The Challenges of Earning an A

Since the Health Department’s grading program launched in 2010, restaurateurs have been feeling the additional pressure of earning and maintain an A, reports the Wall Street Journal. Further increasing the stakes is the public’s accessibility to restaurant grades. A smartphone app that gives a break-down of restaurants’ letter grades, scores and health violations, introduced by the Health Department in 2012 has been downloaded 44,000 times and maintains a database of 24,000 restaurants.

Pressure from the heavy value the public places on the letter grades restaurants earn has some restaurateurs turning to restaurants consultants who will perform mock health inspections ranging typically from a $250 one-time fee to thousands of dollars for yearly contracts.

A 2012 Quinnipiac University study found 82% of survey participants support the use of letter grades to evaluate restaurants and 67% consider letter grades when deciding where to eat.

Often, consultants end up in the position of informing restaurant owners about the ironies of the system. The presence of mice may not cause a restaurant to lose its A rating, however not having a person on site with a food-protection certificate, awarded by the city after completing a 15-hour course, will likely greater risk.

Fast-Casual Restaurants Lead Traffic Growth in 2013

Nation’s Restaurant News reports that the fast-casual segment lead traffic growth for the fifth consecutive year. Market research firm, the NPD Group, discovered that total customer visits to fast-casual restaurants increased 8 percent in 2013 compared with flat traffic overall for all restaurant segments.

“Overall, restaurant customers are trading down, foregoing some of their visits to full-service places while increasing the number of visits made to fast-casual restaurants,” justified Bonnie Riggs, The NPD Group’s restaurant industry analyst. “Fast-casual concepts are capturing market traffic share by meeting consumers’ expectations, while midscale and casual-dining places continue to lose share.”

The check average for fast-casuals was $7.40 during the twelve months that ended last November. The quick-service segment’s average was at $5.30 and casual dining’s $13.66.

Chipotle Invests $10 Million in Mobile Payments

In an effort to maximize throughput and eliminate the time-consuming steps involved in cash and credit card transactions, Chipotle is investing a few hundred dollars per location in adding mobile payment technology to its ordering app. This isn’t about staying current with the latest technology trends for co-CEO Steve Ells, but rather a worthwhile investment to ameliorate guest convenience and foot traffic for the long-run. The updates to Chipotle’s current ordering app will process payments through a bar code scan or Bluetooth connection.

$1.6 Billion Invested in Food-Related Tech and Digital Media in 2013

From 2012-2013, over $2.8 billion was invested in the food/tech/media realm. In 2013, over $1.6 billion was invested into U.S-based private companies through 148 investments– up from $1.2 billion and 136, respectively, in 2012.

The industry continues to grow rapidly. Restaurant-related technology won the most attention from both investors and acquirers with 54 percent of the investments (representing $453.1 million across 76 deals), and 51 percent of M&A activity.

Food and Tech Connect’s infographic illustrates the presence of food in the tech and media industries in 2014.

Chipotle Profit Rises 30%

Bloomberg News reports that Chipotle, the biggest gainer among restaurants in the Standard & Poor’s 500 Index last year, said fourth-quarter profit rose 30 percent as more customers visited its stores.

“It’s really marketing and advertising that’s driving traffic for them,” Peter Saleh, a New York-based analyst at Telsey Advisory Group, said in an interview. “This is really impressive in light of what we’ve heard from other retailers, including Starbucks, who said December was a weak month.”

Blue Bottle Raises $25 Million for Expansion

Thanks to the $25 million Blue Bottle just raised from investors, the Oakland-based coffee roasters will be launching several more locations on both coasts in the near future. The top-tier coffee company plans to “expand retail operations, improve internal training programs and further develop its quality control department.” A Boerum Hill location, bottled iced coffee and an improved sustainability quotient include just a few of the exciting ventures in store for Blue Bottle.

About.me founder and True Ventures (the company that invested $20 million dollars in Blue Bottle in 2012) investor Tony Conrad lauded visionary/Blue Bottle Founder James Freeman:

“What we saw and why we got involved is that James and his team are part of a handful of people who are founding a movement around coffee. It’s not just the very specific experience around the coffee Blue Bottle roasts, it’s everything they do from the way they source the product; supporting farmers in developing regions of the world to grow the purest, highest quality organic beans that promote sustainability; the way they choose store locations that often act as a vote of confidence for a developing neighborhood; and how they serve the product (what cup, what glass, what temperature, single origin beans versus blended bean mixes, espresso drinks only on premise….). They think through every detail to offer something beautiful in our daily lives—it’s a philosophy/approach that has led to a movement around the integrity of experience around coffee.”

President Obama Addresses Minimum Wage Debate in SOTU Speech

Fast Casual reported on the need to increase the minimum wage and the solution to income inequality, addressed in President Obama’s State of the Union address this past Tuesday. The idea is that people who work full time should not have to support themselves and their families in poverty. President Obama noted that in the coming weeks, he will issue an executive order requiring federal contractors to pay their federally-funded employees “at least $10.10 and hour.” Currently, the federal rate is $7.25. That being said, President Obama acknowledged, “Americans understand that some people will earn more money than others and we don’t resent those who achieve incredible success.”

Some, however, argue that the minimum wage hike would actually hurt, not help.

The National Retail Federation’s CEO, Matthew Shay, said a minimum wage hike would create “minimum opportunities.”

“We welcome the president’s focus on the economy and jobs, but a minimum wage hike runs counter to that goal. Raising the minimum wage would place a new burden on employers at a time when national policy should be focused on removing barriers to job creation, not creating new regulations or mandates. It’s simple math — if the cost of hiring goes up, hiring goes down,” Shay explains.

He continues, “Fewer than 5 percent of hourly workers are paid the minimum wage. It’s really a starting wage that allows teen-agers or others with little job experience to enter the workforce. A mandated hike in labor costs would negatively impact businesses that employ people in entry-level jobs and ultimately hurt the people it is intended to help.”

 

IHOP’s Menu Redesign Boosts Sales

A video from Bloomberg Businessweek explains how IHOP’s new menu increased sales by 3.6%. IHOP hired design experts to revamp the menu after customers complained about seeing too much text, which was ultimately overwhelming. due to customer complaints, the too many choices. too much text. The menu redesign experts suggested IHOP included more pictures; people love to see pictures of what they’re going to eat, and this is a great way to break up the page while promoting new menu items. Secondly, boxes are a requisite. Organizational, eye-popping boxes remind customers that they can order sides. Lastly, colors are a bonus. Color-coded categories help customers navigate through the menu, and the extra browsing that customers might not have otherwise done allows them to find something in the middle or back of the menu.

Jessica Biel to Open “Soho House for Kids”

Actress Jessica Biel is in the planning stages of opening an exclusive eatery in Santa Monica called Au Fudge, which will welcome celebrity children and spawn of A-listers. Considered the “Soho House for kids,” the elite and their offspring will engage in dining and cooking activities in an atmosphere suitable for their VIP tastes.

Restaurant Sales to Reach $683 Billion in 2014

The National Restaurant Association predicts industry sales will increase 3.9% to $683 billion in 2014 from $659 billion last year. Approximately 990,000 restaurants will open this year according to reports from the “Restaurant Industry 2014” forecast. Hudson Riehle, the NRA’s senior vice president for research and knowledge, said that technology will help encourage consumers into restaurants. “Technology will have substantial implications going forward in terms of how restaurants boost their loyalty.”