US foodservice market’s theatrical lead

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Having just joined the ALMR I felt compelled to check out our Chicago Study Tour collaboration with Propel Info, writes ALMR chief executive David McHattie. Well, that’s my story and I am sticking to it. It’s actually very easy to pass up on such opportunities, deciding that the cost in time and money is too great as we fight heaving desks and overloaded inboxes in this challenging economy. I am so pleased that I found time to visit the Windy City as it hit the mark in so many ways.

For many years much talk has focused on how good or how far ahead the US market is and this trip provided the perfect opportunity to assess the reality. Four days in Chicago visiting over 35 operations reinforced my view that, while we in the UK are very adept at putting ourselves down, we should not be quite so hard on ourselves. Chicago is not only a great city but a thriving hotbed of restaurants and bars of all shapes and sizes. And despite the fact that 50% of food spend is spent out-of-home in the USA, we are every bit as innovative if not more so. The gap has certainly closed over the years I have been visiting the States but there are some areas in which they still lead.

They do theatre better

On the whole, for example, they do theatre better. It is easy to think they over-egg their USPs – overstating the points of difference – but this is a mature eating and drinking out market and it’s this work at the edges that matters and rewards. They are attuned to the needs of their guests and their efforts to entertain and draw people out of the home to eat, drink and socialise are clearly working. Despite the competition, lines out of the door are commonplace. They understand that they are delivering experiences rather than simply serving food and drink.

Every dish designed to wow the guest

Hash House A Go Go, visited on the first day’s study tour of emerging concepts, has taken very basic ingredients and added a great deal of effort to present menu items that had jaws dropping. Whether waffles and chicken or their house non-alcoholic melon cocktail, every dish was designed to wow the guest. The upshot is thriving sales, 25% food cost, a £14.50- £16.70 check average and a bottom line of 33%. Theatre in design is also in evidence whether at Howells & Hoods with a back bar resplendent with over 100 draft craft beers, the suburban Boiler Room, which cleverly uses reclaimed materials, or the upscale Roof at The Witt or ZED451. It’s all about developing points of difference.

Impressive knowledge of the people

Theatre in service is also plentiful, whether it’s chefs carving a wide variety of meats at the table at ZED451 or theatrical bartenders in the many bars and restaurants we visited. The most impressive aspect for me was the knowledge of the people. Nothing was too much trouble in every place we visited – team members demonstrated a desire to understand needs, explain the features and benefits in a confident and professional way and provide advice and recommendations.

Always sincere, the waiters and waitresses are certainly motivated to deliver and capture the 15-20% normal tip and the business model benefits from a minimum wage of about £5.80 or in some states the Tip Compliant Rate of £3.30. Area managers usually only have four sites and waitresses care for four tables or three at peak sessions. Don’t be fooled because labour costs are still typically north of 33% because of the investment in management and training. Indeed in every business we encountered general managers who were incredibly professional, knowledgeable, commercial and passionate about their business. Marketing is in their DNA and at Corner Bakery Cafe pre-opening marketing is £40,000 to ensure every local business and resident knows the venue is coming and what it offers.

Pricing strategy needs to be right

The market is thriving with a huge push on fast casual with its reduced levels of service (not knowledge, passion or care) but better quality products than the faster end of the market. The “better burger” is rife and note “better” is in comparison to the fast food market. Mind you, Five Guys and Smashburger will have to get their pricing strategy right when they open in the UK shortly. The best concept we visited in this category was M Burger. But then I should not have been surprised as it’s a Rich Melman concept and every Lettuce Entertain You/Melman concept we visited just offered more.

Why do Americans spend 50% of food expenditure on eating and drinking away from home?

The investment levels in 150-strong Corner Bakery Café, where we were impressively entertained by the chief executive, average $633,000 per store with $233,000 of this invested in the kitchen. It’s also interesting to note that they opened three last week with optimism in life post-recession rising. US restaurant entrepreneurs back their beliefs – the glass is certainly half full and they invest. It leaves me with the question: Why do Americans spend 50% of food expenditure on eating and drinking away from home? Is it just the way it is? Or is it because of the investment in people, equipment, systems, management, training and developing knowledge that causes people to venture out and do their eating and drinking in social venues?

Chicago is a wonderful city, the show is immense, the weather was superb and the evenings were buzzing with huge numbers of well-dressed people out with a happy social agenda. This was a fantastic trip shared with a wonderful mixed group of industry colleagues with ample time to explore, discuss and share our thoughts and learnings together under the excellent care of the team at Propel Info – Jo, Paul and Sharon. Here’s to next year – I’m in, as there is so much more to explore and learn (because it is work) – honest!

David McHattie is chief executive of the Association of Licensed Multiple Retailers


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