Why Your Restaurant Leadership Needs to Be Real Estate & Tech SavvyHow restaurants are using technology to attract customers

RADHIKA PAPANDREOU Co-Head Hospitality & Leisure

Ferguson Partners

WHY YOUR RESTAURANT LEADERSHIP NEEDS TO BE REAL ESTATE & TECH SAVVY

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The foodservice sector is growing even more

competitive as consumers’ appetites for eating

out show no signs of abating. Demographic

realities, real estate trends and technological

innovation are just as important as menu items

and food costs. Restaurants need to consider

key industry trends and think differently about

the skills needed in board members and

executives in order to stave off competition.

Changing Demographic Trends

Restaurants are increasingly filling retail real

estate according to census data reported by

CBRE. In 2015, restaurant sales outpaced grocery

sales for the first time, and the gap continues to

grow. Personal consumption spending on dining

outside the home charted higher annual growth

(5%) than dining at home (0%).

This is especially true for millennials, 77%

of whom visit a restaurant once a week

or more, according to Oracle’s report,

Millennials & Hospitality: The Redefinition of

Service. Members of this group favor eating

experiences and destination dining -- and

they’re willing to pay for them. Food is not just

for sustenance for these youthful customers,

it is part of their identities. And many of them

are using mobile devices to research, book,

pay and document their meals.

Developing Commercial Real Estate Trends

As vacancy tightens and rents increase,

restaurateurs are looking beyond

traditional commercial space. Developing

trends include:

• Malls & Food Halls: Millennials’ preference

for experiential retail has many developers

and property managers putting more

emphasis on the restaurants in their

tenant mixes. Owners of large spaces

now see dining as the anchor draw, and

CBRE notes they are filling spaces with

a variety of concepts operated by one

diversified restaurant business (as Eataly

has done in Chicago), or populated with

solo operators serving a range of eating

options. This approach meets consumer

demand for fast, interesting and local

food that delights a range of palates.

• Co-Tenancy & Clustering: Co-tenancy is

a scaled down version of the food hall. It

is a popular option for smaller operators

to go in with complementary restaurants

(as Fiesta Restaurant Group has done in

Boston), or for multi-concept restaurant

groups to co-locate divergent eateries.

Other restaurant groups are clustering

properties in the same neighborhood,

using proximity to leverage operational

efficiencies and to give “regulars”

additional choices without losing

business to competitors.

• Food Trucks & Pop-ups: Other

restaurateurs are dealing with tight

commercial markets by using temporarily

vacant space to test new concepts, build

loyalty and attract new customers. These

short-term options include food trucks

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that can go where the diners are, or

pop-up eateries that take advantage of

a limited-time-only opportunity to drive

traffic, and offer chefs a chance to test

new dishes or concepts.

Advancing Data & Technology Trends

Another growing need in the restaurant

business is experience in deploying

technology.

• Cyber Security: As hackers continue to

attack any operation — large or small —

that has access to valuable data,

businesses need stronger information

and network security leadership. The

2017 Trustwave Global Security Report

shows that food and beverage is the

second-most breached industry; only

retail outpaces it. Most of the breaches

occurred via point-of-sale systems,

but restaurant groups are also at risk

for executive impersonation, email

wire transfer fraud, W-2 phishing and

ransomware attacks.

• Big Data: Technology that creates and

analyzes Big Data requires staff and board

members who know how to turn that

into actionable insights and initiatives,

such as staffing smarter, understanding

customers better and designing loyalty

programs.

• Mobile: Restaurants must be mobile-

enabled. Oracle’s data show that 39%

of millennials have already used their

mobile devices (mostly phones) to order

food and beverages. In fact, 51% want

to order delivery and takeout via mobile

devices, and 41% want mobile ordering

in the restaurant. Just over a quarter of

millennials have used mobile technology

to pay for those orders. And 52% of this age

group wants to manage loyalty programs

via mobile technology. The report notes

that “in many cases, particularly with

loyalty programs in restaurants and room

service in hotels, millennials want to use

their smartphones and tablets even more,

suggesting demand is outpacing current

service availability.”

Recruiting new leaders with new skills

Succeeding in this environment requires

board members and corporate leadership

with new skills and experiences. Board and

executive recruitment strategies should

emphasize:

• New Vertical Experiences: “The days of a

line leader reaching the executive level

in a sole function have ended,” according

to Deloitte’s 2017 Human Capital Trends

report. Restaurants must acknowledge

changing business requirements and

recruit professionals with broader

skills and experiences. Knowledge of

cybersecurity and cloud computing

ensures restaurants can respond to cyber

attacks. Executives and board members

who can extend Big Data and analytics

WHY YOUR RESTAURANT LEADERSHIP NEEDS TO BE REAL ESTATE & TECH SAVVY

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beyond operations and into marketing

and customer behaviors will be able to

identify and act on deeper, more valuable

customer and operations insights.

Action Item: Recruit for experience in

property investment and management,

retail, hospitality, franchising, travel and

tourism, M&A, Big Data and cybersecurity.

• Innovation & Experimentation: According

to a Deloitte report, 90% of companies

are redesigning their organizations to

be more dynamic, team-centric and

connected. The foodservice business is

no different. Seizing opportunities and

meeting evolving dining preferences

requires new operating models,

concepts and experiences borne from

innovation, experimentation and vision.

Action Item: Seek directors and executives

who are experienced in overseeing

innovation and managing change, and

those who have demonstrated the vision

to guide organizations into new areas

required to succeed.

• Age, Gender & Racial Diversity: To create

authentic experiences that appeal to a

more diverse customer base, leaders

need to come from the demographic

groups served. Their innate understanding

of preferences and aspirations of

diners can help you best competitors.

Action Item: Identify candidates from

the demographic groups propelling the

industry and making decisions about

dining out: millennials, people of color,

women and the LGBTQ community.

This is an exciting time in the restaurant

industry. The business is riding a wave of

change and the companies with visionary

and experienced leadership will succeed.

Capitalize on these opportunities by:

• Expanding the reach of recruiting to

address challenges with the right people

in the boardroom and on the leadership

team.

• Engaging a recruiter to access the verticals

where experience or connections are

lacking.

Serving up the dining experiences customers

demand today and will desire in the future

requires more deliberate recruiting and hiring

to identify and retain strong leaders.

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Radhika is a Senior Director at Ferguson Partners where

her focus is on senior management and Board recruitment.

She co-leads the Global Hospitality practice and leads the

Chicago office.

Radhika has expertise in recruiting for Boards in the Restaurant &

Leisure sector working on full Board creation and Board refresh

projects. She frequently speaks about governance and Board

recruitment trends at national conferences and in publications.

Before joining Ferguson Partners, Radhika was a Managing

Director at Lloyds Bank, running the Consumer and Healthcare

practice for North America. She had responsibility for the

management of the sector team and was a member of the

North American Management Committee. She worked between

the New York and Chicago offices, leading teams in both cities.

Radhika has over seventeen years of banking experience. She

spent the first ten years of her career at Citigroup in various roles,

including origination in the Financial Institutions Group, capital

markets credit, and Consumer and Healthcare relationship

management — both in New York and in London.

Radhika earned her Bachelor of Arts degree in International

Affairs and Economics from the Johns Hopkins University,

and an M.B.A. in Finance from New York University’s Stern

School of Business.

RADHIKA PAPANDREOU

Senior Director,

Co-Head Hospitality Practice

Ferguson Partners

+1 312-893-2364

rpapandreou@fergusonpartners.com

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© 2017 FPL Advisory Group. The Ferguson Partners recruitment practice consists of five affiliated entities serving FPL’s clients around the world: Ferguson Partners Ltd. headquartered in Chicago with other locations in New York and San Francisco, Ferguson Partners Canada Co. in Toronto, Ferguson Partners Europe Ltd. headquartered in London with a Japan branch located in Tokyo, Ferguson Partners Hong Kong Ltd. in Hong Kong, and Ferguson Partners Singapore Pte. Ltd. in Singapore. Ferguson Partners Europe Ltd. is registered in England and Wales, No. 4232444, Registered Office: 100 New Bridge Street, London, EC4V 6JA. Ferguson Partners Singapore Pte. Ltd. is registered in Singapore, Business Registration No. (UEN) 201215619H, Employment Agency License No. 12S6233. FPL Associates L.P., the entity which provides consulting services to FPL’s clients, is headquartered in Chicago.

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