If you’re a small restaurant or business with 500 or fewer employees and you’ve had more than a 20% decline of gross receipts in a quarter compared to 2019, you may be interested in hearing about this latest news regarding the Employee Retention Tax Credit (ERTC). And thanks to the new provision in the law, yes, this applies even if you’ve already applied for the first or second draw PPP loan.
What is the Employee Retention Tax Credit?
The Employee Retention Credit is a refundable, advanceable tax credit for employers equal to 70% of qualified wages that Eligible Employers pay their employees, which includes allocable qualified health plan expenses (1). The ERTC was first designed to encourage businesses to keep employees on their payroll during the COVID-19 Pandemic and is now a way to help businesses that suffered significant revenue reductions from the pandemic.
See full IRS article here:
How much is the Tax Credit Worth?
According to the new provision, the ERTC is worth different amounts for last year and 2021.
For wages paid between 3/12/2020 and 1/1/2021: the maximum credit a business can claim is 50% of eligible wages, up to $5,000 per employee.
For wages that will be paid between 1/1/2021 and 7/1/2021, employers can claim 70% of qualifying wages of up to $10,000 per quarter. This means that businesses could receive a maximum of $14,000 per employee.
For more details, see:
Who is Eligible?
Before December 2020, only businesses with 100 or fewer employees qualified for the ERTC, and only those who did not receive a PPP loan.
However, the new provision in the CARES Act via the Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, amended and extended the ERTC (and the availability of certain advance payments of the tax credits). Businesses with 500 or fewer employees qualify if they have experienced a decline in gross receipts by more than 20% in any quarter of 2020 compared to the same quarter in 2019.
Here is more on the new ERTC eligibility criteria provided by the US Chamber of Commerce. See https://www.uschamber.com/co/start/strategy/coronavirus-employee-retention-tax-credit-guide
How do businesses claim this credit?
According to the IRS, eligible employers should report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns, which will be Form 941 for most employers, beginning the second quarter of 2020. If a company’s employment tax deposits do not cover the credit cost, employers can also request an advance of the Employee Retention Credit by submitting Form 7200.
Employers that may be eligible for the ERTC should talk to their accountants or tax preparers. The IRS is also continually updating their guidance on the ERTC, so check back on the IRS website here, https://www.irs.gov/newsroom/news-releases-for-current-month or contact the IRS for further questions.
Here are some important resources you should check out regarding this topic:
Ask IRS directly: https://www.irs.gov/help/telephone-assistance
Frequently Asked Questions and Answers on the ERTC: https://www.irs.gov/newsroom/covid-19-related-employee-retention-credits-general-information-faqs
US Chamber of Commerce on ERTC: http://uschamber.com/ertc
Small Business Resources: https://www.uschamberfoundation.org/reports/coronavirus-response-resources#smallbiz
Also, feel free to check out our earlier article on the Second Draw PPP Loan, here: https://goliathconsulting.blog/2021/01/14/the-second-draw-ppp-loan-the-latest-news-and-next-steps-for-restaurants-and-small-businesses/
Restaurants and Small Businesses may now apply for a second PPP Loan beginning January 13, 2021, thanks to the latest COVID-19 pandemic relief bill approved in late December which authorizes up to $284.5 billion for eligible businesses.
With these additional loans, qualifying restaurants and small businesses can fund payroll costs (including benefits), and pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations. (full details found in www.sba.gov).
Other key PPP updates listed in the U.S. Department of the Treasury website www.treasury.gov also state that:
There will also be increased assistance for accommodation and food services businesses. The maximum loan amount for a Second Draw PPP Loan will be 3.5x average monthly 2019 or 2020 payroll costs up to $2 million, versus the 2.5x for other small businesses. You can confirm whether your business is in this category by visiting https://www.census.gov/eos/www/naics/
Here’s a roundup of resources and important information that you’ll need before you apply:
Who is Eligible?
According to the SBA, a borrower is generally eligible for a Second Draw PPP Loan if the borrower:
How can you apply?
For those reapplying:
Borrowers will be able to apply for a Second Draw PPP Loan from January 13, 2021, until March 31, 2021, through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, eligible non-bank lender, or Farm Credit System institution that is participating in PPP. All Second Draw PPP Loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found here:
The application will require borrowers to submit documents that verify payroll costs and revenue loss. If the lender for the applicant’s Second Draw PPP Loan is the same as the lender that made the applicant’s First Draw PPP Loan this additional documentation is not required because the lender already has the relevant documentation supporting the borrower’s payroll costs.
For those who haven’t applied for a PPP loan before,
First-time borrowers can apply for a First Draw PPP Loan until March 31, 2021, using this form provided on the SBA website.
For existing PPP borrowers that did not receive loan forgiveness by December 27, 2020, he or she may:
What about loan forgiveness?
Second Draw PPP Loans qualify for full loan forgiveness if the loan proceeds are spent on payroll costs and other eligible expenses; and at least 60% of the proceeds are spent on payroll costs. The 40% can be used on other covered expenses (non-payroll expenses), but the employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan.
We recommend that you check out National Restaurant Association’s Article on PPP Second Draw for more details https://restaurant.org/downloads/pdfs/advocacy/ppp-jan2021-update
As well as these following resources:
Top-Line Overview of First Draw PPP Loans (Released 1/8/21)
Top-Line Overview of Second Draw PPP Loans (Released 1/8/21)
Accessing Capital for Minority Underserved, Veteran and Women-Owned Business Concerns Guidance (Released 1/6/21)
Interim Final Rule #1 – PPP as Amended by Economic Aid Act (Released 1/6/21)
Interim Final Rule #2 – PPP Second Draw Loans (Released 1/6/21)
Procedural Notice – Modifications to SBA Forms 3506, 3507 and 750 CA (PPP only) (Released 1/8/21)
Procedural Notice – SBA Procedural Notice on Repeal of EIDL Advance Deduction Requirement (Released 1/8/21)
Frequently Asked Questions for Lenders and Borrowers (12-09-20) https://www.sba.gov/document/support–faq-lenders-borrowers
How to Calculate Loan Amounts (06-26-20) https://www.sba.gov/document/support-how-calculate-ppp-loan-amounts
Updated First Draw Forms
Form 2483 – First Draw Borrower Application (Updated 1/8/21)
Form 2484 – First Draw Lender Guaranty Application (Updated 1/8/21)
Second Draw Forms
Form 2483-SD – Second Draw Borrower Application (Released 1/8/21)
Form 2484-SD – Second Draw Lender Guaranty Application (Released 1/8/21) https://www.sba.gov/document/sba-form-2484-sd-ppp-second-draw-lender-application-form?utm_medium=email&utm_source=govdelivery
Now that 2021 is finally here, it’s out with the old and in with the new. And in the business side of beverages, no topic is more trendy right now than “functional beverages.” Functional drinks are just what it sounds like. They’re beverages that serve a “function,” or basically, products that claim to benefit health, wellness or performance (1).
And according to The Hartman Group’s Functional Food & Beverage and Supplements 2020 report, 29 percent of consumers have been consuming more functional foods and beverages since the onset of the COVID-19 pandemic (2).
The growing concern of the pandemic and awareness for health is shifting consumer preferences towards healthier beverages, and less-sugared, natural products with minimal artificial ingredients are being favored over the sugared juices or carbonated soft drinks (3). Clean, plant-based and healthy ingredients are also reflecting the consumers’ desire to boost immunity.
“Consumers will aim to improve physical health by paying closer attention to macronutrients, maintaining a healthy weight, and choosing products suggested to boost immunity,” wrote Holly McHugh, Marketing Consultant at Imbibe, a Chicago-based beverage development company (4). “Ingredients that promote gut health, improve hydration and have anti-inflammatory properties will be in the spotlight. Superfoods that are naturally rich in immune-boosting ingredients like elderberry, acerola cherry, apple cider vinegar, ginger and turmeric will be popular. Brands will also fortify products with ingredients like zinc, vitamin C, probiotics and prebiotics” (4).
This trend has also spurred the growth of the non-alcoholic drink market. According to Donna Berry, writer for Food Business News, consumers, particularly millennials and Gen Z’ers, are “reaching for no- and low-alcohol options that provide the experience of imbibing but without the possible negative effects…in their quest for balance and health” (5).
More interesting is the changing behavior of the drinking majority. One NRN article reported that more people are now “more mindful about how much and when they drink” (1). “They are comfortable deciding not to drink on occasion. It is not a foregone conclusion that drinkers drink every time they visit a restaurant or bar.”
That’s why we think non-alcoholic drinks will help restaurant operators tap into that potential market.
Alcohol-free cocktails are nothing new, but what will be different in 2021 is how they’ll be prepared. According to Julieta Campos, Beverage Consultant and Bar Manager at Chicago’s Whistler, these spiritless cocktails will be more focused on fresh ingredients, as well as “nuanced flavors and stylish presentations of leading craft cocktails” (1).
That opens the door to endless possibilities. “There are very interesting cocktails that you can make without the use of alcohol,” says Perbellini, head mixologist at newly opened Nella Kitchen & Bar in Los Olivos, California (6). “You have to explore the flavors and use what you have in the house and improve the selection… It’s (also) a very good sales strategy because instead of offering sugary sparkling sodas for a low price, you can actually charge $7, $8, $10.”
Here’s some examples of cocktails from a Chicago Restaurant, Table at Crate, that showcase the trend perfectly: a Pretty in Pink (created by Julieta Campos), featuring a medley of green tea, sumac-pomegranate syrup and lime juice, shaken and strained over ice with a fresh tarragon sprig; a Cucumber Crush, a sports fresh grapefruit and lime juice and demerara sugar syrup, shaken and strained over ice with a cucumber wheel garnish (1).
The first drink emphasizes the antioxidant and inflammatory properties of the pomegranate juice to appeal to today’s consumers, and the second uses citrus fruits that help boost immunity. “These are thoughtfully made drinks,” says Campos (1). “You’re not stuck with a lemonade or an iced tea or some other afterthought.”
Zero Proof Spirits
Zero-proof spirits are still a novelty in the U.S., but they have started gaining a strong consumer base as a result of the health and wellness trend. It used to be that “Many of the leading non-alcoholic spirits that have emerged in the past decade hail from abroad,” said Nicole Duncan, Editor of FSR Magazine, “Seedlip, Three Spirit, and Borrego from the U.K.; Lyre’s from Australia; Ceder’s from Sweden; Abstinence from South Africa; and more” (6). Now, American brands are starting to enter this market, with brands like Ritual Zero Proof, Kin Euphorics, and Proteau.
According to the founders of Kentucky 74, a non-alcoholic bourbon, zero-proof spirits provide consumers a way to drink a “cleaner cocktail without the unwanted side effects of imbibing” (6). And these drinks can be as complex as their alcoholic counterparts. The distilled non-alcoholic spirit Seedlip, for example, takes six weeks to make and is a blend of complex herbs, spices, and barks selected to create a delicate flavor (7). And despite the earlier skepticism, the non-alcoholic movement seems to be gaining traction as more consumers look beyond alcohol and seek alternatives that offer a new kind of sophistication.
Zero-proof spirits and cocktails address this gap in the market, said Duncan (6). But it’s also important to recognize that the power of this trend has “less to do with proof and more to do with how it redefines the dining and drinking out experience.
Here are some examples of elevated zero-proof cocktails that you can try: Seedlip’s Praying Mantis-Style, a spin on the gin sour that features English pea syrup and celery bitters (7). The Ritual Zero Proof Whiskey’s Hot Toddy uses their zero alcohol whiskey and brings out the citrus notes from the orange and lemon meld perfectly with the spice of the cinnamon and clove (8).
Low Cal, Low Carb Drinks
Drinks that are focused on weight loss, such as those made with sugar-free sweeteners, are also expected to trend this year as many try “to lose the extra pounds gained during the quarantine,” said McHugh (4). “Consumers will also be focused on getting in shape and to improve overall health. Launches of sports nutrition products like protein drinks, electrolyte replenishers, performance enhancers, energy boosters and weight-loss elixirs will increase.”
It’s the Millennials and Gen Z who will be driving this trend forward. “Health and wellness are cited as important purchase drivers for Millennials,” said Scott Helstad, technical services adviser, Cargill, a global food corporation situated in Minneapolis (5). In fact, his company’s trend report says 60% of millennials often opt for a lower-calorie drink.
One way non-alcoholic beverages could appeal to these generations is to offer cocktails that are low in calories and carbs. “This will include reducing sugar or swapping it out for natural low-calorie sweeteners like stevia, monk fruit and allulose, improving nutrient density and incorporating plant-based, functional and clean label ingredients,” said McHugh (4). Zero-proof alcohols are also great in that some brands (such as Ritual Zero Proof) advertise their products as having little to no calories (8).
Here are some examples of low calorie/ low carb cocktails that we like: Chef Diane Hendricks’s Watermelon Moscow mule, using freshly grated ginger, club soda and stevia muddled with watermelon and lime juice—only 110-calories per concoction with the added alcohol (9). A margarita sweetened with stevia would rack up just 110-125 calories, compared to the 200-300 calorie average.
Are you looking to maximize sales and efficiency in your beverage program? Is your restaurant considering a bar reorganization for the new year? Goliath Consulting Group offers a full suite of bar and beverage programs, from inventory, costing, and custom cocktail menus to staff training and safe alcohol practices. Contact GetResults@GoliathConsulting.com to learn how Goliath Consulting can help your restaurant today.
How to select bubbles like a career wine buyer
“Champagne is not just for celebrations,” goes the old statement in every beverage manager training manual, “but champagne is perfect for celebrations!” It is time to bid farewell to a tumultuous 2020 and bring in the new year with an inside look at what beverage professionals will be pouring in their flutes this New Year’s Eve. From new world sparkling wine to champagne, prosecco, cava and so many more, there is a sparkling wine for every budget and palate. Here are some of our favorites to usher in the new year:
The Standard Veuve Clicquot – Yellow Label Brut ($$$)
Starting off the list is one of the most notable sparkling wines from Champagne. Veuve’s Yellow Label is the signature champagne of the House and is a standard among wine lists everywhere. This dry (brut), balanced wine brings aromas of yellow and white fruits, vanilla, brioche bread. Take a sip and enjoy the citrus and pear flavors married with a silky-smooth texture. While enjoyed by sommeliers the world over, this classic champagne is the perfect introduction the sparkling wine newcomers.
The Crowd Pleaser La Marca Prosecco ($)
Twenty years ago, very few wine industry watchers would point to an Italian sparkling (prosecco) brand leading all sparkling wine sales in America. La Marca stands out as a giant in the industry presenting a crisp, clean product with aromas of honeysuckle, fresh lemon and tastes of green apple, peach, and citrus. It is light, subtly sweet, refreshing, and affordable. Pop this cork and it will be clear how it soared to top of national sales.
The Neo-Traditionalist Anna de Codorníu Cava – Blanc de Blancs ($)
Cava, the traditional Spanish sparkling wine, is on the rise and brings the best of old-world flavors and methodology at a price the everyday consumer can celebrate. Hailing from Catalonia, Spain, Cava is one of the most Champagne-like sparkling wines on the market. With fine bubbles and tropical fruit with sourdough notes on the nose, Anna’s creamy, dry, long-lasting finish leaves your palate craving more.
The New-World Connoisseur Schramsberg Brut Rosé ($$)
Think the best sparkling wines come from across the Atlantic? Think again. Schrambsberg Vineyards crafts their brut rosé in the Méthode Traditionnelle (a labor-intensive process where wine goes through a secondary fermentation in the bottle – requiring each bottle to be rotated carefully by hand). Do not be fooled by this sparkling wine’s blush appearance, Schramsberg’s Brut Rosé is a dry sparkling wine with candied orange and raspberry preserve aromas followed by tastes of vanilla, strawberry shortcake, lemon curd, and peach. This is California winemaking at its be
The “Saying Goodbye to 2020 is Priceless” Domaine Carneros Le Rêve Blanc De Blancs 2007 ($$$)
For a sparkling wine to carry a vintage (most are combinations of multiple years’ crops to preserve consistency), the region must have an exceptional year for grapes. In 2007, Carneros experienced an excellent year with ideal warmth, producing ripe and complex wines. Domaine Carneros Le Rêve Blanc de Blancs is a standout of this growing season. Produced in the Méthode Champenoise (another name for méthode traditionnelle) by The Tattinger Family (of Champagne, France fame), this sparkling wine contains an intense bouquet of ginger, baked pear, citrus and a palate of white peach, green apple, and toasted almond. Savor the balanced acidity and silky mouthfeel while welcoming a new year with new possibilities!
Goliath Consulting Group knows sparkling wine, but we also offer a full suite of bar and beverage programs. From inventory, costing, and custom cocktail menus to staff training and safe alcohol practices, Goliath helps clients maximize their beverage programs. Contact us at GetResults@GoliathConsulting.com and let us know how we may be of service to your concept.
In our last restaurant technology blog, we discussed COVID-19 pandemic’s impact on the growth and development of AI voice technology and how it was quickly modernizing the drive-thru operations as we know it (1). The very same technology has been working on cameras, too. AI tech now enables cameras to perform designated tasks, recognize faces, and alert managers when issues arise in operations (2). In 2021 and beyond, cameras will not be a simple surveillance tool. Rather, it will be what distinguishes restaurants from the old and the new.
Here we list 5 ways camera tech can improve your business in the new year and beyond.
We cannot discuss restaurant AI without first addressing the pandemic. COVID-19 has been a powerful driving force for AI tech particularly in this industry, as stay-at-home orders, social distancing and other safety measures forced operators to rethink how they interact with their staff and guests.
The upsurge and adoptions of other AI systems will increase as demand in touchless technology increases. Even with the vaccine, we expect the focus on safety and hygiene to remain. This is where AI powered cameras will come in handy. According to David Chen, co-founder and director of engineering at Orbbec 3D Technology International, Inc., a manufacturer of 3D cameras, 3D cameras can now be equipped with algorithms that count, track, and log not only the number of humans in a room, but their position and grouping (2). This would be helpful in situations where social distancing must be enforced.
Cameras can also be programmed with new algorithms that can monitor whether people are wearing masks and complying with public health guidance, with facial recognition now being developed so that it can even accurately identify faces even through the masks or face coverings (3, 4).
Cameras will also allow restaurants to serve customers in a touchless environment. Self-order kiosks using smart cameras is sure to become more prevalent as customers prefer a contactless order service. In modern Asian street food restaurant Wow Bao, for example, as well as the fast-growing high-end burger chain, BurgerFi, self-order kiosks with smart cameras have been in use even before the pandemic (5). For example, the cameras would recognize regular customers and make suggestions based on a customer’s previous order history. According to Christopher Sebes, President of Xenial, Inc., producer of such self-order kiosks, this means increased productivity and customer satisfaction (1). “Once you opt into facial recognition, you can reorder and pay for your favorite dish in less than 10 seconds,” he added.
3D cameras also equate to smarter, faster payments. Some research suggests that cameras can be “more accurate than fingerprints or any other form of biometric identification” (2). In this way, 3D cameras not only speed up payment, but also opens opportunities for restaurants to introduce instant loyalty programs. “It allows for faster repeats of past orders and removes the need for credit card swipes or taps,” said Chen, “3D cameras can actually follow hand gestures as customers “air point” to the items they want, as presented on a screen or menu board. The technology enables customers to order one, two or more of any item, adding to their total order as quickly as they can gesture” (2). And the best part? “learning curves are small to non-existent.”
When smart cameras were introduced to Domino’s Pizza back in 2019, it was for Domino’s to access whether their pizzas were coming out of their ovens in the right shape, with the right toppings, and cooked properly and ready to go (6). The camera even took pictures of the pizza and Domino’s sent them to customers to show that their pizza had been made properly.
In 2021, however, most camera AI will allow restaurant operators to use photos to show customers that their food had been handled properly by their staff. It will answer questions that customers want answered post-pandemic. For example, did the employee wash their hands? Did they clean the surfaces? Are they wearing gloves? Are they wearing a mask? According to Jenny Splitter of Forbes magazine, this is how restaurants can earn customer trust after the pandemic, since “the end customer, then, can feel a little more comfortable knowing the restaurant followed proper cleanliness procedures” (7).
Improve Management and Productivity
Manually keeping track of employee hours can take time and effort, but with facial recognition time clocks installed in AI cameras, checking-in and checking-out employees will offer operators an accurate system with virtually no human error, more security, and the ability to manage your team on the cloud (2).
The AI camera/surveillance system can also evaluate interactions between customers and employees, “track(ing) how quickly food arrives at tables, or how often servers check on diners. The system then offers managers suggestions on how to optimize restaurant operations, and alerts managers of “noteworthy events,” like when wait times run long, and can notify servers if a visitor’s water glass needs a refill” (8).
What this means for operators is that they can use information obtained from AI camera to operation costs and drive revenue by monitoring employees and diners to figure out corrections. They can also use this information to train and educate their staff. All in all, camera AI has the potential to “empower restaurant operators to reduce operation costs and drive revenue” (8).
And for those who may be concerned about privacy, “cameras can be positioned above the employee so that faces aren’t captured. Some of the company’s more recent customers even include kitchens at military bases who are required to keep those faces off camera” (6).
Off-premise dining will continue trending in 2021, with the food delivery market expected to expand (1). According to Dragontail Systems, a Camera AI company based in Melbourne, Australia, camera AI can help ensure order accuracy and improve efficiencies.
For example, their cameras can optimize the food prep process from order to delivery to save time and money (9). The companies’ camera cutting station can monitor food prep and cooking in kitchens, detecting order accuracy before it is picked up by delivery.
By optimizing the preparation, delivery and customer contact processes, operators can ensure higher kitchen productivity, lower delivery costs, faster turnaround and ultimately, happier customers (9).
The potential for camera tech to enhance all aspects of food ordering, restaurant operations and staff management is practically endless. 3D cameras will also enable stores to reopen safely, and aid in the recovery of the restaurant industry post-pandemic.
And as more businesses embrace AI, begin to change the customer experience and their expectations of what foodservice can be, we will surely see more restaurants adopt advanced camera technology.
For more information on how to utilize restaurant technology in your restaurant, contact us firstname.lastname@example.org.
2020 has been quite a learning experience. From social distancing to customers wearing face masks, the COVID-19 pandemic has introduced us to new vocabulary and concepts never heard of in the restaurant industry: businesses had to sell grocery items and toilet paper during the quarantine, specialty menu items had to go due to supply chain issues and some indoor spaces had to be closed off to accommodate new safety measures.
This is now the new norm, and we know that some of these changes are here to stay. But now that you’ve learned everything the hard way, what can you do to plan ahead for the new year? Here are our best guesses for the business trends of 2021.
It’s a new era of drive-thrus. Part of its upsurge comes from off-premise dining becoming widely adopted due to the pandemic, but there’s been an overall uptick in digital sales that’s helped drive-thrus gain significant traction. Brands like Starbucks are increasing their drive-thru prevalence to accommodate the demand for contactless orders (1). Domino’s launched their “Carside Delivery” Service nationwide this June which would allow customers to receive their online order without ever leaving their car (2). Del Taco has also been expanding its takeout and delivery channels, allowing the chain to keep company dining rooms closed to streamline the service modes more relevant to today’s guests (3).
Meanwhile, Chipotle is testing out new restaurant designs, and now have more than a 100 “Chipotlanes,” drive-thru stores where customers can pick up their digital orders (4). These pick-up lanes are also more profitable, said Jack Hartung, Chipotle’s CFO, adding that the lanes help “drive our high-margin digital order-ahead transaction.” He also has the numbers to prove his point: Digital sales at Chipotle accounted for 19.6% of total sales at the chain pre-pandemic, but in the first quarter, digital sales grew 80.8%, reaching a record $372 million, while digital sales accounted for 26.3% of total sales (4).
Drive-thru spaces aren’t the only thing businesses have been renovating, however. Architectural Digest writer Laura Itzkowitz, New York restaurants have seen a major expansion in outdoor dining space thanks to the Open Streets plan that “gives restaurant owners permission to expand their footprint onto the sidewalks and streets on the weekends provided they meet certain criteria” (5). According to David Rockwell, the founder and president of the restaurant Melba’s in Harlem, we can expect to see “more restaurants redefining the boundary between indoors and out. In the long run, restaurants will have to be adaptable, with seating plans that expand and contract easily and quickly” (5).
This flexibility will key as the cold season approaches (6). According to Guy Bloch, CEO of Bringg, a delivery orchestration software company, “an increased emphasis and more strategy behind the delivery and curbside pick-up is a smart consideration for restaurants right now, especially if they want to remain resilient during the colder months and continue to serve off-premises customers who may become a larger part of their base in cold weather” (7). Which brings us to the next point on deliveries.
Food deliveries have soared in the past couple of months. Popular third-party delivery apps such as DoorDash, Uber Eats and Grubhub have seen a stark increase in usage since the beginning of the pandemic, according to Seattle Times (8). For example, UberEats reported a 40% increase and GrubHub is up 24% from the same period the year prior (8)
Decreasing on-premise sales, social distancing and the new work-from-home lifestyle have all contributed to consumers opting to have their food delivered than dining in. Back in March, a survey by Statistica showed that 41.7% of consumers in the United States were likely to purchase restaurant food delivery online if confined at home due to the coronavirus (9), and yet when Zagat conducted a similar survey in May (“The Future of Dining Study”) the result was a staggering 90% of consumers (10).
Not surprisingly, we’re seeing more operators are making the shift from third-party delivery to self-delivery; a quick search of food delivery options on google and various name brand restaurants pop up now actively promoting their own delivery options. Businesses like Dig Inn, Modern Market, IHOP, Panda Express have all launched self-delivery as a way to increase sales and meet the increasing demand for delivery. And not just because of the high commission rate either. While it’s true that third-party delivery service fees can be as high as 30% commission (11), having an in-house delivery service means they have more control over their drivers, reduce transit time, as well as increase customer service.
“We understand that convenience and value are what our guests need right now, so we’ve quickly adapted our marketing and business approach,” said Andrea Cherng, Chief Brand Officer at Panda Restaurant Group (12). “In order to provide quality meals at a value for families in our communities, we’re creating more regular promotions and speeding up our delivery-as-a service launch by half a year.”
A detailed pro/con list of third-party vs self-delivery is found here on our previous blog (13).
Social distancing and contact-free technology will be indispensable in 2021, as sanitation and safety concerns around COVID-19 remain (14). Aside from automatic doors, motion-activated faucets, touchless soap dispensers and paper towel dispensers, more hands-free options are likely to become increasingly implemented in the kitchen area, from touchless trashcans, doors, glove dispensers, sauce, to beverage dispensers.
A big part of the trend of automation for customers will revolve around new payment and menu alternatives. Payment solutions will have to change as well from conventional payment models of cash and plastic credit cards to contactless solutions such as EMV, tap and pay, and mobile wallets (14). And as more customers become sensitive to the use of plastic menus (The National Restaurant Association and CDC both recommend restaurants to use paper menus and discard them after each customer use), more will turn to contactless menu options like QR powered digital menus to comply with both demand and safety recommendations (15, 16)
We also expect more businesses to embrace tech and AI to accommodate this upward trend of digitalization for customers (14). By more tech and AI we mean smart ordering via AI voice technology, self-order kiosks and tablets. AI-powered training, staff scheduling and smart inventory (via RFID tags) are also expected to grow and enhance all aspects of restaurant management.
If 2020 was about reacting to the pandemic and learning ways to deal with the new changes, 2021 is going to be about the responding, as well as applying the hard-learned lessons to our businesses. That said, maintaining safety is still going to be the most important trend that operators will have to maintain and evolve. It will take some time to earn back the consumer’s trust in this issue, but operators who can incorporate these safety measures into their business model will be the first to earn them.
The Benefits of Owning a Franchise Restaurant Business
We discussed in our earlier blogs why it is a great time to buy a food franchise in 2020 through 2021. Prospects continue to be bright for fast food and fast-casual franchises: Papa John’s Pizza just announced their plan to open 1,000 new stores over the next five years (1), and Whataburger hinted an offer of offering new franchising units for the first time in 20 years (2). The COVID-19 pandemic is helping boost franchise sales as unemployment grows in the restaurant industry and people are reassessing new career options. But you might be wondering, why buy a franchise business at all? What do you have to gain by buying a franchise versus running your own independent restaurant?
Here we share our thoughts on what makes franchise ownership so appealing.
When you start a restaurant from scratch, much time must go into doing market research, creating business models and developing a new menu. You also have to staff the right people and figure out who your target customers are even before you come up with your marketing plan. But that is a lot of work. It takes time to set up a decent restaurant, particularly if you plan to start amidst the COVID-19 pandemic. One of the benefits of buying a franchise business is that you can skip many of these processes. With a franchise, you do not have to build the foundations from the ground up because there are a pre-established system and business plan. “With a franchise, you have the security of a proven concept,” says Don Daszkowski from the Forbes Business Council (3). “The franchisor already went through the pains of trial and error and the expense of branding, marketing and putting systems in place.” The less time you spend on starting, you can spend more on building your business. Buying a franchise allows you to take advantage of this speed.
Less Risk, More Support
According to Joel Libava, a franchise ownership adviser and author of Become a Franchise Owner!, revenue fluctuates much less in a food franchise setting (4). “As long as you have a steady stream of customers patronizing your restaurant or food store, revenue tends to be pretty high,” he wrote on sba.gov. Additionally, franchisors assist their franchisees with marketing, real estate, among other things. Popeyes, for example, offers support and expertise not only in the menu, operations and marketing, but also in development, and profitability (5).
There’s a less overall risk when there is more support. When you buy a franchise, this assistance package is included in the upfront and ongoing fees, including a Grand Opening (4). “Good franchisors know how to put on a strong Grand Opening,” said Libava, “and if yours goes well, you won’t have to wait long for customers to line up to try (and purchase) your food.”
Moreover, Franchisors will also connect you to a Real Estate person soon after your franchise agreement is signed. Franchisees can therefore leverage extra resources and connections to secure the best location possible for your new business. According to Libava, “that alone gives you a huge advantage over an independent businessperson (without Commercial Real Estate connections) who’s trying to secure a location for his restaurant” (4).
You know exactly what you are getting when you walk into a Chick-fil-A’s or a Subway’s. That is because both have massive brand recognition. While it takes most restaurant owners years to market and establish their brand, being a franchise owner allows to you reap the benefits of the brand’s name and trademark, giving you a competitive edge and making it easier for your store to attract customers.
This is also why financing is easier when you buy a franchise. You are more likely to get a loan from banks or organizations if the business is already well established. Also, there are quite many top-ranked, affordable franchises under $25,000 you can buy if you do your research right (5).
Good Balance of Independence and Dependence
Being a franchise owner allows you to be your own boss. If you classify yourself as a hands-on worker, a natural leader and communicator, result-driven and proactive, buying a franchise offers you the benefits of being a business owner while having the needed assistance from a strong support network.
A Better Opportunity for Long-Term Growth
There is also a better growth trajectory when you choose franchising. Once you start your franchise and acclimate yourself to your role as a franchisee, you can expand your portfolio long-term, buying other franchises in different locations or different concepts. Amyn Ali, a successful entrepreneur and owner of three Wing Zones, 10 Dunkin’ Donuts and Baskin-Robbins and one Papa John’s, shared his thoughts on Entrepreneur magazine (6). “I started in franchising eight years ago. I saw great potential in franchising and wanted to be my own boss, so I bought a Baskin-Robbins and Dunkin Donuts location, which turned out to be immensely successful. I wanted to diversify my franchise portfolio, so I signed a 14-unit deal with Wing Zone, which was also the first in the city of Chicago.”
Here’s his advice for future-franchisees: “So many people want to open up their own business but fail to look at all of the pros and cons of business ownership. The most important advice that I can give is to really do your due diligence and look into your competition, the longevity of the brand, how you’re going to manage it operationally” (6).
Owning a franchise business is still hard work that comes with its own disadvantages. Success is not guaranteed, and you’ll have to invest in it long-term, just as you would with any other business ventures. That said, there are many benefits to owning a franchise as it offers you speed, support and great profits. The decision is yours.
About Goliath Consulting Group
Goliath Consulting Group with headquarters in Norcross, Georgia offers a dynamic array of business development solutions, tailored to meet the needs of each individual client – in addition to a full suite of knowledge and tools that help make restaurants more profitable, including strategic planning, menu development, project management, new restaurant development, branding, marketing, franchising, equipment, technology, evaluations, outsourcing, and more. The company also has a management division that manages full-service restaurants. Goliath Consulting enjoys a ten-year track record of creating client success among local, regional and multi-unit national restaurant chains.
Goliath Consulting Group is actively involved in the Foodservice Consultants Society International and is an allied partner of the Georgia Restaurant Association.