COVID-19: What’s Working · Aggressive Merchandising & Promotion Tactics 1 It’s not all about price • It will take more than a good price to drive traffic and keep customers

1

COVID-19: What’s Working & What Will Become Part of the New Normal

2

International Foodservice Manufacturers Association

Vision

Enhance consumers

foodservice choiceEnable co-creation

of value with operator

Integrate manufacturer

resources/operator needs

Mission Objective

InsightsConnectivity Best Practices

Three Centers of Excellence

Today’s Guests From Kinetic 12 Consulting

3

Bruce Reinstein

Partner

Kinetic 12 Consulting

Tim Hand

Partner

Kinetic 12 Consulting

Coronavirus Impact on the Foodservice Industry

What’s Working &

What Will Become Part of the New Normal

Tim Hand Bruce Reinstein

Kinetic12 Consulting

May 5, 2020

Coronavirus Impact on the

Foodservice Industry

What’s Working &

What Will Become

Part of the

New Normal

Change is upon us

Innovation, creativity and

reinvention describe how

operators are reacting to the

COVID-19 crisis.

These are unprecedented times

and we expect some significant

revolutions in how operators

conduct business.

Let’s now look forward to what

might change.

1

Aggressive

Merchandising &

Promotion Tactics

2

New No-Touch

Food-Safety

Protocols &

Services

3

Focus on

Simplifying

Operations

4

New App

Modifications &

New Technology

5

Embracing

Employees

Differently

6

New Streams of

Revenue

7

Interacting with

Suppliers &

Distributors

8

Tighter Financial

Management

8 areas of operator change

Tracker: When Each State is Reopening Its Economy

Source: Morning Brew

Mobility Trends apple.com/covid19/mobility

https://www.apple.com/covid19/mobility

Source: Morning Brew

1 Aggressive Merchandising & Promotion Tactics

2

New No-Touch Food-Safety Protocols & Services 3

Focus on Simplifying Operations

4 New App Modifications & New Technology

5 Embracing Employees Differently

6 New Streams of Revenue

7 Interacting with Suppliers & Distributors

8 Tighter Financial Management

1Aggressive Merchandising & Promotion Tactics

It’s not all about price• It will take more than a good price to

drive traffic and keep customers.

• Customers will evaluate options based on

a broader set of criteria including - ease

of ordering, pick-up and delivery options,

food safety and sanitization.

Telling a real story• We are going to be more discerning -

Consumers will become less accepting of

marketing “fluff-messaging” and look for

fact-based points of difference.

• Operators story needs to be real,

authentic and resonate with the

consumer.

1

2


3

4

Family & Friends meals

• Family & Friends meal bundles will

become a standard - but it will be

limited to the most popular items.

• Operators will innovate and make it

easier to order for 2, 3 or 4, and have

built-in leftovers.

Meal Kits

• Cook at home restaurant kits - save

money and have fun creating and

cooking your favorite foods from your

favorite restaurants.


5

6

Curbside pick-up & delivery of

two-three course meals

• Fine dining and polished casual will

accelerate their investment in take-out.

• Previous hurdles will be solved: the inability to

control food quality and presentation, the

lack of personal table-side service and the

lack of the dining room experience.

Groceries at Foodservice

• Express grocery will remain, to a limited

degree.

• Sale of proprietary restaurant items like

sauces, breads, frozen soups, beverages,

seasonings and even branded napkins can drive revenue.


7 No more free delivery

and lower 3rd party

delivery fees covered

by operators • Free delivery will end and go back to

regular cost.

• Curbside will pick up steam as an

alternative to higher delivery charges.

• High 3rd party delivery costs will be renegotiated.

Kinetic12 Consulting


2








2Focus on Simplifying Operations

Restaurants will go back to their core

menus

• A “back to basics” approach will become the norm. Menus will be reduced.

• LTOs will need to drive traffic and incremental revenue - not simply be content for the next commercial.

Reduction of skus• Paring down skus will make it easier on purchasing,

receiving, and storage as well as reduce waste.

• Products will need to work harder - be incorporated into multiple recipes and creative LTOs.

Peeling off staffing layers• A move back to “multi-taskers” who are well

trained to handle multiple roles.

• This will allow an operation to run leaner and provide more flexibility in scheduling.

1

2

3

2Focus on Simplifying Operations

Practical packaging

• Effective, safe, multi-use take-out packaging

will take the place of cheap packaging.

• Dimensions of great packaging being

expanded - priced right + sustainable +

functional + tamper-proof.

Comfort food innovation

• Consumers retreat to comfort foods in

difficult times.

• Similar to the innovation explosion we’ve

experienced with hamburgers and more

recently with mac & cheese, other comfort

foods will be turned into successful, yet

simple innovation platforms.

4

5


2








3New No-Touch Food-Safety Protocols & Services

Frictionless curbside pick-up• Curb-side pick-up at virtually every full-service operation.

• Apps for ordering, payment, communication and pick-up with the goal of zero contact between patrons and staff.

Frictionless drive-through• Wide-spread adoption of no-touch protocols for

QSR/Fast Casual drive-through.

• App ordering, no-touch payment at the window.

Overt employee sanitization

practices• Expanded sanitization standards for employees.

• Overt cues of safe-handing/no-touch protocols - use of latex gloves, masks, dining room/bathroom sanitization practices, signs on tables and doors.

1

2

3


Mandated sanitization practices

• Government mandates – e.g. spray down the

restaurants on a regular basis with a hi-grade

disinfectant.

• Regulations for glove usage as well as new training

requirements on sanitization and food handling.

Self-serve anything will become a

safety issue

• Existing self-serve condiments, beverages, and

touch-screen ordering - either go back behind the

counter or be redesigned to be no-touch.

• Buffets and salad bars will be re-thought or

disappear entirely.

• Portion control condiment use will increase but be

kept behind the counter.

4

5


Sick employee protocols

• New rules for what constitutes being sick.

• Short term - temperatures taken before shifts

begin

Tamper-proof packaging

• Greatest areas of immediate operator

investment.

• The investment in tamper-proof packing

could result in an increase in the cost of the

order for delivery.

• Off-premise packaging will become a

differentiator and part of an operator’s brand

experience and no longer be viewed as a

cost to be minimized.

6

7


2








4New App Modifications & New Technology

New app functionality

• New app functionality - to help consumers

research and track sanitization and no-

touch protocols, to curb-side delivery, to

menu bundling services, to Foodservice

grocery shopping options.

• For employees, new sanitization and food

handling training functionality and heath

and sick-day trackers.

Self-serve ordering terminals

• Facial recognition and voice-driven

solutions to be eventually adopted in place

of touch-screen tech.

1

2

4New App Modifications & New Technology

Consumer order tracking• Our collective obsession with tracking orders

will be amplified by our new compulsion to

know who has touched our food.

• Amazon-like tracking in Foodservice delivery

and curb-side orders + videos of food being

prepared.

Sanitization tracking• Demand for information on an operator’s

sanitization practices.

• Tools to track sanitization and communicate to

consumers via apps, websites and in-restaurant

trackers.

• Cues to show consumers they are safe - table

tents that reads “this table has been sanitized”.

3

4


2








5Embracing Employees Differently

An entrepreneurial approach to

employee engagement• Expansion of “employee engagement cultures”

investment.

• It will be about the “team” and that includes

CEOs on down.

Hiring and keeping the best• A labor surplus has been created - but fewer staff

will be needed so hiring the best will be even

more crucial.

• Expanded benefits and perks offered, wages will

go back to being based on skillsets, handling

multiple stations and reliability.

1

2


A safe working environment• Foodservice employees have the same fears

and needs as consumers.

• Creating a safe environment for staff and

conducting on-going training will be crucial to

attracting and keeping people.

• New role - “sanitization experts”.

Being scorecarded by

employees• Staff will scorecard current and potential

employers on their sanitization and safety

practices.

• A new determining factor in where people

choose to work.

• Operators must consider the attractiveness of

their work environment.

3

4


5

6

Coming to work sick• Coming to work when you’re sick will now

be perceived as irresponsible.

• New policies will be published that clarify

what sick is.

• Short term - temperature checks ++

• PTO will be modified.

Shared employees

• The idea of shared employees, while not

new, has been adopted recently and is

working.

• We see the practice of holding “two-jobs”

becoming formalized.

• New partnerships between non-

competing restaurant operators and other

retailers.


2








6New Streams of Revenue

Revenue beyond dine-in• Curbside, delivery and drive-through will

play a crucial role for restaurant and

non-commercial growth moving

forward.

• Major investment and renovation to add

and expand these off-premise services.

Adding dayparts• Expanded daypart footprints - but

without complicating menus.

• Opportunity to “fill the gap” with other

nearby restaurants closing.

• Concepts that rely on one daypart (fine

dining -dinner only) will expand hours.

1

2


Proprietary products • Proprietary / “signature items” will

become more common.

• Not just bottled dressings and hot

sauces, but proteins, breads and

beverages.

• Meal kits – to allow assembly at home.

Groceries• Buying groceries at a restaurant is a new

concept for consumers.

• This will continue - but in a way that

drives revenue with existing customers.

• Operators will continue to sell their

proprietary sauces and dressings along

with a limited selection of other items,

primarily pulled from the inventory they

buy for the restaurant.

3

4


Ghost kitchens

• Expansion of the “Ghost kitchen”

concept - driven by delivery,

frictionless, cashless, lower

investment and requirement for

cheaper real estate.

• New hybrid-ghost-concepts -

double drive throughs and

curbside pick-up, where ordering

and payment is done prior to

arrival.

5


2








7Interacting with Suppliers & Distributors

“Best-in-class” partnerships• How do you define “best-in-class”

supplier today?

• Operator expectations will increase.

• Operators are under tremendous

pressure to survive - will not have time for

suppliers and distributors that are not

meeting their expectations or not being

responsive.

• Chain will lean on their top 5-10 suppliers

and further refine their expectations,

access and reciprocating value for

these strategic relationships.

• It will be a new world of collaboration -

greater trust, shared risk, and mutual

acceptance of what win-win needs to

be.

1

7Interacting with Suppliers & Distributors

Collaborative innovation• Innovation support is part of being best-in-class.

• Chains will be even more open to CI – smaller

teams and greater need for external thought

leadership.

• Product innovation, testing, cost savings ideas,

recipes, training, promotions, merchandising

support.

Flexible, quality ingredients• Operators will become more flexible in their use

of ingredients.

• Sku reduction, labor reduction, menu

simplification, cost management.

• Flexible, high quality products at a good value

that can be used to develop profitable items for

LTOs and permanent menu additions.

2

3


2








8Tighter Financial Management

Changing footprints & more

efficient floor plans• Restaurants will get smaller with more space

devoted to serving off-premise orders.

• Floor plans will be re-thought to

accommodate social distancing,

sanitization, frictionless and queuing.

• Expansion plans will be curtailed as

companies rethink store designs.

Real estate• Good real estate has been difficult to obtain

– this will change.

• Empty restaurants will be less expensive to

lease, and existing rents will be renegotiated

due to the surplus of real estate.

1

2

8Tighter Financial Management

Labor adjustments• There will be a hard look at labor costs -

excess will be eliminated.

• Staff will go back to wearing multiple hats. Productivity and efficiency will be paramount.

• “Doing more with less” will be the new operations mantra… but in order to do that, operators will need to simplify their businesses.

Differentiation re-defined • Differentiation will be based less on menu

breadth.

• There is too much added cost in the supply

chain and kitchen complexity.

• Instead, differentiation will be based on value, experience, exploration, convenience and safety.

3

4

1

Aggressive

Merchandising &

Promotion Tactics

2

New No-Touch

Food-Safety

Protocols &

Services

3

Focus on

Simplifying

Operations

4

New App

Modifications &

New Technology

5

Embracing

Employees

Differently

6

New Streams of

Revenue

7

Interacting with

Suppliers &

Distributors

8

Tighter Financial

Management

8 areas of operator change

This is an important time to

reexamine your business

Fast-Break: Post-CV Growth & Recovery PlanningNow is the time to plan your recovery

MANUFACTURERSWhat do you need to do now to

address your “New Normal” business

environment?

• Fast turn-around

• Two 90-minute on-line meetings

• Prioritized report

Benefits:

• Understand how the New Normal

impacts your plans

• Identify what to stop, start or change

OPERATORSWhat do you need to do to prepare for

your “New Normal” business environment?

• Fast turn-around

• Prioritized report

• 10-point assessment

✓ Safety/No Touch

✓ Supply Chain

✓ Revenue Streams

✓ Staffing/Productivity

✓ Footprint-Adapt/New

✓ App/Website

✓ Menu/SKU Adapting

✓ Brand Ambassador

✓ Innovation/ Differentiation

✓ Financial Management

Coronavirus Impact on the Foodservice Industry

What’s Working &

What Will Become Part

of the New Normal

Tim Hand

[email protected]

Bruce Reinstein

[email protected]


2








Learn more about us at

Kinetic12.com

Live Conversations with Segment Operators (all at 11AM CDT):

K-12 on May 18

Healthcare on May 19

C&U on May 20

Small & Midsize Chains on May 21

B&I on May 22

IFMAworld.com – Information Hub

45

Register now at

IFMAworld.com under

the Events tab.

May 12 @ 2PM CDT: Innovation: The Key to Responding and Adapting

to New Business Realities

May 14 @ 2PM CDT: Business Planning Using IFMA Scope

Documents

COVID-19: What’s Working · Aggressive Merchandising & Promotion Tactics 1 It’s not all about price • It will take more than a good price to drive traffic and keep customers