The former CEO of Red Robin on how operators can rapidly build a much needed source of incremental revenue in 2022 and beyond.
I spent the better part of 25 years working for large chain restaurants including well-known names in fast food, coffee, and casual dining. When it became clear that the pandemic was going to cause extended shut downs and dramatic changes in consumer behavior, my heart went out to all my colleagues battling to stay afloat. Restaurants of all sizes were under siege and struggling to survive.
Restaurants thrive on guests gathering in close circumstances, sharing great food and drinks with friends and family. Overnight, they became destinations no more. The only thing that kept the industry alive was the growth in delivery.
Consumers still wanted to enjoy restaurant-quality meals at home. They still wanted the convenience of enjoying their favorite menu items. Whether via delivery or curbside pickup, restaurants continued to serve, albeit at half or less the volume of prior years. Most weathered the storm.
Now as restaurants return to serving diners in their brick and mortar locations, many still continue to drive profitable business through delivery as well. The other night, while I was standing waiting for a seat at a very popular beach resort location, I counted the number of drivers who came and went—seven in our 20-minute wait. That restaurant served seven incremental virtual tables at the same time their dining room was full. The choice of what, when and where to consume has become important to meet the needs of guests today.
So why should a well-known chain restaurant embrace the addition of virtual brands when they are currently serving the menu they are known for both in their restaurants and away?
Restaurants are built to support peak hours which average (at most) 15 hours per week. Yet most restaurants are typically open 11 a.m. to 9 p.m. seven days a week, or 70 hours, leaving lots of time when capacity exceeds demand. Most restaurants skew more to dinner or lunch. The casual dining chain I led had a relatively balanced lunch and dinner, but skewed heavily toward the weekend. Well-chosen virtual brands can offset those skews and create more peak hours during other parts of the day.
Even the most loyal guests have a maximum number of occasions they will devote to any one brand. By adding one or more well-chosen virtual brands, restaurants can broaden their offerings without diluting their core brand. Guests may not be “feeling” a burger tonight but would love a great taco meal. Why not serve that need? Particularly when so many of the key ingredients are on hand?
The cost of staffing the cook line has risen exponentially and organically in the last year and is unlikely to be abated. Today in many parts of the country, line cooks are averaging $25 an hour. By expanding offerings to include virtual brands, chains can leverage their investment in labor with higher revenue and productivity. And, if they’re really smart, they will enlist those same cooks with upside bonuses for excellent online ratings, driving up trial, repeat and revenue while maintaining excellence in their brand.
I know how complex restaurant kitchens are, but I also know that cook lines are underutilized a vast majority of the time. By incorporating well-chosen virtual brands, chain restaurants can quickly leverage their brick and mortar and labor investments with higher revenue now, and in the future. Asset utilization to meet the growing demand for home delivery is not a pandemic phenomenon, it is the future of smart restaurant leadership. By embracing virtual brands, chain restaurants can rapidly build a much needed source of incremental revenue in 2022 and beyond.
Denny Post recently served as president and CEO at Red Robin and was the interim CEO of the Women’s FoodService Forum, an organization dedicated to advancing women leaders in the food industry. Innovation has been a major theme in Post’s career. She conceived, developed, and marketed best-selling products for a variety of restaurant enterprises including Pike Place Roast at Starbucks, Red’s Tavern Double and Finest Lines at Red Robin, Popcorn Chicken at KFC, and Chicken Fries at Burger King. She is currently an adviser to Nextbite, a leading virtual restaurant company.