On the core menu, entry-level items are as low as $7–8 dollars, like the $7.99 Classic Breakfast Sandwich (two fried eggs, with choice of ham, bacon, or link sausage, with American Cheese on a toasted brioche bun served with French fries or tater tots) and the $6.99 stack of three hotcakes, which allows customers to add eggs for $2.
“If you're household income of $50, $60, $70, $80,000, you're looking for affordability,” Colonna says. “So it's very important to have entry-level items, affordability items, while you try to maintain your value proposition. As long as you maintain a delta or a difference between the competition. We also offer soup and salad and etcetera. We give more food, more product, for the price than any of our competitors bar none right now. We have to maintain that distance.”
In terms of commodities, Cox says Norms prefers to have products like beef and pork contracted prior to spring and summer, but when prices are so elevated, a more hand-to-mouth approach may be necessary so the brand isn’t locked into higher costs for too long.
As for labor, Norms takes a three-pronged approach. The restaurant has an hourly and management program that provides workers a stipend if they refer an employee that stays at least 90 days. The same offer is extended to guests; if they successfully recommend a worker, customers receive $200 worth of Norms coupons.
The third strategy is external and internal marketing of what the restaurant is about, like its 401(k), health insurance, competitive wages, and free employee meals.
Normally, Norms stores are open 24/7, but those operating hours haven’t been as feasible during COVID given the restrictive labor pool. National diner chain Denny’s has had the same issue. As of February, 50 percent of its U.S. footprint was open 24/7, which was only a small uptick from 48 percent at the end of December. Stores with full operating hours outperform restaurants with limited hours by nearly 20 percentage points.
Norms’ goal is for 11 restaurants to reach 24/7 in 2022. Colonna says graveyard cooks will also need to be paid about $2–3 more.
“I'll be honest with you, we are not fully staffed right now,” Colonna says. “But we peck away at it every day. I think the market is getting a little bit better. The employees that wanted to work whether it's in the kitchen or in the dining room, in the front of house, they're just not there, and we could come up with all these reasons why they're not there in the quantity that there used to be. So it's a scramble for everybody right now.”
The company opened two locations last year, one in Encino and another in Rialto. In 2022, Norms is eyeing three more spots in Ontario and West Hollywood, California, and Las Vegas. Each of those new stores will require resizing and value engineering, Colonna says, since construction has increased 20 percent compared to 2019. For instance, the upcoming unit in the Ontario Mills shopping outlet is a former Chevys Fresh Mex.
Equipment that used to take three to four weeks to obtain now takes eight to 12.
“There's a supply chain issue with construction, whether it's lumber, stainless steel, electronic parts, refrigeration,” Colonna says. “That's really a crapshoot right now, as far as trying to plan an accurate development calendar.”
From a customer perspective, Colonna senses growing concern with rising prices. The good news, he says, is that if guests go to the supermarket, their wallets will be squeezed there, as well. However, there’s also the idea that consumers could trade down to convenience stores or fast casual and quick service.
Colonna doesn’t know how long it will take, but he knows a larger reaction is coming.
“It's really a slow burn versus the revolution that we have to keep our eyes on,” the CEO says.
