E S MANAG E R // E X T E N S I ON 1 4 8 : John Krueger john@foodnewsmedia.com C I R C U L A T I O N WWW. Q S RMAGA Z I N E . COM/ S UB S CR I B E C I R CU L AT I ON COORD I NATOR : N. Weber circasst@qsrmagazine.com A D M I N I S T R A T I O N GROU P P UB L I SH E R , FOOD N EWS MED I A : Greg Sanders greg@foodnewsmedia.com P R E S I D E N T: SA L E S S U P P ORT // E X T E N S I ON 1 2 4 : Tracy Doubts tracy@foodnewsmedia.com GR APH I C D E S I GN E R : Erica Naftolowitz erica@qsrmagazine.com P RODUC T I ON MANAG E R : Mitch Avery mitch@qsrmagazine.com

IN THIS ISSUE BRAND STORIES FROM QSR

12 The Future of the Drive Thru Is Data To take drive

24 What Do Bank Branch Closures Mean for Restaurants?

thru operations to the next level, operators need to focus on the numbers. SPONSORED BY ENVYSION, A MOTOROLA SOLUTIONS COMPANY

LOOMIS

Bank branch closures are sweeping the country for a variety of reasons— and quick-service restaurants are making adjustments. SPONSORED BY LOOMIS

SHUTTERSTOCK

20 The Massive Cost Restaurant Franchisees Can’t Predict Construction costs are the biggest investments that

28 In the Drive Thru and Beyond, Communication Is Key Quick-service

teams are looking for communication tech that can help meet higher-than-ever customer expectations. SPONSORED BY HME HOSPITALITY AND SPECIALTY COMMUNICATIONS HME HOSPITALITY AND SPECIALTY COMMUNICATIONS

SHUTTERSTOCK / ALLIANCE IMAGES

restaurant franchisees make. They’re also the most difficult to estimate. SPONSORED BY BIDVITA

85 NEW PRODUCT SHOWCASE H E R E A R E S O M E N E W I T E M S O N T H E M A R K E T T H AT H AV E O P E R AT O R S E X C I T E D .

VISUAL ART VANDEMOORTELE

P. 86 DSA SIGNAGE CHARGENET STATIONS

P. 89 MAGNESOL PDI / ©GORODENKOFF - STOCK.ADOBE.COM

P. 86

Revenue-Generating Menuboards DSA Signage

Frying Oil Saver MAGNESOL

Digital Menuboards With User-Friendly Software Visual Art

Webb C. Howell MANAG E R , I T S E RV I C E S : Jason Purdy ACCOUN T I NG A S SOC I AT E : Carole Ogan

A D M I N I S T R A T I O N 800.662.4834 , www.qsrmagazine.com/subscribe . QSR is provided without charge upon request to individuals residing in the U.S. meeting subscription criteria as set forth by the publisher.

R E P R I N T S THE YGS GROUP TOLL FREE: 800.290.5460 FAX: 717.825.2150 E-MAIL: qsrmagazine@theygsgroup.com www.qsrmagazine.com/reprints

P. 89

P. 90

P. 90

Sponsored content in this magazine is provided by the represented company for a fee. Such content is written to be informational and non-promotional. Comments welcomed. Direct to sponsoredcontent@foodnewsmedia.com

Turn Parking Lots Into Profit Centers ChargeNet Stations

Cybersecurity Solution PDI Software

Baked Goods Vandemoortele

F O O D N E W S M E D I A P R O P E R T I E S

4

MAY 2022 | QSR | www.qsrmagazine.com

E D I T O R ’ S L E T T E R

Through Rosé-Colored Glasses The National Restaurant Association Show provides an opportunity to

W ithin a few months of being hired, I found myself at a table with three vaunted restaurant jour nalists. It was a fall Maine night and the host was taking coats. A fireplace glowed the entry. And then, I asked for a glass of rosé. Years later, our manag ing editor, Nicole Duncan, still tells this story to fresh employees. How at a restaurant that felt cozier than a Hall mark movie, I ordered pink wine. To be fair, for starters, I have no regrets. Rosé is never a bad choice. Yet truth fully, I just pointed to something that sounded “wine-y” and hoped for the best. I was a Brooklyn, New York, kid who had just spent a decade writing about high school football in Florida. My parents didn’t drink alcohol and the first meal I ever made for my wife was the beef stroganoff version of Hamburger Helper (she, too, often brings this up). I was trying to fit into a sphere I wasn’t even aware of. This story, as glib as it might be, came to mind recently when my col league, Ben Coley, was booking his f light to Chicago for the National Restaurant Association Show. We hired Ben in January 2020. So, as the calendar portends, he wasn’t going on any work trips anytime soon. It made me realize what he’s missed—the kind of interactions you can’t punch a time card for. In the grand scheme of COVID, not being able to travel for a trade show feels miniscule. And it is. Ben and I communicated via screen for roughly a year as the industry faced the crisis from the tip of the spear. By the time we met again, it felt like decades had passed. I’m sure you all

can relate. I had gray hair and acted twice my age before. Now, it was (more or less) closer to reality. As the world recovers, however, so are events and the connective threads we seek out from face-to-face opportunities. We’re one step further on the road back to normal, or whatever that might be. And I’m happy Ben gets to see it; to meet with the people he’s been talking to on the phone/Zoom for two-plus years; to gather insights and feedback from the trenches; and yes, the moment to embarrass himself in front of grizzled vino vets if he gets the chance. This recalibration is important for restaurants. Maybe more so than other industries. It’s been unnatural, and definitely out of character, for so many leaders I’ve spoken to in past months to huddle at home and try to f lip the right switches. Hospitality is a uni verse where no matter what tech you invest in and how streamlined systems become, you simply can’t recreate the view from the front door. As Eggs Up Grill CEO Ricky Richardson once told me, “what you can’t ever defeat is what you see inside your restaurant.” The same is true of colleagues. So let the conversations f low at the industry’s biggest show, and come find us at our table to say hello if you’re attending. Just, whatever you do, don’t bring me the wine list.

reconnect again, and brings us that much closer to life as we remember it.

DANNY@QSRMAGAZINE.COM QSR MAGAZINE

Danny Klein, Editorial Director

ROSIE ROSENBROCK

6

MAY 2022 | QSR | www.qsrmagazine.com

BRINGING

Whether you’re a quick-service coffee destination or full-service restaurant with a breakfast program, Mother Parkers is here to partner on your tea and coffee needs through: • Blend & Product Development • Insights to Drive Growth • Surety of Supply Get in touch with us online mother-parkers.com/contact-us to learn how we can help! of lapsed customers say more variety of hot & cold specialty coffees and new brewed coffee options would entice them to increase food and beverage purchases at breakfast. BACK TO RESTAURANTS COFFEE DRINKERS 47 %

Find out more about our coffee and tea programs by visiting us at www.mother-parkers.com

RELIES ENTIRELY ON THE DILIGENCE OF honey bees . third of our diet A

PROBABLY EVEN MORE, ONCE PEOPLE TRY THIS

lavender blueberry syrup . Honey bees are responsible for one in every three bites of food we eat, thanks to their pollination efforts.That includes the fresh lavender and blueberries in this delectable syrup. As an added bonus, honey bees produce pure, all-natural honey as part of the process. For this and other delicious recipes brought to you by bees, visit Honey.com .

SHORT ORDER

What kind of Slush are you in the mood for? Sonic has the answer.

Sonic Sets theMood The classic chain’s latest launch tapped into just the right amount of nostalgia.

SONICDRIVE-INCLAIMS ITHAS A SLUSHFLAVOR for “everyone and for every mood.” Now, it’s taking the guesswork out of the equation for consumers. The chain dropped a “Sonic Slush Ring” in March, which is designed to look like a Slush in one of the brand’s signature white cups. But they’re more than just design pieces; each ring comes with a guide that matches the indicated ring color to the “perfect Slush flavor to suit your mood,” the company says. If the ring turns purple, for example, a grape Slush might be in order. Pink? Try Strawberry. “Everything Y2K is on trend right now, and the Sonic Slush Ring lets us tap into that style in a fun way that’s uniquely Sonic,” says Lori Abou Habib, the brand’s chief marketing officer. The Slush Rings sold for $9.99 online. Guests could also purchase canvas tote bags and T-shirts that read “My Slush Mood.” For every Slush Ring sold, Sonic donated all of the proceeds to supplies and learning resources for public schools.

SONIC Got timelyandnewsworthyphotos?Submit themtoShortOrder@qsrmagazine.com.

www.qsrmagazine.com | QSR | MAY 2022

9

SHORT ORDER

It remains to be seen just howmany locations will close during the pandemic era. Estimates in the 100,000 range feel like a good benchmark, but the dust continues to settle. However, the industry has progressed far enough to ask another question—who is ready to scale again? Bank of America’s global research division released a report looking into the subject. Here were some highlights. U.S. Restaurants After COVID: A Growth Market?

The overall reality: While the pandemic wreaked havoc with the profitability of smaller restaurant operators, it proved beneficiary for large restaurant chains, particularly tradi tional fast-food restaurants. For many quick-serves, average volumes are higher than pre-COVID, 10 percent across the board per BofA’s index. Along with lean labor models, many brands drove unit-level cash flows to all-time highs.

may have lacked the capacity to accommodate the [double] drive-thru lanes or curbside pickup areas that became so integral to restaurant operations during the pandemic.” Some historic concerns: “While many large restaurant systems have emerged healthier from the pandemic accelerating growth is not without risk,” the company added. “Historically there has been an inverse relationship between unit growth and same-store sales for mature concepts as they risk cannibalizing their own existing operations. And in some cases, excess growth has precipitated the sharp declines in performance that necessitate turnarounds [which invariably include slowing or stopping unit growth].”

Examples:

“I’m excited to share that over the long-term we now believe we can operate at least 7,000 Chipotle restaurants in North America, up from our prior goal of 6,000 based on the success of small-town opportunities that are delivering unit economics at or better than our traditional locations.” CHIPOTLE CEO BRIAN NICCOL

“We now believe that our domestic footprint can scale to 4,000 restaurants [from 3,000 previously], and maintain our position for 3,000 international restaurants. That’s a potential of 7,000-plus total restaurants.” FORMER WINGSTOP CEO CHARLIE MORRISON

K

Brands to Watch: BofA added while excess growth can stir setbacks for mature concepts, brands far from saturation are insulated from cannibalization and new stores propel not only top-line growth, but also the ability to scale up and leverage costs. Restaurants with significant whitespace and exceptional unit economics (Dutch Bros, First Watch, Krispy Kreme, Portillo’s and even Starbucks), have earned the “right to grow,” the company said. Dutch Bros has the added advantage of small boxes/plots of lands that can thrive in lower cost locations. Indeed, In the first year of being a public brand, Dutch Bros opened a record-breaking 98 stores systemwide, surpassing previous guidance of 92 units. This year, it expects at least 125 openings, or growth of roughly 23 percent.

“In 2021, we opened 3,057 net new units, driven by 4,180 gross unit openings, with meaningful contributions from each of our brands, marking the strongest growth year in our history and setting an industry record for unit development. To put that into context, as the world’s largest restaurant company, we opened a new restaurant on average every two hours.” YUM! BRANDS CEO DAVID GIBBS Competition Abounds: “Despite the exit of independents and smaller restaurant concepts, demand for the best real estate sites remains fierce,” BofA said. “In general, the concepts that closed during the pandemic had occupied subpar locations [a contributing factor to closures] and or pads that were too small for large chains. They also

DUTCH BROS EXPECTS TO 0PEN AT LEAST 125 STORES THIS YEAR UP, ROUGHLY 23 %

GROWING MONEY TREE: ADOBE STOCK / ADAM121. DUTCH BROS

10

MAY 2022 | QSR | www.qsrmagazine.com

S P ON S O R E D B Y E N V Y S I ON , A MO T O R O L A S O L U T I ON S C OMPAN Y

Getting drive-thru operations right is critical, even more so in the current environment. “Right now, our top focus in our stores is on growing top line sales through drive-thru execution, with an em phasis on late-night operations,” Aiello says. “A lot of companies took a natural sales lift during the pandemic just because there were more consumers in general going through drive thrus, but to main tainit andtorealize the truepoten tial, you’ve got tohave consistently outstanding operations.” As FlynnRestaurant Group re focuses on meeting high demand at the drive thru, data is onemain prongof itsapproach.Thecompany holdsweeklyengagement callswith its storemanagersandareacoaches to review outlier reports fromEn vysion Restaurant Solution Suite, a video surveillance and loss pre vention software solution that ties reporting tovideoverification.The outlier reports show video footage and transaction data side-by-side,

D uring the worst phases of COVID-19, a case could bemade that drive thrus saved the quick-service restaurant industry. When diningroomsclosed, drive thrus shoulderedmostof therevenue intake for many chains—and that trend shows no signs of stopping anytime soon. “The increase in the percentage of drive-thru sales, pre-pandemic versusnow, hasbeenabsolutelyremarkable—not only forour company and our brand, but for the industry as awhole,” says JonAiello,market presidentwithFlynnRestaurantGroup. “Thedrive thru is the lifeblood of quick-servicerestaurants rightnow, andI feel like that change ishere tostay.Companies thatareabletooperatedrivethrus thatareextremely efficient, extremely accurate, and friendlywill have the advantage.” To take drive-thru operations to the next level, operators need to focus on what the data reveals. / BY KARA PHELPS The Future of the Drive Thru Is Data

providing insights and context todig deeper into thenumbers. “Weget tohaveagoodconversationeveryweekaboutwhere theop portunities are, and that’s been reallyhelpful,”Aiello says. FlynnRestaurantGrouporiginallychoseEnvysiontohelpmitigate business risk. Beyond helping to reduce loss prevention, the platform hasalsoprovedvaluable inotherways. “Initially,whenwestartedwith Envysion, our biggest gainwas obviously loss prevention,” Aiello says.

“Theplatformhelpedus see where we weremissing the boat in terms of refunds, voids, promos—thingsgoing on thatmaybe shouldn’t be going on. But a hidden ben efit that we’ve discovered

“Companies that are able to operate drive thrus that are extremely efficient, extremely accurate, and friendly will have the advantage.”

along theway has been the operational improvements we’ve been able tomake, just throughthenormal courseof engagingwiththevideosand engagingwith theoutlier reports.We’vebecomebetter as anorganiza tionas a result of it.” Envysion has allowed Flynn Restaurant Group to identify key ar eas of their drive-thru operations andmake measurable differences over time. “Everybody hasmore on their plate, and no one has time to watchvideoall day,”Aiellosays. “Envysion integratesahigh-techvideo surveillance systemintoourPOSandgives us real-timedata. Infiveor 10minutes over coffee, you’re able to identify where your pain points are—notonly intermsof lossprevention, but also intermsofoperational deficiencies. You’reable togoandaddress those immediately insteadof being buried ina computer all day. It’s beenahugehelp tous.” Z

To learnmore, visit envysion.com.

SHUTTERSTOCK

12

MAY 2022 | QSR | www.qsrmagazine.com

| M E N U P R I C I N G | fresh ideas The Delicate Art of Menu Pricing

Consumers appear willing to foot the bill to dine out these days. But is there a breaking point?

Inflation has forced operators to play a balancing act unlike anything we’ve seen in decades. / B Y B A R N E Y W O L F

R estaurant operators of late find themselves in a precari ous position few have experienced: trying to figure out the best methods to price their menus amid a range of inflationary pressures. The nation hasn’t experienced this level of inflation in 40 years, and, even then, restaurant operators were nowhere close to wit nessing the type of labor shortages that are now joining with various supply issues to exacerbate more typical cost stresses, like rising energy prices. “Pricing is really coming to the forefront,” says TomCook, prin cipal at Westport, Connecticut-based restaurant consulting firm King-Casey. “Now, it’s not only the cost of goods that are going up, but the cost of labor that these operators have to face.” Restaurants began encountering some of these concerns even before the economic turmoil created in the wake of COVID

19. Ingredient shortages over the years forced changes in menus and recipes, while labor concerns started appearing several years before the pandemic. Unlike the past, however, when owners could focus on one issue at a time, “this is occurring on a massive scale that has people thinking of it in a separate way,” says Dirk Izzo, senior vice pres ident and general manager at NCR Hospitality, which provides fiscal technology solutions. There’s no doubt inflation has impacted what the consumer pays at limited-service restaurants. According to the U.S. Bureau of Labor Statistics, prices for meals and snacks at these eateries jumped 7.2 percent for the 12 months ending in March. The BLS estimates overall food prices could rise another 4 per cent in 2022. “For the majority of operators, it will be very difficult to avoid

ADOBE STOCK

www.qsrmagazine.com | QSR | MAY 2022

15

fresh ideas

| M E N U P R I C I N G |

raising prices, if not this year, then the next,” adds MaeveWebster, president of Vermont-based Menu Matters, a menu and strategic consulting firm. The issue then becomes, can quick-serves do so and not alienate customers? Thus far, most experts suggest the best menu-pricing philoso phy may to be to refrain from across-the-board or frequent price hikes, instead choosing more strategic increases. At the same time, they say guests have been largely tolerant of restaurateurs’ need to escalate prices. “People have been more understanding than they’ve ever been,” says Jim Balis, managing director, Strategic Operations Group for CapitalSpring, which provides structured financing for the restaurant industry. Consumers are even willing to tip at fast casual and quick-service units. Observers also note some restaurants are making portions smaller as opposed to raising pricingmultiple times, although that tactic is just as visible to customers as raising prices. The trick going forward, asWebster suggests, is pricingmenus in a way that will address the various cost increases facing oper ators without turning off so-far patient customers. And experts agree the key is a balancing act to protect margins without being hidebound. “Operators need to be more flexible in terms of profit-margin objectives,” Cook says, admitting that’s easier said than done. While maintaining margins is the goal, eventually those may need to be relaxed or customers will feel exploited. He suggests a three-pronged restaurant menu-pricing strat egy that focuses on controlling costs—including through kitchen

tain items “have very good price value, so guests realize the price increase is not going to be a showstopper,” Cook says. Alerting guests to items with perceived value is just as important. Izzo echoed the call to use technology advances to offset labor cost pressures, ranging from separate make-lines for digital orders in the kitchen to kiosks and QR code contactless ordering in the lobby. And “bots” can take orders in drive-thru lanes. He is another proponent of gathering data to help make good menu pricing decisions, not only which items—particularly high profit ones—can carry price increases, but also how to market those as value propositions. “Every restaurant is trying to figure out the elasticity on price and howmuch of an increase it can take without losing customers,” he says. “Data will help. You must realize your costs and under stand your customers and their requirements. Determining that sweet spot is important.” Any pricing strategy should consider a discounting plan where it makes sense, Balis says, such as pricing a premium, limited-time offer higher but also offering it as part of a discount concept, such as a bundle—making sure all of thosemaintain acceptablemargins. After considering specific menu pricing, “the next step is to look at the revenue channel,” he says. “You may want to price dif ferently across the channels,” such as charging separately mobile or drive-thru service than for dining in. With an investment portfolio that covers some 3,000 restau rants, mostly limited-service, CapitalSpring works with all kinds of owners—chains, franchises, and independents. While some are adamant on certain pricing issues, others are more flexible toward regional pressures.

“A lot of times the brand will give you liberty on pricing, but, say, if there’s an LTO, you have to abide by their pricing,” Balis says. Webster advises operators to be honest with customers, but refrain from countless price hikes, because guests “will lack confidence” in the brand. “They won’t knowwhat to expect in terms of what they may be paying.” The pandemic also has changed the way peo ple view a value proposition. “It’s not so much the cost, but what am I getting for it,” she says. Value can be enhanced not just by low prices or deep dis counts, but by other factors, including hospitality, loyalty benefits, and ease of ordering.

While automation can save costs, hospitality is still important, including at limited-service restau rants. Several experts pointed to the Chick-fil-A’s success with stationing friendly employees in its drive-thru lanes to take face-to-face orders, a tactic some oth ers followed. “It’s demonstrating that you appreciate guests when they visit,” Webster adds. She cautions against relying so much on technol ogy that it removes the human touch. “Otherwise, you are nothing more than a higher-level vending machine.” q

SEVERAL EXPERTS POINTED TO THE CHICK-FIL-A’S SUCCESS WITH STATIONING FRIENDLY EMPLOYEES IN ITS DRIVE-THRU LANES TO TAKE FACE-TO-FACE ORDERS, A TACTIC SOME OTHERS FOLLOWED.

technology advances; ramping up data collection related to pric ing and value; and communicating a brand’s value to guests. Taking a “deep dive” of transactional data over recent years will provide necessary quantitative information, he adds, and an analysis of consumers’ attitudes regarding the value of products will let an operator know if an item has a “good perceived value and a chance to do a price increase.” Having data also allows restaurants to let consumers know cer

BarneyWolf is a regular contributor to Food News Media and is based in Ohio.

CHICK-FIL-A

16

MAY 2022 | QSR | www.qsrmagazine.com

SPONSOREDBYANCHORPACKAGING

HUURUV DQG HQDEOH VWDƪ WR FKHFN RUGHUV before pickup without opening the lid and releasing the foods’ heat. PP excels here as ZHOO DQG XQOLNH Ƭ EHU RU IRDP LV FRQVXPHU reusable and remains recyclable after use.

'(/,9(5 6$/(6 AND PROFIT GROWTH

Better packaging is an investment in protecting customer acquisition costs and securing the next order. It is also something consumers value. 58% of all adults say they’d be willing to pay a little more for upgraded packaging. This number jumps to over 70% for those that choose takeout and delivery most – consumers 18 to 41 (Gen Z adults and Millennials). A 2% premium on the order pricewill cover the increased investment in packaging for most operators.

+2: 72 '(/,9(5 7+( %(67 7$67( (9(5< 7,0( CONSUMERSWILL ORDERMORE OFF PREMISE SALES THIS YEAR Creating great meal experiences will drive your share RI UHYHQXH DQG LQFUHDVH SURƬ WV

&RQVXPHUV KDYH PDGH Rƪ SUHPLVH SDUW RI their daily lives. Consider this: 54% of con sumers report it is essential to the way they live, and over 60% say they will order more takeout and delivery in 2022 – a number that leaps over 70% for consumers 18 to 41 years old. Yet, Datassential found only 1 in 3 consumers feel takeout and delivery food quality has improved. Restaurants delivering the best meal experiences will win. Better packaging converts this opportunity into loyal growth. After a takeout or delivery meal is pack aged, the clock begins on preserving the meal experience. An average of 30-minutes pass as food waits for pickup, travels, and is brought to the table. Over that time, the meal must stay warm, delicate textures must remain crisp and presentation must be preserved. Test packaging on this time frame, in a simulated delivery process, to identify the packages that perform best. SUCCESS MEAN TESTING ON $ Ǖ0,187( '(/,9(5< 7,0(/,1(

Polypropylene Holds Heat and Prevents Leaks

Improved packaging pays additional EHQHƬ WV +RZ PDQ\ RI \RXU FXVWRPHUV H[SHULHQFH \RXU IRRG IRU WKH Ƭ UVW WLPH through delivery or takeout? Packages that protect the meal experience longer enable RSHUDWRUV WR VXFFHVVIXOO\ Rƪ HU PRUH RI their menu over a larger delivery radius. Better meals reduce costly comps for XQVDWLVƬ HG FXVWRPHUV $OVR VWUDWHJLFDOO\ selected geometries convey larger servings while supporting portion control, enabling slight item quantity reductions to lower food costs and maintain or even improve SURƬ W PDUJLQV

Proper Venting Removes Excess Moisture

.((3 7+( +($7 ǟ NOT THE CONDENSATION

Polypropylene (PP) packages excel at holding heat. But for hot and crisp favorites, like breaded chicken or fries, the moisture this heat cre ates must be vented. Technomic consumer research found Crisp Food Technologies ® was best at venting excess humidity to protect texture while retaining heat - even over 30 minutes. Because food stayed hot and crispy, consumers experienced better taste. '(/,9(5 *5($7 35(6(17$7,21 Alternatively, for rich and saucy meals, sturdy, compartmented packages with leak resistant closures prevent messy spills while retaining heat and keeping proteins and sides separated. Clear, anti-fog lids reduce

Better packaging is your key to unlocking RUGHU UHYHQXH DQG SURƬ W JURZWK E\ delivering the best experience.

Contact Anchor Packaging to build a packaging plan that delivers for you

Source: NRA State of the Restaurant Industry 2022, Dataessential 2022

DelivertheBest * Taste

ConsumersConfirmCrispFoodTechnologies ® Delivers theBestTaste Learn How Protecting Texture Protects Taste at anchorpac.com/Technomic Consumer Reusable • Microwaveable • Curbside Recyclable Full Assortment of Shapes and Sizes

S P ON S O R E D B Y B I D V I TA The Massive Cost Restaurant Franchisees Can’t Predict Construction costs are the biggest investments that restaurant franchisees make. They’re also the most difficult to estimate. / BY KARA PHELPS

locationwithinminutes. Designed to be user friendlywitha straightforward setupprocess, the platformcan create detailed estimates for projectswithina fewminutes, comparedtothe twoweeks itmaytypicallytake togeneratebids the traditional way. “Pretty much everything is on-demand,” Borisov says. “But in construction, if a project comes in15–20percentoverbudget and it takes the contractor four weeks longer than antici pated, that’s very typical. This has become the norm in franchising, in fact, where projects are late. Franchisees aren’t happy about that.” Since BidVita eases some of themost com mon frustrations that franchisees experience, the platform can also helpmaintain positive franchisee-franchisor relationships. “Thebiggest issue infranchising is franchi seeunhappiness,”Borisovsays. “If franchisees are unhappy, the brand isn’t going to get refer rals. Most of that friction happens during the franchisedevelopment process,when franchi sees are in themarket for real estate locations ormakingsuretheysignagoodlease.Theyneed data points to work with their biggest invest ment.Evenwithoutconstructionplans,BidVita cantell themwhatalocationisgoingtocost,how longit’sgoingtotaketodevelop,what’s included andexcluded, andthemajormilestonesonthat project. Ifthey’renegotiatingalease,BidVitacan tell themwhethertheyhaveanappropriateten ant improvementallowanceor if the landlordis notwillingtoupgradethespace.Franchiseesor theirreal estateagentscanlearnallof this from their phone in less thansixminutes.” Timeandforeknowledgecanmakeabigdif ference. “Wegiveour franchiseesand franchi sorsaglimpse intothe futurewithtechnology,” Borisov says. “The data our platformprovides canhelp you see the finish line during all proj ect phases.” Z

W hen it comes to opening a new res taurant franchise, thebiggest price tag is construction, especially in today’smarket.Butnewfranchiseesoftenlearn that obtainingarealisticestimateforconstruc tion costs is usually impossible until late in the process,whichinmostcases istoolate,because theupfrontcommitmenttocost isalreadymade. Even franchise disclosure documents (fdd s ) referenceabroadpotential range. Thisuncertainty isn’t ideal for franchisees, manyofwhomentered franchising tomitigate their risk asmuch as possible. One of the ben efitsof franchising isbuying intoanestablished systemwith no surprises, but the largest cost involved is often the least knownupfront. “If you are in franchising, construction canmake up 60–70 percent of the cost of your entire project,” says Slava Borisov, CEO of

BidVita. “Like any large investment, you need data to be able tomake an informed decision. Everything else in the franchise system is known with 10–15 percent deviation, but for construction, you’regivenarange that insome cases isupto10times the lowest cost. That can bemassively frustrating to franchisees.” BidVita isaplatformdesigned for franchis es’ commercial constructionthatusesartificial intelligence (ai) to check construction costs, timelines,milestones, andqualifications inreal time all over theU.S. and delivermore precise datawithout needing input froma contractor. Franchisors canuseBidVita to increase royal ties and decrease timelines to opening by an average of four months, and franchisees are happier knowing their costs, timelines, and milestones in the early phase of development and compare the construction costs for their

To learnmore, visit bidvita.com.

SHUTTERSTOCK / ALLIANCE IMAGES

20

MAY 2022 | QSR | www.qsrmagazine.com

%LG9LWD ʖʤ ʶ˂ˁˆˇ˅ˈʶˇʼ˂ˁ ʷʴˇʴ ˂ˁ ʷʸˀʴˁʷ ʹ˂˅ ʹ˅ʴˁʶʻʼˆʸˆ

ʼˡ˖˥˘˔˦˘ ʹ˥˔ˡ˖˛˜˦˘ ʴ˚˥˘˘ˠ˘ˡ˧ ˆ˔˟˘˦

ʼˡ˖˥˘˔˦˘ ˅ˢˬ˔˟˧˜˘˦ ʥˋ ʹ˔˦˧˘˥

ʴ˖˖˘˟˘˥˔˧˘ ˆ˧ˢ˥˘ ʷ˘˩˘˟ˢˣˠ˘ˡ˧

ʴ˖˖˘˦˦ ˖˥˜˧˜˖˔˟ ˖ˢˡ˦˧˥˨˖˧˜ˢˡ ˗˔˧˔ ˔ˡˬ˧˜ˠ˘ʟ ˔ˡˬ˪˛˘˥˘ʡ

DEPARTMENT ONES TO WATCH

SouthernGrounds A fast casual pairing sustainably sourced food with a coffee bar hopes to reach 125 locations in the next decade. B Y B E N C O L E Y

Since, Southern Grounds expanded to four locations throughout Florida, including its first nontraditional unit in the Jackson ville International Airport in partnership with HMSHost. To kick off 2022, the brand announced the beginning of its franchise program, with the goal of reaching 125 stores in the next decade. “We wanted social consciousness to persist in our brand over low prices, poor quality, and the standard mix of f lavors you would get in traditional coffeehouses. So, increasing both food and coffee qual ity was important in this new paradigm for us,” Janasik says. “Those were the things we were chasing in this new model. New cof feehouse and community focus lead to new energy in the communities, gentrification of sorts, and we wanted food and coffee to be spoken equally in the same sentence when consumers came to experience us.” The restaurant features a sizable food menu featuring breakfast and brunch, hot items, tartines ( French open-faced sand wiches), cold sandwiches and wraps, salads and soups, and a kid’s menu. Some exam ples include Greek omelette, grilled goat cheese, salmon tacos, salmon toast, turkey club, and caprese salad. The beverage lineup comprises cold brew, drip cof fee, cappuccino, cafe con leche, chai latte, French press, and more. The typical menu mix is 55 percent food and 45 percent beverage. The sustainable and non-GMO menu feeds into a growing trend among restau rant consumers. Thirty-eight percent of adults said availability of locally sourced food would make themmore likely to choose one restaurant over the other, according to The National Restaurant Association’s 2022 State of the Industry. The sentiment is even higher among Gen Z (40 percent) and mil lennials (48 percent). At the biggest cof CONTINUED ON PAGE 102

studied big-time coffee brands and noticed a standardized experience that didn’t fol low through on the promise of building community, which is an integral part of the movement, Janasik says. Southern Grounds wanted to rebuild that gathering place and disrupt the way custom ers experienced their morning beverage. The best way to do so? Combine sustain ably sourced food with a coffee bar to carve out an elevated, differentiated category. The concept recruited local chefs to cre ate scratch-kitchen recipes, learned from coffee roasting company Intelligentsia on how to form equitable trading relation ships with farmers, and teamed with local artists and architects to deliver designs that ref lect the aesthetics, color, and artwork of the neighborhood.

FOUNDERS: Mark Janasik & Shiju Zacharia HEADQUARTERS: Jacksonville, Florida YEAR STARTED: 2016 ANNUAL SALES: $6.3M company-owned shops; $2.1M AUV TOTAL UNITS: 4 FRANCHISED UNITS: Licensing agreement with HMSHOST for two locations. One is currently open in the Jacksonville International Airport Terminal A, and a second location will open pre-security tentatively in Q4.

WHENMARK JANASIKANDHIS TEAMENVISIONED the opening of Southern Grounds seven years ago, they were advised against enter ing an already crowded coffee shop sector. But from their perspective, they had

SOUTHERN GROUNDS

22

MAY 2022 | QSR | www.qsrmagazine.com

Steve Chu Ekiben Fells Point, MD

YOUR PEP. OUR PEPPER.

The dish that got chef Steve Chu from hot dog cart to full-fledged restaurant: Thai Chicken Meatballs. It’s got a little bit of everything – crisp mango slaw, tender, juicy chicken meatballs and of course, that phenomenal bite and texture of Cracked Black Pepper.

TOGETHER, WE FLAVOR

Your Skills. Our Spices. Now that’s a potent combination. Learn more at: McCormickForChefs.com/McCormick-Culinary

S P ON S O R E D B Y L OOM I S

What DoBankBranchClosures Mean for Restaurants?

BANK BRANCH CLOSURES ARE SWEEPING THE COUNTRY FOR A VARIETY OF REASONS. HERE’S HOW QUICK-SERVICE RESTAURANTS ARE MAKING ADJUSTMENTS. / BY KARA PHELPS

B ank branch numbers have been ona steadydecline for the last few years,but thetrendhasonlypicked

up speed since theCOVID-19pandemic began. A report fromS&PGlobal found that more than 2,900 branches closed in 2021 alone. As consumers grew less comfortablewithin-personinteractions during thepandemic, theystartedusing online and mobile banking apps much more. And as mergers and acquisitions (M&A) have increased to the highest levels since 2006, banks have closed duplicate branches within a 10-mile ra dius. These combined forceshave led tonoticeablyhigher bankbranch closures inevery part of the country, fromcities to rural areas. So, howdotheseclosuresaffectquick-servicerestaurantoperators? Several common issues tend to arise. “The biggest impact to restaurants is that they now have to drive farther tomake their bankdeposit and to get their change order, so the employee is out of the restaurant longer,” says Lenny Evansek, senior vice president of national retail business development at Loomis. “An other sideeffect is that theyneedtoopenupnewbankingrelationships, whichmeans they nowneed tomanagemore of them. Also, banks are raising the feesoncommercial deposits if thosecommercial-connected clients go into banking centers—so restaurants are now payingmore todoover-the-counter banking. The cost of going toabankbranchhas never beenhigher.” As more andmore bank branches close, operators are tasked with findingworkarounds andnewsolutions to theseproblems. Thatmight meannever going into a branchat all. “Restaurants need to adopt a way to do more banking virtually,” Evansek says. “That is essential in today’s world. Loomis has a variety of solutions that can accommodate virtual deposits. We have the tra ditional armored car, where we just pick up and deliver deposits and

dropoffachangeorderoruseour smart safe technologysolutioncalled SafePoint. We also offer our own change ordermanagement platform called Loomis CashExchange, where clients can go online, place their change order, and thenwe deliver it. Many restaurants are starting to offer tip automation—our solutionKickfin can also send tips instantly to employees as soonas their shift ends.” For operatorswhowork inmultiple states or regions, consolidating all of their banking activity into one vendor has distinct advantages. By simplifying to a single point of contact and implementing virtual deposits, operatorscanstreamlineprocessesandsaveemployees’ time. “Operatorshaveacompleteclosed-loopsystemwithLoomis,”Evansek says. “Wedifferentiateourselvesbythehighqualityof theservicesweof fer, ourabilitytoimplement solutions, andourabilitytotraineffectively. Wearetheonesofferingthesafe;wemanagetheserviceandmaintenance plan; we are our own armored car service.We offer automated tipping and change ordermanagement. As banking becomesmore virtual, we can really become the one-stop-shop for operators for anything related tocashmanagementwithinthe fourwallsof arestaurant.” Z

To learnmore, visit loomis.us.

LOOMIS

24

MAY 2022 | QSR | www.qsrmagazine.com

HERE’S HOW STOP GOING TO THE BANK… SafePoint ® by Loomis helps businesses like yours reduce time spent on daily cash management tasks ZKLFK LQ WXUQ LQFUHDVHV HIĆFLHQF\ DQG FXWV FRVWV 6DIH3RLQW LV D FDVK KDQGOLQJ VROXWLRQ FRPSULVHG of smart safe technology, change order management, armored transportation, and our proprietary online reporting platform that provides actionable data to help make better business decisions.

› Enterprise-wide reporting › Receive daily provisional credit › Eliminate bank trips › Keep funds safe

› Reduce labor › Improve operating efficiency › Optimize cash handling › Gather real-time insights

Contact us today for more information on how SafePoint can transform your business.

Loomis U.S. 2500 CityWest Blvd., Suite 2300 Houston, TX 77042

www.loomis.us sales@us.loomis.com

713-435-6700, option 2

DEPARTMENT FRANCHISE FORWARD

NoTime Like thePresent Pandemic conditions or not, some brands are racing to get franchise programs off the ground and capitalize on growth opportunities. B Y B R Y A N R E E S M A N

attorneys at Nixon Peabody and our consul tants at MSA Worldwide are awesome. They focus strictly on franchising, and they’ve been doing it for 20 or 30 years. They showed us the ropes. Without that expertise, we would prob ably have launched in 2027.” Beyond the various state and federal regu lations that come with franchising, H&H built out its entire operational training, manuals, and brand standards with cloud-based operations software f irm Friend Connect that the fran chisees access. “We’re 90 percent of the way through and have been working on it for over a year,” Rushin says. “It’s all that underlying infrastructure stuff that you don’t really think about that takes a long time to think through and build off of. So when you do sign your first deal you have everything ready and you’re not f loundering around putting something together at the last second.”

Miller’s Famous Sandwiches is another 50-year-old brand looking to the franchising space. Over the decades, it’s established roots as a top-notch roast beef destination at two Rhode Island locations, which never closed during the pandemic. The chain’s original 1,500-square-foot main unit in East Providence did nearly $2.4 million in sales last year. Gwendolyn Graham, president of Miller’s Famous Sandwiches, has been with the brand since 2006. Her husband, Roger Miller Jr., VP and chief operating officer, came onboard fully in 2010 when the company opened its second location. He’s a third-generation operator. Both were asked if they wanted to continue the tradition. They previously worked in IT, and Gwendolyn in accounting as well, which has helped through the transition. Like H&H, Miller’s is choosing slow, steady growth at first, seek ing both first-time and experienced franchisees with passion for their brand. They are not looking to add multiple units at the start for the sake of revenue. As of press time, Miller’s was close to signing its first franchisee in southeastern Massachusetts, about 25 miles from the chain’s East Providence location, and was looking at tertiary mar kets outside Boston where interest is strong and the brand resonates. “Systems are important in franchising—to make sure that those can be replicated and duplicated,” Graham says. “We’re process oriented people, and that’s what running a quick CONTINUED ON PAGE 102

After 50 years, Miller’s Famous Sandwiches decided to get into the franchising space.

O nce a restaurant brand becomes well established on a local or regional level, the natural next step for many is to dive into franchising. It’s a step easier said than done, especially during a pandemic when many businesses halted shop and huddled up. But some endured and even thrived during the COVID-19 crisis, and are progressing with their f irst franchise plans. It’s served up new lessons of its own—franchising requires patience and purpose. Iconic New York City brand H&H Bagels, which has five loca tions and turns 50 this year, saw its domestic shipping swell 500 percent and global wholesale increase 400 percent. H&H CEO Jay Rushin says the company became a better team and operator as a result. After five years of planning—during which he became very aware of their positive brand image after starting their global wholesale business—the company started franchising last fall, with four to six new units planned for 2022, and more accelerated growth in store for 2023. “We probably launched it about as fast as you could, at least at the quality level we’re looking to achieve,” Rushin says. “Our

MILLER’S FAMOUS SANDWICHES

26

MAY 2022 | QSR | www.qsrmagazine.com

S P ON S O R E D B Y HME HO S P I TA L I T Y AND S P E C I A LT Y C OMMUN I C AT I ON S

In the Drive Thru and Beyond, Communication Is Key Quick-service teams are looking for communication tech that can help meet higher-than-ever customer demand and expectations.

servicebrand inSanDiego, Calif. “Integrationbetweenmyheadset andmydrive-thru timer helps bring awareness tomobileorder wait times andenablesmy team tomakemobile customers ahigh priority so the customer doesn’t have towait onus.” Equally important,more restaurantswant drive-thrucom municationsystems that enable newer technologies likeorder ing via artificial intelligence (ai). “Manybrandshavebeensuccess fully testing automatedordering in thedrive thruandhave seen that it enables their teams tomulti-task,” Foley says. “While theAI takes orders, employees are freed from order taking andempowered to enhance the customer experience withpersonable, face-to-face in teractionswhen itmattersmost.”

A lthoughbrands have experimented for yearswith small tweaks to their traditional drive-thru service, theCOVID-19pan demic forced rapid innovation tobetter serve thehigher traffic volume.While drive thrusmadeup asmuchof 70percent of sales be foreCOVID, the drive thruquickly became a lifeline for quick-service restaurants. As a result, operators invested innewtechnologies tohelp meet higher-than-ever customer expectations. Today, crews serve more customers thanever before atmultiple touchpoints—dine-in, the drive thru,mobile orders, and curbside—and customers expect a fast, seamless experiencewitheachorder. “TheCOVIDpandemic forcedusall toreevaluateandadjustour businessoperations,”saysPaulFoley, presidentofHMEHospitalityand SpecialtyCommunications. “Drivethrushaveevolvedintooperations withmultipleorderandpickuppoints. It’sno longer justabout serving customers inthe lanequicklyandefficiently. It’salsoaboutmeetingser viceexpectationsateveryadditional channel likecurbsidepickupspots.” Tobetter serve customers, restaurantsneeda communication solution that seamlessly connects drive-thruandcrewcommunica tion, plus provides critical insights inreal time. “Wewantmobileorder customers tohave a fast andflawless experience just like theydo in the drive thru,” saysLupeCabrera, a generalmanager for amajor quick

TheNEXEO | HDXCrewCommunicationPlatform, createdby HME, delivers onall thesepoints. It features all-newhighdefinition HDXDigital Audio, optional systemintegrations that provide critical performance alerts to the right personat the right time, supports tight integration tohighly accurate automatedorder-taking (aot) systems, and is cloud-connected for platformupgrades tomeet the ever-chang ing restaurant needs. Teammembers canuse voice commands to performcertain tasks like immediately connecting toadrive-thrucus tomer, connectingprivately toa teammember viaheadset for coaching, andmore. NEXEOalsoallows one-on-one calls and segments crews intogroups formore efficient operations, allwithout disruptingdrive thrucommunicationwithcustomers. “Delivering a great customer experience startswithmakingkey communicationeasy and fun throughout the restaurantwhilemaxi mizing efficiency,”Foley says. “NEXEO|HDX is specifically created to be the total restaurant communicationsolution for todayand tomor row, elevating your operation toexceedyour customers’ expectations andenable future changes in the rapidlyevolvingquick-service restau rant industry.” Z

To learn more, visit hme.com/nexeo.

HME HOSPITALITY AND SPECIALTY COMMUNICATIONS

28

MAY 2022 | QSR | www.qsrmagazine.com