Know Your Food Cost Percentage. Know Your Restaurant Profits.
Calculate Food Cost Percentage
Remember those good old days when having delicious food, excellent food service, and a charming setup were the keys to a successful restaurant? Well, times have changed! We now experience Augmented Reality, Robot servers, and uninterrupted self-serve experiences.
The essentials are still the same. However, the industry is becoming more customer-centric and creating experiences with technology advancements. And the push to embrace tech solutions stems from the mounting challenges in the restaurant sector. With diner price sensitivity, rising food and labor costs, and dried-up VC funding, adapting to these changes is more than just a choice. It's the need of the hour.
This article looks at the key trends shaping the restaurant industry in 2024. We will also provide insights into the factors driving these changes and their implications for restaurants.
The world is changing fast, and business leaders will have to adapt with speed and agility. Constant innovation and speed-to-market will help restaurants thrive as they serve guests where and when they want to be served.
— National Restaurant Association Research and Knowledge Group
The above quote suggests the speed of change and the hyper-competition the food service industry will face in the coming years. From quick service to fine dining, restaurants of all sizes need to stay abreast of the technology trends that are shaping the future of the food service industry.
Creating a loyalty program can immediately increase your repeat customers.
The e-loyalty trend in the restaurant industry is gaining massive momentum in 2024. About 92% of all top-performing restaurants offer mobile order-ahead and loyalty rewards programs or a combination of both.
Customers increasingly prefer digital loyalty programs because they make it easier for them to engage with restaurants.
To leverage e-loyalty to the best of your ability, you must understand loyalty is moving beyond traditional incentives, primarily discounting. Indeed, it is crucial to integrate loyalty apps with mobile payments and online ordering, especially with advanced solutions OneHub e-loyalty and CRM software. It allows customers to effortlessly enjoy rewards while encouraging them to visit more often. With OneHub e-loyalty program not only streamline the ordering process but also empower customers to create more engaging and rewarding relationship.
Around 80% of diners are willing to pay extra for a unique experience. As customers seek more from their dining experiences, experiential dining is rapidly emerging as a significant trend. Technology, the key driver behind this force, can help you create unique and innovative dining experiences beyond traditional norms.
As a restaurant owner, you can leverage technology and do a lot with Augmented and Virtual Reality to add an element of storytelling and enhance the dining experience. Take Dave & Buster’s, for example. It offers arcade games with food and drinks to improve customer experience. The chain grew by over 51% in 2022. And if you’re a small restaurant concerned about spending a lot of money, you can create DIY participatory and entertaining experiences. This can involve having themed restaurants, tableside cooking, etc.
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The trend of cloud kitchens started in the post-Covid era when people switched to online ordering more than going out. Since then, about 51% of restaurateurs in the U.S. have shifted to ghost or virtual kitchens.
Fire Biryani, a ghost kitchen created by MayaEats, has over fifty locations in the US. Since ghost kitchens focus only on delivery, they help existing businesses stay afloat. Additionally, they are a less risky investment with lower operational expenses.
If you already have a restaurant, opening a ghost kitchen in a different location allows you to increase your customer base. This expansion enhances production capacity and extends your delivery range. Given the increasing demand for delivery services, investing in a delivery-only model can be brilliant. You can also test new menu concepts, food items, and brands at lower rents and with less labor.
New technology in the food industry is making waves. Right when you’re reading this blog, 70% of Americans shop online. Online ordering is one of the notable developments and has become one of the latest norms in restaurants. Food ordering has evolved from dine-in to takeout via phone calls to third-party apps. That’s not it. Now, the newest trend is native apps developed by restaurants themselves–a low-cost, high-return solution.
Now, restaurants like Domino's, Starbucks, Panera, Chipotle, Subway, Pizza Hut, and other number of successful chains offer their apps with rewarding loyalty programs to boost convenience and loyalty and reduce costs.
Another benefit of online ordering is that it opens the door to reaching thousands of people. Your restaurant's seating capacity might be 100-200 or even less. But this trend allows you to serve a much larger audience without additional staff or infrastructure investments.
About 51% of American consumers leverage contactless payment methods like tap-to-go credit cards and mobile wallets. A trend once again initiated by the pandemic continues to grow in 2024. As per customer demands, contactless payment options are increasing, and restaurants are incorporating different payment methods as a new norm.
The different ways of payment below can help you save time while increasing the table turnover rate. With quicker and seamless payments, you won't have to worry about order accuracy or increased costs associated with cash management.
Another apparent advantage of contactless payments is the time they save. Customers do not have to wait in long queues to order or pay. They can swiftly pay with cards, smartphones, watches, and wearable devices and get going. Contactless payment systems enhance efficiency and improve the customer experience. As a result, updating your payment system can upgrade the overall customer experience. With faster and more convenient paying methods, it can be a win-win for diners and you.
Ensuring a hassle-free payment experience is vital for guests — the smoother and more convenient the experience, the better.
Digital menus, often accessed via QR codes, are becoming a standard norm. These streamlined menus help customers decide faster and allow restaurants to update offerings in real-time. In addition, it also saves money and reduces waste, ultimately leading to more profitability.
“From talking to a variety of sources on both sides of the digital menu boards divide, both providers and end-users, is about 3 to 5 percent uplift in sales.”
— Networld Media Group Digital Menu Boards and ROI Study
Unlike paper menus, digital menus can be updated instantly and often. You can even use them to add new dishes, change prices, and manage sold-out dishes in real time. When your digital menu is linked to your POS, it can automatically show customers which dishes are sold out. Besides, deploying digital menus can help you cut costs quickly while reaping longer-term, more strategic cost reductions.
Zablong Pizza, for instance, transforms the waiting period into an interactive experience, fostering a sense of community among customers. CAFETIERO, a German cafe chain, cleverly integrates digital menu boards into its decor with framed displays, effectively blending aesthetics and functionality. Sodexo Defense Partners focuses on clarity and simplicity, minimizing clutter on menu boards to communicate swiftly with patrons. Starbucks Express takes a streamlined approach, optimizing digital menu boards for speed, strategically placing them at eye level for quick decision-making. Meanwhile, Baja Bistro demonstrates creativity with clean design and icon-based menu labeling, utilizing technology to present information in an appealing and easily digestible manner. These examples highlight how restaurants strategically employ digital menu boards to not only inform customers but also create engaging, efficient, and visually appealing experiences that ultimately contribute to increased sales.
Customer behavior significantly impacts buying habits, whether you run a quick-service restaurant (QSR) or a traditional family-style eatery. Adapting to these trends is essential to stay relevant and stay relevant in a highly competitive market.
Now that you're aware of these trends shaping the future of dining, you're just one step away from your game-changing idea. Take a moment to examine how technology trends can shake things up for your business.
Utilize these food technology trends and take action in 2024! And on the way, if you need a modern and cost-effective point-of-sale solution to implement these trends quickly, consider checking out OneHubPOS.
OneHubPOS provides centralized POS software to streamline restaurant operations and enhance customer satisfaction. The user-friendly system seamlessly integrates with your existing processes, handling inventory, orders, and payments. Reach out now to learn more and try our solution for just $1!
Federal law allows including only employees who customarily and regularly receive tips. This typically excludes back-of-house staff like cooks and dishwashers. However, some states might have different regulations.
Tips are typically collected throughout the day and pooled at the end of the shift. The pool is then distributed among eligible employees based on the chosen method.
In some states with allowed tip credits, employers can take a portion of the minimum wage based on tips received by employees. This essentially allows employers to pay tipped employees a lower base wage.
Non-compliance can lead to fines and penalties from the Department of Labor, wage-and-hour lawsuits from employees, and employee morale issues.
Tip sharing is voluntary. An employee might choose to share some of their own tips with colleagues. Tip pooling is a mandatory system where all tips are collected and then distributed among eligible employees based on a predetermined method.
No, managers and supervisors cannot participate in the tip pool.
There are no standard percentages by law. However, 15-20% is a common tipping range for good service in the USA. Tip pooling eliminates the need for individual tip calculations.
Tip pooling can be beneficial for restaurants of all sizes. It can foster teamwork, ensure everyone benefits from good service, and simplify tip distribution.
Yes, tip pooling is legal under federal law (FLSA) with some key restrictions. However, some states might have additional regulations. Always check your state's Department of Labor website to ensure compliance.
Pricing is a balancing act! You need to cover your costs (including the food cost per portion) while offering a price point that feels valuable to your customers. Consider factors like competition, target audience, and the overall dining experience you create.
Food cost calculators are great for initial estimates, but consider restaurant management software for ongoing success. This software tracks inventory, automates cost calculations, and generates reports to identify cost-saving opportunities.
Absolutely! Many online food cost calculators can handle various cuisines. Look for tools that consider ingredient types, portion sizes, and even regional pricing variations.
Consider your food cost percentage your restaurant's financial fitness tracker. It's the total cost of recipe ingredients divided by your total menu sales. Ideally, calculate this regularly, like weekly or bi-weekly, to monitor profitability and adjust pricing or portions as needed.
The standard costing model is like a recipe for consistent pricing. It uses historical data and market trends to predict ingredient costs, allowing you to budget, purchase, and maintain profit margins even when prices fluctuate.
Food cost per portion is the actual cost of creating a single serving of a dish. It considers all ingredients, including spices, garnishes, and even waste! This number helps you understand your profitability and set menu prices effectively.
Satheesh Kanchi is the Founder and CEO of OneHubPOS, He is the restaurateur behind several popular Indian restaurants in California and India. He started his career as a technology CEO, bringing that same level and learnings innovation and drive to the restaurant industry.
