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The State of the Full-Service Restaurant Industry

THERE ARE NO SHORTAGES OF CHALLENGES AHEAD. BUT YOU’RE NOT IN THIS ALONE.

Running a restaurant is such a personal journey that, often times, operators gloss over one of their greatest resources. If you’re struggling, chances are someone else is, too. Some of the best advice comes from restaurateurs who have been there before. In many cases, they’re going through the same setbacks every day. And they’re not always acing them.

Given the vast and varied challenges, from tech to delivery to marketing, labor, cost analysis, and so forth, it becomes critical to establish benchmarks to measure success. Putting that into perspective can help a restaurant operator create goals and prioritize targets. A great way to do so: learn from the trials and triumphs of peers.

TouchBistro released a report on the state of full-service restaurants in 2019. The point-of-sale company interviewed more than 500 full-serve employees from across the country. Two-thirds of the restaurateurs had five or more years of experience in a senior management role; 95 percent worked at venues with more than 20 seats; and 41 percent were employed at restaurants with 41–80 seats.

By job title, 56 percent identified as a general manager, 34 percent as an owner, and 10 percent as a president/CEO. Eighty percent of respondents ran independently owned restaurants. Twenty percent were chains.

Here’s what surfaced.

The financial picture

The broad stroke was a positive one. Nationwide, full-service units reported an average profit margin of 11 percent. While profit margins typically grow as operators gain experience, margins maxed out at 11 percent after five years, the report said. Although profit margins plateau at this five-year mark, TouchBistro’s research showed that a full-service restaurant’s annual revenue continues to grow as the restaurateur gains more experience.

One in two, or more than half of the respondents, said they used their own savings to open restaurants. Other popular funding sources included banks or small business loans, investors, and family in friends.

Let’s break that down:

  • Own savings: 54 percent
  • Banks/small business loans: 46 percent
  • Investors: 34 percent
  • Family/friends: 31 percent
  • Online lenders: 12 percent
  • Grants: 8 percent
  • Crowdfunding: 8 percent
  • Food incubators: 5 percent

When unexpected costs pop up, most restaurateurs turn to financial institutions and small business loans.

How else do full-service operators tackle surprise expenses?

  • Banks/small business loans: 52 percent
  • Own savings: 43 percent
  • Investors: 28 percent
  • Family/friends: 25 percent
  • Online lenders: 14 percent
  • Grants: 10 percent
  • Crowdfunding: 8 percent
  • Food incubators: 5 percent

PEXELS/HELENA LOPES

Rent is an overhead most restaurants ha

Health check, and the rising price of rent

The real-estate issue never lets up, does it? Unless you own a space outright (that isn’t as easy, or common—by far—as it once was), rent is an unavoidable overhead expense for full-service operators.

Fifty-eight percent of respondents said they spend up to $7,000 every month on rent. Of the major cities surveyed, New York and Miami topped the list as the most expensive for commercial rent in the country. In those cities, one in seven restaurateurs said they spend more than $12,000 per month on rent. Those are pretty staggering figures.

Just 16 percent of the restaurateurs said they don’t have to deal with rent and landlords because they own their space.

How much money are restaurateurs spending on rent per month:

  • 24 percent: $3,000–$5,000
  • 20 percent: $5,001–$7,000
  • 16 percent: Own the space
  • 14 percent: Less than $3,000
  • 11 percent: $7,001–$10,000
  • 8 percent: $10,001–$12,000
  • 7 percent: Over $12,000

As TouchBistro points out, rent prices don’t tell the entire story. You need to measure them against sales. For the majority of restaurants, rent represents about 5–10 percent of monthly sales.

Two-third of restaurateurs said they could handle a rent increase of more than 4 percent, but this depends on the size of the restaurant. Generally, TouchBistro said, the larger the restaurant, the easier it is to cushion an increase in rent. The survey also found that restaurants in Miami and New York—the most expensive markets—were more prepared than restaurants in less expensive cities to handle rent increases of 10 percent or more. What does that suggest? Perhaps that spending more on real estate sometimes pays off. It’s risky to compete in that arena, but it can return dividends. Massive volumes come out of prime outlets, naturally. At the same time, though, miscalculate traffic at those high-priced spots and rent will quickly overwhelm a restaurant.

Staffing, staffing, staffing

We’re beating a very worn-out drum talking about the tightened labor market and what that entails. To put it simply, it’s tough to find help right now. You just can’t pay somebody money anymore and expect that to be enough (although it’s still the most important factor). Incentives. Work culture. Benefits. There are all playing a larger role than ever. And then there’s the issue of retaining quality employees; what it costs to lose them; what that means for your customer service. And on we go.

How restaurants find employees:

  • Referrals/networking: 51 percent
  • Job sites: 50 percent
  • Social media: 46 percent
  • In-store advertising: 45 percent
  • Company website: 37 percent
  • Job fairs: 23 percent
  • Headhunter/recruiter: 20 percent

Restaurants are pulling out all the stops to win with talent. Two-third of restaurants use higher wages to attract employees. Benefits, like professional development opportunities, are secondary to competitive wages in the battle for the best employees.

Seven in 10 restaurants said they experience regular labor shortages at some point. A third said they struggle with server shortages, while a quarter lack dishwashing staff most of the time. Full-serves that make more than $2 million in annual revenue also struggle to retain chefs, line and prep cooks, and bartenders.

One in three full-service restaurants experience an annual turnover rate of more than 20 percent, the study said.

Annual employee turnover rate:

  • 35 percent: Less than 10 percent
  • 27 percent: 11–20 percent
  • 14 percent: 21–30 percent
  • 11 percent: 31–40 percent
  • 12 percent: Over 40 percent

The most important traits

  • Hard work
  • Trustworthy
  • Positive attitude

Important traits

  • Professional
  • Punctual
  • Multi-tasker

Somewhat important traits

  • Goes above and beyond
  • Communicative
  • Has integrity
  • Quick thinker
  • Hospitable

Least important traits

  • Authentic
  • Humble
  • Collaborative

Getting detailed

Ever met a restaurateur who said training wasn’t important? But how much training is needed to be successful exactly? That’s a more nuanced debate.

TouchBistro found that training time varied greatly among full-service restaurants, and ranged anywhere from one hour to more than 12 per employee. Larger restaurants, however, tended to offer more training, as about half of them train their staff members for more than 12 hours each. Resources play a role.

The amount of training front-of-the-house staff receive:

  • 26 percent: 4–7 hours
  • 25 percent: 1–3 hours
  • 24 percent: More than 12 hours
  • 21 percent: 8–11 hours
  • 3 percent: Less than one hour (not many people would admit this).

Training BOH staff receive:

  • 28 percent: More than 12 hours
  • 26 percent: 4–7 hours
  • 23 percent: 1–3 hours
  • 18 percent: 8–11 hours
  • 5 percent: Less than 1 hour

The cost: 55 percent of full-service operators said they spend less than $2,000 per employee on training, but this depended on the restaurant’s annual revenue. Venues that generated less than $1 million in annual revenue tended to fork up less than $2,000 per employee, while restaurants that made more than $1 million annually spent more.

A third of restaurateurs also said they use employee-scheduling software, while a quarter stick to spreadsheets. The rest use old-school tactics like pen and paper, or a combination of tech and traditional methods.

How restaurants create staff schedules:

  • 33 percent: Scheduling software only
  • 26 percent: Spreadsheets only
  • 13 percent: Pen and paper only
  • 12 percent: Spreadsheets and software
  • 6 percent: Pen/paper and spreadsheets
  • 5 percent: Pen/paper and software
  • 5 percent: All three

Additionally, 23 percent of restaurateurs said employee schedules take them three hours or more per week. Half of the operators said they reduce labor costs by increasing productivity, and four in 10 have done so by cross-training staff and using POS data to predicting scheduling needs.

PEXELS/MAT BROWN

Don’t rush into your POS choice.

The payment game

When it comes to picking a POS system, the respondents tapped affordability, ease of use, and system reliability as the most critical factors. The majority of operators said they own their hardware. Eighteen percent said they lease it.

Also, two-thirds of restaurateurs said they use a payment solution that integrates with their POS. Larger restaurants especially prefer POS-integrated payment solutions. Smaller venues were split evenly between choosing standalone payment processors and integrated solutions.

The main point: Given how many tasks a POS system can factor in the day-to-day—sales tracking, labor forecasting, inventory management—it’s essential to pick a good fit. Don’t rush in.

The money conversation

We’ve learned in recent years that restaurants can’t move too fast on the payment subject. People who say cash is dead have never tried to serve someone who’s afraid their identity will be stolen every time they pull out a credit card. Even Shake Shack found the cashless route to be more trouble than it was worth.

Now, are there benefits to being a cashless operation? Yes, no question. It reduces shrinkage. Employee theft basically vanishes. It’s cleaner. Restaurants can collect data. But is the consumer ready for it? That really depends on your restaurant and customer base. Some brands, like Sweetgreen, see more pros than cons and can ditch the paper. If your target is broad, however, it might not work.

As for mobile payments, like Apple Pay, Google Pay, and Samsung Pay, 18 percent of restaurateurs said they are set up to accept all three. Payment through loyalty points, TouchBistro said, has the most potential for growth—only one in seven restaurants currently use points as a payment method.

While most restaurants accept a variety of payment methods, four in five restaurateurs are frustrated with their payment processors, the survey found. Their top issues: a lack of pricing transparency and the need for manual data entry.

The concerns:

  • 21 percent: Lack of transparency on pricing
  • 20 percent: No frustrations
  • 18 percent: Manually entering batches into accounting software
  • Dealing with multiple vendors and terminals: 16 percent
  • Manually entering transaction amounts in terminals: 15 percent
  • Dealing with small vendors/resellers that don’t inspire trust: 9 percent

RAWPIXEL.COM

First it’s about collecting information. Next, it’s finding ways to turn that data into tangible and actionable results.

Collect the data

The data gleaned from POS systems can help make business decisions. Restaurants can access their profit margins, see labor trends, opportunities for savings, and more.

About seven in 10 operators said they completely understand the information presented to them in their POS reports. That’s a pretty interesting stat. It means close to 30 percent of restaurateurs are receiving data and aren’t sure how to leverage it. Three-quarters of respondents said they use POS reports to help make decisions about menu pricing, while half also use the reports to inform scheduling and menu design decisions.

What this amounts to is significant whitespace in the big-data realm. First it’s collecting information. Next, it’s finding ways to turn that data into tangible and actionable results.

The business decisions that POS reports influence:

  • Menu pricing: 74 percent
  • Scheduling: 50 percent
  • Menu design: 4 percent
  • Online ordering apps: 40 percent
  • Hiring needs: 39 percent
  • Staff promotions/evaluations: 34 percent

And while bookkeeping might not be the sexiest part of running a restaurant, keeping track of expenses is a necessary evil. The majority of operators surveyed said they spend 2–4 hours each week on bookkeeping, and a quarter of them enter POS data manually.

What are the key data points?

Six in 10 restaurateurs said they regularly review their labor cost ratio. Smart scheduling is increasingly freeing up restaurateurs from having to manually create employee schedules.

Half of the respondents said they regularly check their average cover, table turnover, and time it takes for a table to flip. The power of efficiency.

Taking stock

Pretty much every restaurateur can agree controlling food costs is an essential part of maintaining and growing profit margins. Full-serves tend to accomplish this by managing their inventory and menu. Restaurants with lower profit margins manage food costs by controlling portion sizes. TouchBistro found that only four in 10 restaurants negotiate with vendors to keep food costs down.

The same amount take manual inventory of supplies on a weekly basis, if not more often.

How restaurants control food costs:

  • Inventory management: 64 percent
  • Regular menu management: 62 percent
  • Portion control: 49 percent (this ups to 61 percent for restaurants with a lower profit margin)
  • Vendor negotiation: 37 percent

Why are restaurants comping meals?

  • Server error: 32 percent
  • Kitchen error: 32 percent
  • Customer dissatisfaction: 21 percent
  • Customer error: 20 percent

What this tells us is that the majority of comps are related to internal issues, not external ones. Even if it’s an external problem, like customer error, it’s probably safer, typically speaking, to pretend it was internal. Nobody paying for a meal likes to be told they messed up.

Some other stats:

Two-third of full-service restaurants look into the future (like predictive forecasting tools) to prepare inventory orders. Generally, the larger the restaurant, the more likely it is to use analytics to inform its inventory orders, the study said.

About half of the restaurants surveyed said they struggle with ordering too much inventory—a quarter don’t order enough, and the rest struggle with both.

This issue doesn’t improve with time or experience, either. Restaurateurs with less than three years experience in the industry tend to over order or under order at about the same rate as those who have spent more than 15 years in the business. So don’t feel bad if you’re just starting out and having this issue. Everybody has it.

JAKUB KAPUSNAK | UNSPLASH

Off-premises has been all the rage—for better or worse—this past year.

The vendor question

When a vendor raises their prices it’s always a struggle. Typically, it’s one full-serves just absorb and solider through. The operators surveyed said the majority of vendors increase their prices semi-yearly or more often.

  • 34 percent: Semi-yearly
  • 20 percent: Yearly
  • 18 percent: Monthly
  • 14 percent: Semi-monthly
  • 13 percent: Not yet

Delivery dives in

Off-premises has been all the rage—for better or worse—this past year. Here’s how full-serves said they were embracing the channel.

Almost four in five operators said they use an online ordering platform. Two-thirds use between one and three platforms.

  • 27 percent: Just one
  • Two: 21 percent
  • Three: 15 percent
  • Four: 12 percent
  • Five or more: 4 percent

Adoption rates of online ordering sites by full-service restaurants across the country:

  • Grubhub: 41 percent
  • UberEats: 39 percent
  • DoorDash: 32 percent
  • A restaurant’s website: 31 percent
  • Postmates: 20 percent
  • Eat24: 13 percent
  • Others: 2 percent

What’s been the impact?

More than half of restaurants said they conduct 6–20 percent of their business through online ordering platforms.

Full-serves said they’ve seen an 11–20 percent increase in overall sales volume.

The majority of restaurants said customers spend up to 20 percent more on online orders, due to both more add-ons and more menu items per check.

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Delray Beach in 2030: City eyes more dining, entertainment and tourism

Palm Beach Post Article

Delray Beach in 2030: City eyes more dining, entertainment and tourism

Full Article Link Here:

On the Avenue, hip retirees will mingle with young professionals, families and tourists who all flock to this seaside city to play.

Delray Beach’s nickname is the “village by the sea,” and a few decades ago, the name fit. The sleepy seaside city had a main street, Atlantic Avenue, that stretched from the farmlands out west to the ocean in the east.

During the past 30 years, however, the quaint city with the Old Florida style has transformed into a dining, entertainment and tourism destination.

The city’s renaissance has, in turn, driven demand for homes for people who want to live in or near the downtown. These residents include retiring Baby Boomers, professionals, families and young singles.

As the population continues to pour into Palm Beach County, city and business leaders say Delray Beach is poised to stand as the best example of a place where people who live there love to play.

I think it’s going to be the destination in Palm Beach County, a melting pot of ages from 18 to 80,” said Tom Prakas, a restaurant broker who has handled more than 50 restaurant transactions worth more than $100 million in Delray Beach.

Prakas likened downtown’s Atlantic Avenue to a mix between Ocean Drive in Miami Beach, Las Olas in Fort Lauderdale and Clematis Street in West Palm Beach.

“The town is on fire,” agreed Don DeVere, vice president of The Edwards Companies, which is building the mixed-use Atlantic Crossing downtown. “Delray Beach has a great vibe and sells itself. In our view, there is no better place in southeast Florida.”

Delray Beach is no Miami, and most people are happy to keep it that way.

But Delray Beach is getting the amenities typical of more sophisticated cities like Miami, such as the Delray City Market food hall and several new hotels.

In addition, the city just welcomed a multi-million dollar wine bar and gourmet restaurant, The Wine Room, plus the upscale iPic movie theater.

And then there are the dozens of restaurants and bars of all types clustering in and around the downtown.

Mixed-use projects by sophisticated developers also are taking shape at key junctures downtown.

Among them: Atlantic Crossing at Atlantic Avenue and Federal Highway near the Intracoastal Waterway; and a project around the Sundy House boutique hotel, restaurant and gardens. The project, formerly known as Midtown Delray at Swinton and Atlantic avenues, will incorporate historic homes into a new complex of apartments, offices and shops.

Todd Rosenberg, whose Pebb Capital just paid $40 million for the Sundy House property and adjacent buildings, said the city will see “incredible growth” during the next 10 years.

“This is an authentic market that’s been around forever but has come back to life, and today is well beyond a food and beverage destination,” said Rosenberg, whose family has long ties to the city.

But even as he touted his plan to build 70,000 square feet of new office space at the gateway to downtown, Rosenberg pivoted back to the reason office tenants will want to lease there.

It’s a fun place.

“We’re hoping to provide one of the first real office locations for people who want the best of all worlds, next to an incredible entertainment destination and adjacent to fitness, food and lifestyle,” Rosenberg said.

Play is what helped put Delray Beach on the map locally in the 1990s as city leaders tried to revive the stagnant downtown’s fortunes.

“They used to call it Dull-Ray,” said Prakas, the Boca Raton restaurant broker who has done more than 50 deals in the city. “You could camp out on the avenue and never be hit by a car after 9 p.m.”

In 1989, voters approve $21.5 million for beautification and public works projects, allowing for the refurbishment of Old School Square at Swinton and Atlantic Avenues, the gateway to the downtown.

Old School’s cultural offerings, plus restaurants 32 East and Dakota, help kicked off the downtown’s rebirth.

Today, even weeknights are clogged with diners wandering the avenue in search of food and fun. The avenue’s growth has been so pronounced it is now spreading, including north along Second Avenue, an area dubbed Pineapple Grove, and down other streets.

Interest used to be from local players but now regional and national restaurants want a piece of the downtown.

Prakas has sold, and resold, several restaurants. One property, the current Vic & Angelo’s at Atlantic Avenue and the train tracks, has changed hands six times.

The city’s liveliness continues to attract developers meeting demand from people who want to live near the fun.

“It’s a place where people park their cars and never go anywhere else,” said Bil Bathurst, a longtime resident and now a member of the city council.

Apartments, townhouses and condominiums have been built, and more are planned in and near the downtown.


Even old homes north of Atlantic Avenue and west of Swinton Avenue, in and around Lake Ida, are changing hands for big money as new buyers tear down old homes and build luxury, multi-million dollar estates.

Bathurst, a real estate agent with NV Realty Group, said a home at 1415 N. Swinton Avenue sold for $620,000, was torn down and now is being rebuilt into a mansion. Another home at 508 N. 14th Street, which sold for $530,000, also was torn down and is being redeveloped into a large, Key West-style home.

And just east of Swinton Avenue, at 426 Highland Lane, a five-bedroom, five-bathroom house just sold for $1.7 million.

Who is moving there?

“Wealthy people from all over the world,” Bathurst said, citing buyers from Boca Raton, California, New York and Latin America.

Development isn’t just been confined to the downtown, however. West of the city, builders such as GL Homes continue to construct new luxury single-family homes for families and residents 55 years and older.

The Delray Marketplace, once considered a forlorn shopping center complex west of Florida’s Turnpike, now is city central for the thousands of homes in residential communities there.

These communities are just west of upscale enclaves built near Morikami Park. This strip of Jog Road, dubbed Millionaire’s Row, features enclaves such as Addison Reserve Country Club where some homes do, indeed, cost in the millions.

Even north-south corridors such as Military Trail and Congress Avenue are seeing redevelopment into new shopping centers and apartment complexes as demand for residences grow.


3 KEY PROJECTS TO WATCH

Atlantic Crossing

Where Atlantic Avenue meets the Intracoastal Waterway is the setting for a mixed-use complex geared to the future Delray Beach resident.

Atlantic Crossing is a $300 million complex spanning two blocks and featuring office and retail space, plus for-sale condominiums as well as rental apartments. The project is being developed by The Edwards Companies.

The property, bounded by Federal Highway to the west and the city’s Veterans Park to the east, has been in the works for years. But it finally is going vertical, with the first phase set for completion by 2021 and the second phase set for 2023.

Don Devere, The Edward Companies vice president, said Delray Beach has several unique features that make it a good bet for the future. “It has a nice balance of residents, office workers and vacationers,” DeVere said.

Retirees moving to Florida may find interest in Atlantic Crossings’ planned condominiums, or they may prefer the flexibility of renting one of the project’s apartments, as DeVere expects many young professionals in their 20s and 30s will be inclined to do.

In addition to the office and retail space, DeVere also is upbeat about plans to build new office space in the center. Atlantic Crossing will feature 20,000-square-foot floor plates to accommodate large office users. Merrill Lynch, for instance, already plans to lease a full floor in the project’s first building.

 

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Join Prakas & Company at the ICSC South Florida Idea Exchange. Athan “Tom” Prakas will be a host of the round table discussion at 11:15 am. 

 

Join Prakas & Company at the ICSC South Florida Idea Exchange.

Athan “Tom” Prakas will be a host of the round table discussion at 11:15 am.

Tom & his entire staff will be on hand to share a glimpse into the hospitality real estate world. Covering buying, selling, leasing restaurant space and property through the entire state of Florida. 

 

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Tap 42 Craft Kitchen & Bar Coming to Coral Springs – TheRealDeal.com

 

Tap 42 Craft Kitchen & Bar signed a 10-year lease with Bristol Group to open a new location at 3111 North University Drive. Tom Prakas, owner of Prakas & Co., brokered the deal.

Tap 42 is leasing 5,000 square feet, plus an outdoor patio, for the new restaurant. It’s expected to open in January 2020, according to a release. The restaurant will mark the seventh for Tap 42.

 

The Real Deal South Florida – Article Link – Click Here!

 

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Florida Real Estate Market Trends of 2019: What to Expect

FLORIDA’s Strong Commercial Real Estate Market

The strong commercial real estate market is one that Florida parades with pride. The market indicates a positive growth in 2019 for CRE, and here is why:

  • Business growth in the area

  • Retail growth

  • No personal income tax making it the 4th best tax climate in the US

Related: Why Switching to Commercial Real Estate Investing Is Smart

In any case, the Florida real estate market has a strong commercial real estate presence. This will continue growing in 2019 and 2020 if the political climate and foreign trade relations continue as is.

 

 

 

 
Foreign Real Estate Investors

Florida has been an attraction for international homebuyers for years. With Florida’s real estate market becoming more of an international destination for real estate, Florida is becoming a hub for foreign money as they view real estate investing in South Florida as lucrative and strong just as much as its counterparts in Los Angeles and New York State. Accordingly, the major selling point for this real estate market with foreign investors is its affordability when compared to other internationally-dominant US real estate markets.

With South Florida real estate, Canadian real estate investors are taking a large chunk of international investment in the area. This can be mainly attributed to the many Canadian companies opening branches in the Tri-county area in South Florida.

According to data from the National Association of Realtors, foreign investments in residential real estate properties in South Florida is made up of 46% of Latin American and Caribbean real estate investors.

As for the housing market predictions 2019 in Florida, foreign investors and their impact on the market may shift if President Trump imposes taxes on Canadian companies in the United States. Additionally, the fact that foreign investors’ interest in any city is strictly financial as they look at the return on investment of everything is an alarming trend. These foreign investors can just as easily shift to another state.