The Risks of Making Bad Real Estate Decisions: How to Mitigate these Risks Using Data Science

A successful restaurant not only retains their profits and customers, but continually seeks new frontiers. There are many ways to improve an existing operation — whether hopping on the hottest trends or maximizing technology use — but ultimately this “next frontier” may be just that: a new location.

There is a constellation of factors that can impact what type of new location will work best for your next business. While these variables may seem obvious to an already successful owner, the risks associated with site-selection and real estate are so extensive, prospective expanders may want to seek professional assistance before delving in.

Acutely offers an innovative approach to site-selection to mitigate these many risk factors. It’s a service that combines industry expertise with data science — In addition to offering detailed, customer-oriented projections, they emphasize actionable insights to tangibly improve your business.

Before “validating” your business with Acutely, let’s discuss those ominous risk factors that could negatively affect your restaurant.

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Opening a Restaurant – A Checklist for Restaurant Operators

Opening a restaurant is hard – there is no way around it. From first timers to seasoned restaurant groups; things will go wrong, problems will arise. You can mitigate many of these issues by being organized, planning ahead, and leaving
time to tackle the unforeseen.

We have put together a checklist to help you on your journey to opening. It is by no means an exhaustive list. Each project and each company will be different but we have tried to hit the big points you will not want to forget. We encourage you to tailor this list to your organization needs and have left space for you to
do so.

Good luck with your opening and we hope to someday work with you or just
stumble upon your new restaurant for a meal.

Mathew Focht
CEO, EMERGING

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Take Control of your Supply Chain

Overview

Managing supply chain in the hospitality industry used to be pretty simple. You figured out
what you needed to buy, then compete with everyone to get the best price. No longer.

Price is important, of course, but today’s supply chain is more complex. Many factors impact
operations: product innovations, extreme or unplanned weather conditions, fluctuating
costs for food and supplies, and consumer demand for fresh and local products.
As a result, restaurant owners and operators need to regularly manage the process and
adjust as conditions change. But most already have too much to do, and often default to
long-standing contracts with familiar products that have previously done the job. And that
can be costly.

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Sweating Supply Chain

Overview

Today’s restaurant chains are confronted by countless strategic and structural challenges,
but few more critical than the impact of sourcing and managing ingredients and supplies.
With 25-35% of revenue spent on food, beverages, packaging, and supplies, operators are
increasingly focused on finding more effective ways of managing their variable cost inputs.
This trend is a predictable and necessary outgrowth of oversupply (too many restaurants),
consumer demand for value, and the margin pressure brought on by intense competition
over patronage frequency and loyalty.

Unfortunately for most operators, 99% of the “experts” are on the
distributor’s side of a negotiation.

A poorly understood and often sub-optimized element of the supply chain is the “lastmile”
stage, better known as “distribution.” Roughly three to six cents of a restaurant sales
dollar supports that restaurant’s foodservice distributor’s cost of acquiring, warehousing,
invoicing, and delivering ingredients to their “end user” destination; the operator’s storeroom,
cooler, or freezer. To clarify, that’s $.03 to $.06 of every $1.00 that comes into the
restaurant, is spent on food and supplies. Some part of that is the distributor’s net profit.
So when one considers only five cents of a sales dollar make it to a typical restaurant’s
bottom line, fractions of pennies begin to look really important.

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Site Selection

Factors that go into site-selection

Research published by Ohio State University in 2005 found that 60 percent of
restaurants fail in their first year, and 80 percent fail in five years. The main culprit?
Location. Site selection is one of the most important decisions you will make with
any new enterprise and can help make or break your restaurant.

Danny Meyer, while now famous as Shake Shack’s founder, is also the owner of
Union Square Hospitality Group and has managed a variety of different operations.
When asked about how he developed these locations, he said:

“More and more what I find interests me is if you give me the
frame, I’ll figure out what kind of art belongs inside that frame,
and I’ll figure out who to do it with.”
Factors that go into site-selection

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How to Maximize the Effectiveness of your Staff

Using Modern Technology to Train and Motivate

The imminent chef, Alice Waters, is perhaps more responsible
than anyone for the revolution in the way we think about food
and drink, she has “single-handedly changed the American palate”
according to the New York Times.

Driven by visionaries like Alice Waters, customers today are
searching for high quality, seasonal, locally sourced ingredients
that are developed using sustainable food practices. More and
more customers want to know where their food is coming from,
how it was made and what impact it has on the environment.
The liquor industry has undergone a similar revolution to respond
to new customer tastes. Local microbreweries have popped up
everywhere giving customers a local option with an incredible
variety of choices. Similarly local distilleries have grown significantly.
Cocktails are making a resurgence with many spirit companies
adding variations to their core brands to satisfy customer
and bartender requests.

All this change has put enormous pressure on the restaurant industry
to adapt. With constant change, how does the restaurant
achieve their ultimate goal of providing excellent and informed
service? When a customer asks, “What is in this dish or cocktail?”
Can the server answer the question with the appropriate
information that makes the option appealing and makes the customer
feel good about their choice. If the restaurant is successful,
repeat customers, positive reviews and word-of-mouth will push
the restaurant towards improved results.

It’s true that some customers still have simple tastes and just
want a cold beer and a cheeseburger, not caring where the ingredients
come from. However over time a higher percentage
of customers are becoming more discerning with more sophisticated
expectations. It’s not uncommon at the local pub for a
customer to ask where the ingredients in the salad came from or
where the special draft beer was brewed.

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Opening Second Location

So, you think it’s time. Your second location. You’ve had quite the run of success with your
first, and expanding seems like the right thing to do. However, it’s important to consider all
variables when creating something larger. Whether it’s just a second location or an empire,
there are several key features in determining whether a second location is right for your
business.

Can it run without you?
As a restaurant owner, you’ve probably been
in the trenches daily, from baking bread to
cleaning toilets. It is important to fully realize
whether or not your establishment can run
without you, and if not, a second location may
be the worst idea you’ve ever had. It starts
with a sound team, and a leader you can rely
on to take your place. This is why having a
steady manager/partner is very important to
your success. If you can trust this manager to
take over the ship while you are gone tending
to a second business, you’ll be able to manage
a true enterprise.

“First and foremost, having management that
is ready to open another unit is key. This will
give new career opportunities for current staff
to move up, as well as new employment for
those seeking work.” Mathew Focht, CEO of
Emerging.

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Incentive Programs to Motivate Your Staff

Customers often make a decision within the first few minutes after entering your
restaurant. You can see it on their faces as their senses take in the ambiance. If the
employees are genuinely happy, there’s a sense of camaraderie, the sound of laughter
reverberates from the kitchen and they, as a guest, feel included in this festive and
ease-producing atmosphere, you may have just made a lifelong patron. They leave
feeling a little lighter and think about making this their Friday night gathering spot.

Compare this to the establishment they tried
last week—the one with the distracted host, the
grumpy server, and the sound of angry words
echoing from the kitchen. Yes, the one they
promised themselves they would remember to
never grace with their presence again.

Why does one business overflow with joie de
vivre while the other appears filled with the
downtrodden? Is it bad hiring? Improper training
procedures? Management that just doesn’t care?
While these may play a part in restaurants going
awry, there’s one factor that leads to both better
training and a responsive staff: motivation.

Incentive Programs to Motivate Your Staff

Implementing a Sustainable Seafood Program

For those in the restaurant industry, adding yet one more item to your “to-do” list can seem
overwhelming if not impossible. Nevertheless, something has prompted you to consider
the possibility of offering sustainable seafood. It could be your growing awareness that
the marine life in the vastness of the oceans is not as limitless as once perceived. It could
also be because of the increasing number of customers who want to know where and how
their food is sourced. Newer generations are driven by a desire to live in such a way that
supports both the environment as well as the businesses that are “sustainably” conscious.

As you’ll come to realize from the information we share here, offering sustainable seafood
is an important part of that equation. Fortunately, implementing such a program is not as
hard as it sounds. Many restaurants can begin the transfer to an environmentally conscious
menu in as little as two weeks (depending on existing contractual or inventory commitments).
The step-by-step process detailed here includes sources, cost, and resources to
help you make the switch. So let’s take a look at just what sustainable seafood means and
why it is important to you and your customers as well as to the generations that will follow.

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Impact of Gen Z on the Restaurant Industry

Generation Z is on the rise. According to the United States Census Bureau, there are currently
about 82 million of them, and growing. At 25.9 percent, they make up over one-quarter
of America’s population. By 2020, that number will rise to over 30 percent of the general
population and 40 percent of the U.S. workforce. They are on track to becoming the
biggest group of consumers in the history of the U.S. Globally, they make up approximately
2.52 billion of the world’s population.
Those who find themselves in Generation Z were born in 1996 or later. Why 1996? According
to The Center for Generational Kinetics, those born from 1996 onward do not remember
September 11, 2001—a defining moment for Millennials. The other unique experience
that sets this generation apart is this: they are the world’s first “digital native.” They have
never known life without the internet and this one fact, to a large degree, has shaped their
lives and their thought processes.
Overshadowed by the media-hype of the millennial generation, they have just recently
made their mark as the generation to watch. And being watched they are. Companies
such as Charles Schwab, Campbell Soup and Macy’s Inc are changing their whole marketing
strategies based upon the wants and demands of this generation. Why is this important
to you, as a restaurateur? According to asset management firm Piper Jaffray, Generation Z
spends 20 percent more of their dollars at restaurants than Millennials were in 2003 when
they were of a similar age. In fact, this generation that has entered the spotlight spends
more money on dining out than on clothing or music. To take advantage of this burgeoning
segment of the population, you must come to understand them. And to know them is to
love them.

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How to Identify Locations, Choose a Site, and Negotiate a Lease

If you’ve decided to take the leap and open your own restaurant, you don’t need us to tell
you that you have a lot of work ahead of you! Don’t fret, though. That work is well worth it.

“Everything is negotiable. Whether or not the negotiation is easy is another thing.“
Before you can start thinking of the creative aspects of your restaurant, like the menu,
décor and general ambiance, it’s important to get the nitty gritty out of the way: finding
the perfect place to house this establishment. Read on to find out how to identify the right
location and site, as well as negotiate your lease to get that restaurant started on the right
foot. After all, according to a 2005 study by Ohio State University, approximately 60 percent
of restaurants shutter within their first year, while 80 percent close within the first
five. Make sure the fruit of your labor isn’t part of that 60 percent.

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How to Fund a Restaurant

The time has come. After years of thinking about it, probably with both trepidation and
profound excitement, you have decided to go for broke, find the investors you need, and
open up the restaurant of your dreams. Good for you. There will probably be countless
people, friends and family included, that will suggest you may be a little close to the crazy
end of the spectrum of mental health. Others will applaud your bravery. There is one thing
for certain—you are going to need capital, and quite a bit of it, to get your dream off the
dock and headed for a successful voyage.

The most important part of this journey is to have all your ducks in a row before embarking
on the quest for investors and capital. Your first, and most important duck, is your business
plan.

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Guide to Effective Restaurant Marketing

Restaurant marketing is more important today than ever before and can be the key to
setting yourself apart in a saturated market. A successful marketing strategy includes
both online and offline messaging; both are critical to building a brand, attracting new
customers, and retaining loyalty.

To get the most out of marketing for your restaurant, you need to familiarize yourself with
the basics. The process of promoting your restaurant starts with you. In this document,
we will touch on a number of ways to increase your visibility, connect with customers,
and advertise your business in your community.

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Finding the Right Location in Today’s Changing Restaurant Landscape

“Since the Roman times, people have always wanted to ‘see and be seen’ and participate
in a community. The experience people seek from a restaurant or entertainment
anchor seems to make them more resilient in these changing times, and thus they
are now the driving factors behind new developments, as well as developers’ efforts
to remodel and increase relevance for existing shopping centers.”—Ashley Robinson.

A hot topic of conversation these days is the closure of America’s malls. But, according
to Robinson, higher-end malls are taking advantage of the present retail environment to
reinvent and reimagine their shopping centers.

With the big chain retailers that were once shopping mall’s anchor stores going the way
of the dodo, fitness centers, indoor entertainment centers, and restaurants are stepping
in to fill the role. Make that a lot of restaurants. Robinson references a time when malls
only allowed 2 full-serve restaurants along with a mediocre food court in a shopping
center of 1 million square feet of retail with 3 fashion anchors. Nowadays, she says, “A
restaurant will often be 1 of possibly 7 full-service restaurants, plus a food hall with 7 to 10
unique, fresh QSR concepts with alcohol. Chef-driven concepts are growing more than
many chains, and many have paid incredibly high rents that inflated the market to unsustainable
rates when the sales dollars are that diluted.”

Many are blaming retail’s demise on Amazon and other e-commerce brands, and rightly so.
Almost half of all U.S. households have an Amazon Prime membership. Amazon’s net revenue
for 2016 reached $135.99 billion, up from $107.01 billion in 2015. That’s a big chunk of the
consumer change. But Robinson believes there’s more to the story than the boom of online
spending and that there is a way restaurateurs can take advantage of the changing times.

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Big Data, Big Money For Restaurants

The term big data refers to large, diverse and fast-growing volumes of different data
types that can be quickly collected and analyzed. Many restaurant owners and executives
remain unsure about how these data translate into top- and bottom-line benefits.
A 10% increase in data accessibility will result in more than $65 million additional net
income for the typical Fortune 1000 company.

Data analytics represents a dramatic change in the way in which restaurants operate.
Where restaurant owners and operators previously needed to rely upon experience and
instincts, they can now utilize unbiased, data-driven information as they make decisions
affecting every part of their business. In addition, data capture and storage capabilities
have drastically increased and continue to grow at a fast rate. The widespread availability
of big data and the associated processing technologies bring with them new demands,
challenges and opportunities.

Although restaurant owners and operators can utilize analytics in several indirect ways
to increase revenue, we will focus on only the direct methods. Data analytics allows your
restaurant to benefit from the following objectives: gain a deeper understanding of your
customers; measure your business in real-time through alerts and dashboards; optimize
your menu; and predict your restaurant’s future demand.

“Hiding within those mounds of data is knowledge that could change the life of a patient,
or change the world.” (Atul Butte, Stanford)

Big Data Big Money For Restaurants