Is Your Business Transactional or Experiential?
David Klemt
Partner, KRG Hospitality Inc. | Bar, Beverage and Guest Experience Coach | IHI 2024 Global Top 100 Social Media Influencers in Hospitality | Host of Bar Hacks, IHI 2024 Global Top 40 Hospitality Podcasts
When you consider your restaurant or bar honestly, is the service you and your team are providing to guests transactional or experiential?
It’s an important distinction, and it applies to every restaurant and bar category. Whether operating a QSR or FSR, today’s guests want more for more their money.
Further, they expect more just for choosing to leave their homes. A recent report from CWB Franchise Finance, in partnership with Circana and fsStrategy, indicates strongly that experiential concepts are on the path to weathering economic challenges and achieving long-term success.
Now, to be clear, of course all businesses are transactional. In that regard, restaurants and bars are clearly no different from other businesses.
Guests come in, they place orders, and they pay for the goods they receive. Transactional, right?
However, restaurants and bars are in a position to deliver memorable experiences.
Sure, for some people those memories are fleeting. There are those who are always seeking the next thing. But operators who become known for providing more than just menu items will remain on the radar of even the most fickle guest.
When a restaurant or bar delivers goods plus phenomenal services, when the guest experience involves more than just ordering and paying, it becomes experiential.
Think back to the times this year you’ve popped into a QSR or fast-casual restaurant. Can you remember much about the experience? If yes, fantastic—that operator understands the power of an experiential business model. Should the answer be no, that operator sees value only in being transactional.
Which are you happy to return to in the future?
Experience is King
I’m going to assume you’re much happier to return to an experiential concept than a strictly transactional one. And if that’s a correct assumption, you should apply that to your own restaurant or bar.
According to studies Circana has conducted over the past couple of years, Canadian consumers are reacting to economic uncertainty and financial instability as one would expect: cutting back on discretionary spending.
Generally speaking, that means reducing their spending at restaurants and bars. However, there’s a bit of good news tucked into those Circana studies.
Per Circana, half of Canadians plan to increase spending on something in particular: experiences. Further, 91 percent of Canadians say they’ve spent money at experiential restaurants recently.
“A restaurant visit isn’t necessarily just about nourishment, but instead is a platform for socializing, entertainment and exploration,” reads the joint CWB, Circana, and fsStrategy report.
Importantly, an operator need not go to extremes to deliver an experience. Something as simple as creating an LTO around craveable drinks can pay huge dividends. For proof of that, simply look at McDonald’s in the US and the hype that surrounded the berry-flavored Grimace Shake.
Operators throughout Canada and around the globe need to understand how impactful being experiential can be.
Keep reading over at KRGHospitality.com.
FTC Targets Restaurant Fees and Surcharges
Well, that didn’t take long. Less than two months after asking for the public’s input, the Federal Trade Commission is proposing legislation targeting additional fees and surcharges.
The proposed rule is known as the “Unfair or Deceptive Fees” rule. As one may imagine, the FTC is going after hidden and so-called “junk” fees.
As it stands, according to multiple outlets, this rule would prohibit restaurant and bar operators from surcharges that are commonplace. For example, larger-party fees, delivery surcharges, and even credit card processing charges would be banned by the rule.
Instead, operators would be compelled to list total prices on menus, whether for goods or services. Further, the FTC is directing operators to provide larger groups with “larger group” menus. These separate menus would show total prices calculated to include any surcharges.
Even further, it’s being reported that the FTC is also addressing tips. The Commission’s rule directs operators who charge service fees in place of tips to remove the fee and return to tipping.
Interestingly, the National Restaurant Association is reporting that the FTC never identified restaurants as a targeted industry when asking for public comments about junk fees. However, other sources claim that restaurants were indeed included when the FTC put forth the request for public feedback.
Regardless, it’s a fair statement to say that the Commission doesn’t understand restaurant operation and costs. It appears that the FTC either didn’t work with any operators when drafting these proposed rules. Or, if they did seek out restaurant operator input, they put very little stock into it.
Costing Independents
One thing that’s clear is these proposed rules will cost operators. In particular, compliance will cost independent operations, which account for nearly 70 percent of American restaurants.
According to the NRA, the cost of changing menus will cost nearly $5,000 per operator, for starters.
“The FTC doesn’t take the realities of the restaurant industry into consideration,” reads the Association’s fact sheet. “Its estimated compliance cost—$3.5 billion—would equal a cost of $4,818.27 per operator for menus alone. Small independent operators run on a 3-5% margin and make an average of $45,000/year. The cost of making this change would be approximately 10% of their total income.”
As independent operators can attest, credit card swipe fees are a dynamic cost that affects them disproportionately in comparison to their chain restaurant counterparts. Since these fees are calculated on a per-transaction basis and not fixed, adjusting menu prices to comply with the FTC’s rule puts them at a costly disadvantage.
Then there’s the simple fact that when restaurants raise prices, traffic tends to drop. When traffic drops, revenue goes with it. And when traffic and revenue drops, hours are cut back, and people lose their jobs.
Continue reading on KRGHospitality.com.
Will Whiskey Bring Us Together?
领英推荐
A letter penned by Senator Catherine Cortez Masto and signed by a bipartisan group of senators shows that we’re capable of coming together.
There’s seemingly no escape from messages that America is divided like never before. And, when inundated with that message, it’s easy to believe. Sadder, when we believe that message it’s too easy to plunge into despair.
However, 17 senators, Democrats and Republicans, are coming together in support of American whiskey.
These senators are seeking the permanent removal of tariffs on American spirits and wine by the European Union. That 25 percent tariff, first imposed in June of 2018, is in retaliation over a dispute over aluminum and steel. This was a response to the US imposing a 25 percent tariff on steel imports, and ten percent on aluminum.
Unfortunately, after a suspension? in 2021, the tariffs on American whiskey will jump to 50 percent on January 1, 2024. So, Sen. Cortez Masto and a bipartisan group of senators are urging the Biden administration to work with the EU to permanently suspend or otherwise eliminate tariffs on American whiskey.
If Ambassador Katherine Tai and the White House are unable to broker a deal with the EU, the tariffs would be catastrophic for many American whiskey distillers. In turn, their whiskeys would become more costly for restaurant, bar, nightlife, and hotel operators. And, of course, for consumers.
Here’s to hope. Hope that a deal can be reached, and hope that somehow, some way, our elected officials will engage in more bipartisan efforts moving forward.
Bipartisan Support in the Senate
Below, the text of the letter that Sen. Cortez Masto (D-NV) sent to Ambassador Tai and the White House.
The following senators signed this letter in a show of bipartisan support:
If only restaurants and bars, venues where American whiskey is bought and sold, had received this type of support when seeking RRF replenishment.
Continue reading on KRGHospitality.com to read the letter for yourself.
Drink Donnybrook: Let’s Talk Screwdriver
As it turns out, the origins of one of the simplest cocktails on the planet—there are just two ingredients in a traditional Screwdriver—are a mystery.
Another interesting note about the Screwdriver: It’s likely a relatively new drink.
If the Screwdriver is an American invention, the earliest most believe it could have been created is the 1920s. That’s when Smirnoff sold the rights to North American distribution to a distiller in the US.
However, it’s possible the cocktail wasn’t invented until some time in the 1940s. Vodka didn’t really become popular among Americans until the ’40s. So, it’s conceivable that the Screwdriver is less than 100 years old.
Still, it’s difficult to believe that someone, somewhere didn’t think to add a splash of vodka to their orange juice in the 1800s. Or that someone didn’t think to “adjust” the taste of the vodka in their glass with a bit of OJ.
Either way, it’s pretty entertaining to know that we don’t have a definitive answer for who created the Screwdriver, where it was first made, and when. When we consider the fact that the recipe calls for just two simple ingredients, maybe it does make sense that we don’t know the who, where, and why. It’s so easy to make that it’s believable multiple people had the same idea around the same time, across the globe.
Of course, it wouldn’t be a Drink Donnybrook without checking into some origin theories. So, let’s dive in!
World War II
One theory involves WWII and the US Marine Corps.
It’s quite simple, really. During WWII, stationed overseas, perhaps a few Marines jazzed up their orange juice with a touch of vodka.
Oh, but wait. The Screwdriver may not be attributable to the USMC. It’s possible, according to another theory, that the former US Army Air Forces came up with drink and name when stationed in Ankara, Turkey.
As the predecessor to the Air Force, the USAF may hold claim to the Screwdriver.
If it’s one thing we need, it’s more fuel for the inter-service rivalry between the USMC and USAF.
Journalists
Two publications mentioned the Screwdriver in the 1930s and 1940s.
According to some historians, Journalism Quarterly at least made reference to a drink called the “Smirnoff Screwdriver” in 1938.
If that’s true, the classic cocktail predates WWII by a year. And if that’s true, it’s possible that American marines, airmen, or soldiers spread it around the world.
In 1949, Time magazine mentioned the Screwdriver. According to the writer, the cocktail was the newest drink grabbing attention at the Park Hotel in New York. Apparently, American engineers, Balkan refugees, and Turkish spies loved the drink.
Interestingly, if Time‘s reporting is accurate, it’s possible the supposed Turkish spies frequenting the Park Hotel bar got the name of the drink from American airmen.
Since apparently no bartenders who worked at the Park Hotel appear to have taken credit for it back in the ’40s, it’s unlikely it was created there.
Continue reading on KRGHospitality.com.