Posts tagged: Business model

Creating a data-driven restaurant expansion strategy is a crucial step that you need to go through when opening a new restaurant. 

While building on the success of your existing restaurants seems feasible on paper, there are no guarantees that a new restaurant in an entirely new location will perform as expected.

Many variables come into play here, like the criteria for choosing the new location, marketing, consistency, and of course, competition.

There are also risks associated with expanding your restaurant business, especially since it requires a significant investment. More restaurants mean your losses will multiply during uncertain times such as pandemics, wars, or economic disruptions.

In this guide, we’ll walk you through the steps of creating a restaurant expansion strategy for your F&B business. 

1. Think About the New Location 

Scouting a location for your new restaurant can make or break its success. Ideally, you should look for a location that shares as many similarities with the locations of your current restaurants as possible.

For instance, if most of your restaurants are near suburban areas where most residents are families, your best bet is to find a similar location for your new restaurant to replicate its success.

It’s also important to choose a delivery-friendly location. Your restaurant should be centrally located within close proximity to the highest online order volume and most delivery drivers.

2. Create a Business Plan

Creating a business plan for your new restaurant based on your restaurant’s new location is essential. A great approach here is to use what has already worked for your current restaurants and improve on it in your new business plan, as well as fine-tweak it based on the new location.

Your business plan should include:

• Competitor analysis. Learning who your competitors are, the types of customers they attract, and whether there are any collaboration opportunities with them must be detailed in your business plan.
• Sales volume from nearby residents, workers, and window shoppers. If your new restaurant targets office workers, placing it in a residential area won’t make any sense.

3. Calculate Your Budget and Expenses

Once you’ve formulated a business plan, think about your finances. What’s your estimated budget for the new restaurant? How much will your initial and overhead monthly expenses be?

Getting rough estimates for these numbers will help you determine the profitability of the new restaurant and understand the associated risks.

4. Decide Whether You’ll Replicate the Existing Menu or Make a New One

When it comes to expanding your restaurant, you have two options: either go for the same exact menu or create an entirely new one.

Both approaches are fine; it all depends on your customers’ preferences in the new location. Will people in that location be interested in your existing menu? Or should you omit or add some new items?

You can find the answers to these questions with a data-driven approach. How are your competitors performing in the new location? Are certain menu items more popular than others?

If you’re still unsure, you can try replicating the menu and analyzing its performance for further improvements.

5. Get the Required Permits and Licenses

Planning a new restaurant means that you must obtain all the permits and licenses required in the new location. These may include:

• Certificate of Occupancy
• Business License
• Food Service License
• Employer Identification Number (EIN)
• Sign Permit
• Seller’s Permit
• Live Entertainment License
• Food Handler’s Permit
• Valet Parking Permit
• Employee Health Permit

Of course, you may not have to apply for all of these permits and licenses, depending on the nature of your restaurant. For example, if your restaurant doesn’t offer live entertainment, you don’t need to apply for a live entertainment license.

6. Think About How You’ll Handle Online Orders

Providing a convenient online ordering experience is vital for the success of your new restaurant. The demand for online food ordering has skyrocketed in the past few years amid the pandemic.

Not taking care of that part in your new restaurant will make you miss out on significant takeout sales volume. You can either manage online orders on your website with an online ordering system or outsource the process to third-party food delivery apps and solutions. Just make sure you create a master menu that can be automatically adjusted in real-time to prevent your customers from mistakenly ordering an out-of-stock item.

7. Plan and Prepare Your Materials and Kitchen Equipment

Material planning for your new restaurant involves stocking up your inventory with essential ingredients, food, drinks, and other items you need for food preparation.

You also need to create a customized kitchen that contains all the appliances and tools needed to efficiently create the items on your new menu. Think ovens, gas/electric ranges, ventilation, mixers, food processors, microwaves, sinks, freezers, etc.

A good practice here is to create an inclusive list of items with their prices and add it to your business plan. This will help you get an idea of the initial expenses you should expect when opening your new restaurant.

8. Hire Staff

Once you’ve laid the foundation for your new restaurant, you’ll have to hire staff.

First, you need to hire a new head chef to help you with the menu. If the chef is familiar with local customer food preferences, they can make it easier to decide whether to use the same menu or tweak it a bit. They’ll also have added their own touch to the recipes and other culinary aspects.

Your head chef should also have leadership skills to train and manage staff.

9. Build a Marketing Plan

If no one knows about your new restaurant, you’ll barely get any sales.

Since you’ve already established your brand name in other locations, creating a buzz about your new restaurant’s location should be easy since you’ll use your existing reputation.

Create a marketing plan that aims to replicate the success of your brand in the new location. Here are some tactics that you can implement:

• Offer complimentary meals or discounts in the first few opening days
• Spread the word through social media channels and ad platforms like Google Ads
• Announce the opening of the new restaurant on your existing website
• Let customers in your existing locations know about the new restaurant’s location with hoardings or consultation desks 

10. Analyze Your Customers’ Data

Once your restaurant is up and running, collecting data about your customers and analyzing it will help you fine-tune the experience for them and cater to their needs. Utilizing a data-driven approach will not only help you retain customers but also attract more customers down the line.

It’s also important to create a consistent experience for your customers with guest profiles. For example, if a customer is lactose intolerant, this should be included in their profile. So the next time they order an item from your new restaurant, it must be free of dairy products, either by substituting the dairy ingredients or eliminating them completely.

Grow Your Restaurant Business Faster and Risk-Free With Brito Cloud Kitchens

Brito Cloud Kitchens takes the restaurant expansion strategy off your plate by handling the entire life cycle for you.

From data-driven market research and resource planning to full kitchen operations and order fulfillment, Brito ticks all the boxes! We also create customized sales reports and revenue analytics to continuously improve your brand’s performance.

Taking advantage of the rising popularity of online food ordering, we enable you to run a delivery-first restaurant model that helps you reach a wider audience, minus the risks and costs associated with coming in brick and mortar.

With Brito, you’ll be able to launch your brand in the new location within 3-4 weeks of signing the contract. You also don’t have to worry about kitchen management, staff hiring, delivery processing, or marketing since we handle it all!

Fill out this form now so we can discuss your restaurant’s growth potential with Brito!

Cloud kitchens have presented an opportunity for F&B businesses to reach wider audiences with a low-risk and cost-efficient approach. With a noticeable decline in the demand for dine-in restaurants, cloud kitchens are getting more and more popular among established F&B brands.

So what’s that all about? What’s so special about cloud kitchens and where did all of that come from? What should that mean for your F&B business? Let’s find out!

How It All Started

The COVID-19 pandemic was one of the most significant driving forces behind the increasing popularity of cloud kitchens.

And while cloud kitchens have been around even before the outbreak, they weren’t considered as an option that frequently.

After the pandemic, many F&B businesses were looking for innovative ways to cut costs while maintaining a solid market presence and reaching the highest number of customers. 

As a result, lots of restaurant businesses considered shifting to ghost kitchens for two primary reasons: risk mitigation and cost efficiency.

What Is a Cloud Kitchen?

A cloud kitchen, also known as a virtual kitchen or ghost kitchen, is a commercial food production facility that allows multiple restaurants to offload their entire kitchen operations and order fulfillment and delivery processes to a service provider. 

In that case, the menu offered to customers is delivery-optimized, where the item selection criteria are deliverability, demand, and quality. 

There are different business models for ghost kitchens, which include:

• Independent Ghost Kitchens. An independent ghost kitchen that operates exclusively for a specific F&B business. 
• Coworking Ghost Kitchens. This model provides the resources to cook food and allows brands to rent booths in a shared kitchen environment. 
• Multi-Brand Ghost Kitchens. This model maximizes cost-efficiency by enabling various brands from one parent company to operate under one kitchen roof. 
• Outsourcing Model. In an outsourced model, the cloud kitchen provider takes care of everything in the F&B business’ lifecycle, including kitchen operations, resource planning, order fulfillment, delivery, and analytics.

Difference Between a Cloud Kitchen and Delivering at a Brick and Mortar

There are substantial distinctions between the ghost kitchen and brick-and-mortar models, which can be summed up in the following points of comparison:

Delivery Speed

Cloud kitchens enable you to offload the entire order fulfillment and delivery process, ensuring that your customers get their food as quickly as possible. 

Things are different in a conventional brick-and-mortar setup. You won’t be able to cope with sudden increases in demand since your resources are limited. Not to mention, the operational workflow is rarely efficient, especially if your delivery drivers struggle with parking. 

Order Tracking

Another issue with brick and mortar restaurants is that tracking orders can be challenging, particularly if your restaurant is partnered with multiple delivery services and apps. This often results in incomplete orders or even accidental order exchanges.

With ghost kitchens, each kitchen has a dedicated app that makes order tracking much more straightforward, drastically helping in reducing delivery time. With all your orders grouped in a centralized interface, tracking orders becomes more efficient, irrespective of the specific delivery app each customer uses.

Additionally, cloud kitchens have dedicated fulfillment teams that make sure each order is handed to the right driver. By eliminating the possibility of order mismatches, you’ll increase your customer satisfaction levels and get more happy customers ordering food from you.

Flexible Delivery Menus

Ghost kitchens provide a different version of your menu that only includes items suitable for delivery. Items that can be challenging to package for delivery or change taste during travel are excluded from the menu. 

A ghost kitchen also allows you to track demand for all your menu items based on customer data and analytics, so you can resource ingredients more efficiently. This data-driven approach can save you a lot of money and reduce ingredient waste. 

In a traditional brick and mortar facility, you’ll never be able to monitor demand as accurately as in ghost kitchens since your customers use multiple delivery services. Your menu remains the same for takeout and dine-in customers, resulting in more wasted ingredients and revenue loss. 

Online Visibility 

In the post-pandemic era, the demand for online delivery services has skyrocketed. Even people who traditionally preferred to dine in began to appreciate the convenience of online food ordering services. 

In a brick and mortar setup, bringing in new customers is entirely dependent on your physical storefront. Adopting a cloud kitchen approach is the exact opposite: your location becomes less relevant, and you’ll get a huge influx of customers looking for food choices online. 

Setup

Setting up your brand with a cloud kitchen service provider is much faster than coming in brick and mortar. You don’t need to source materials, hire staff, print menus, or handle any of the work required to launch your brand in a new market. 

Benefits of Cloud Kitchens

Here are some of the perks of making the move to a cloud kitchen:

Risk Mitigation

Launching your brand through a virtual kitchen is much less risky than a traditional brick and mortar environment. The latter means you’ll have to rent a property, deal with hefty monthly overhead costs, and hire staff. 

Whenever a disaster with the magnitude of a global pandemic strikes, your response strategy wouldn’t be of much help: you’d still end up losing a lot of money. 

Higher Growth Potential and Faster Speed to Market

Launching your brand in a new market is much faster with a cloud kitchen approach. Once you sign a contract with a cloud kitchen provider, expect your first order to be fulfilled within 3 to 4 weeks. Traditionally, opening your first restaurant branch in a new market can take up to 8 months.

Cost Efficiency

Cloud kitchens provide lower risks and a higher ROI (Return on Investment) than coming in brick and mortar, making this approach a less-costly alternative. 

Due to the current economic crisis, many F&B businesses are struggling to reduce costs. If you’re trying to expand your presence into new markets, you’d want to take an accurately calculated risk if you want to break even in a reasonable amount of time. 

Even then, there’s no guarantee that unusual events like pandemics and wars won’t force you to shut down your operations and lose your investment.

Operating a restaurant requires massive initial and overhead investments such as property leasing, interior design, management, and staff hiring.

On the contrary, virtual kitchens require a much lower initial investment, and moving forward, it’s a single monthly subscription fee that you can opt out of with zero exit fees or liability.

Improved Accessibility to Customer Data

The concept of a cloud kitchen allows F&B businesses to gain better visibility of their customers’ big data. Since many cloud kitchens rely on third-party apps for food delivery, you’ll be able to learn more about your customers’ eating habits, behavior, and preferences.

The collected data can be analyzed to help you come up with innovative ideas and solutions to optimize operations and increase revenue.

What Does This Mean For Your F&B Business?

The rising popularity of cloud kitchens has made many F&B businesses rethink their growth strategies to survive the current economic crisis. 

Launching your F&B brand in a new market can be expensive and risky, with limited potential for growth. 

At Brito, we offer a Cloud 9 Kitchen service model that handles the entire lifecycle for you. From data-driven market research to material planning and order preparation and fulfillment, your brand will be ready to ship its first order within a month. We can also provide assistance with recipe development and cost calculations.

Here’s why Brito is the right cloud kitchen partner for your brand:

• We provide consultation services. Our cloud kitchen services are only one part of the equation. Brito also acts as your private legal and financial consultant, so you can enjoy the peace of mind of launching your brand, minus the legal and financial headaches.  
• We are techies. We leverage the power of food tech by integrating powerful analytics tools right into our platforms, providing you with deep insights into what your customers love or hate through our real-time dashboards.
• We care about the environment. Honoring our commitment to a greener Earth is a priority for us, and by minimizing waste and optimizing your menus based on demand data, we directly contribute to protecting the environment. 

Fill out this form now, and let us know how we can help you 

Mitigating risk and surviving in the F&B industry can be challenging, especially in the current economic crisis. Many restaurant businesses are still trying to recover from the effects of the COVID-19 outbreak, and the ongoing Russo-Ukrainian War isn’t making it any easier. 

But not all hope is lost yet. As an F&B organization, you still have a solid chance of skipping the economic disruptions by adapting your restaurant business to the current consumer needs, logistical and operational challenges, customer behavior trends, and increasing costs.

The Economic Challenges That Face the F&B Industry

Currently, two major economic obstacles affect the F&B sector:

The COVID-19 Pandemic

The global pandemic that hit the world in late 2019 wasn’t so kind to many industries, with the F&B industry being the most affected one.

From enforced closures and reduced opening hours to revenue loss and supply shortages, the COVID-19 outbreak resulted in complete business failure for thousands of companies in the F&B industry. 

Based on a recent report, the pandemic set back restaurant sales by up to 6 years. Another report estimated that 57% of businesses in the F&B industry think the pandemic is the most significant risk to their supply chain.

Conversely, the pandemic has presented several opportunities for growth based on shifts in consumer behavior and preferences. For example, due to hygiene concerns, lots of consumers now prefer to order food online or use in-store pickup services. 

The global health crisis has also resulted in various diet trends, such as plant-based, additive and preservative-free foods. 

The Russo-Ukrainian War

The Russo-Ukrainian War caused major shortages. in essential goods such as wheat, sunflower seed oil, and corn, forcing businesses in the F&B industry to raise their prices and look for alternative ways to source their materials. It also increased food prices, affecting both businesses and consumers.

Top 11 Hacks to Survive the Economic Crisis That Hit the F&B Industry

If you’re having a hard time supporting your F&B business during the economic crisis, these tried and tested techniques should help you minimize your losses, maintain your customer base, and reach new audiences.

1. Increase Brand Awareness

Boosting brand awareness and building a relationship with your customers will remind them that you’re there during unusual events. The best approach here is to emphasize brand consolidation.

For example, during the pandemic, lots of restaurants combined their promotions with relevant pandemic messaging, like “I stay home”, while also focusing on providing high-quality at-home experiences for their customers.

2. Maintain a Cash Reserve and Reduce Your Debt

Settling your debt and maintaining a consistent cash reserve are key steps to surviving an economic crisis.

List down your current expenses and discuss the possibility of letting some of them go with your teams. Of course, you still need to maintain an exceptional customer experience, so only eliminate the expenses that won’t directly affect your customers.

Also, when revenue goes down, you’d want to use your cash reserve to cover your monthly expenses, not pay debt installments. The sooner you settle your debts, the stronger your position will be during a recession.

3. Minimize Waste and Excess Inventory

Unnecessarily stocking up on materials can severely hurt your F&B organization’s finances, and in an economic crisis, things get even worse. Ideally, you’d want to manage your inventory levels based on realistic, data-driven demand forecasts.

Optimizing your inventory will help you reduce waste, spend less on warehousing, and minimize the loss in unexpected situations.

4. Create Virtual Experiences for Your Customers

Developing virtual content for your customers can significantly compensate for the inaccessibility caused by the pandemic. Virtual events, cooking lessons, user-generated content, and tutorials are all great ways to engage your customers online during trying times.

 5. Offer More Discounts and Promotions

Customers love discounts and promotions. A simple price cut can help you acquire more customers, even if it requires an initial investment. This is largely due to the economic crisis that caused a shift in consumer habits.

Since customers are leaning more towards saving and reducing consumption, discount codes can help you increase online sales. Couples, families, or even people that can’t have their meals without some ice cream or a soft drink would also appreciate promotions that provide more value.

 6. Offload Your Expansion Strategy to a Cloud Kitchen Provider

Entering new markets during an economic crisis can be challenging and risky. From leasing commercial properties and resource planning to kitchen operations and sales reporting, growing your restaurant business can take a heavy toll on your finances.

Even if you manage to get things up and running, the future of your brand’s presence in the market is more uncertain than ever in the current economic disruptions.

The solution resides in two words: Cloud Kitchens. Cloud Kitchens (also called Ghost Kitchens) allow you to grow your business and expand into new markets, minus the overhead costs and the long time to launch. A Cloud Kitchen solution, like Brito, is an innovative shortcut that will help you reach new audiences quickly while keeping costs under control.

In scenarios such as pandemics, global recessions, political unrest, and natural disasters, your operation risk with a cloud kitchen is non-existent since you can simply put everything on hold without inflicting any overhead expenses.

 7. Leverage Technology

Integrating cutting-edge technology into your existing systems can be a great way to make your F&B business stand out.

One way to increase sales in the post-pandemic era is to invest in self-service kiosks. These kiosks are fast and deliver a great customer experience. For example, BurgerFi has reported a whopping 18.5% increase in check size for orders processed through devices.

 8. Provide an Efficient and Affordable Takeout Service

More and more people are downloading food delivery apps and shopping for food online. Customers who preferred dining in became more likely to opt for delivery or in-store pickup services to enjoy their favorite meal in the comfort of their homes.

You can optimize your customers’ digital food ordering experience by:

Offering high-quality in-store pickup and home delivery services

Creating menus focused on home eating experiences

Launching a dedicated takeout app

Using existing delivery apps to reach a wider audience

 9. Communicate Your Hygiene and Safety Measures

The global pandemic of 2019 has made consumers more concerned about food safety and hygiene.

Implementing strict food safety and hygiene procedures can drastically increase customers’ trust in your brand. However, communicating these measures with your customers isn’t any less important.

10. Offer Plant-Based Food Options

The COVID-19 pandemic has triggered a shift in consumer eating preferences. Forced lockdowns and a decline in productivity allowed people to explore new foods, with plant-based alternatives taking the lead.

According to recent research, plant-based meat sales have increased by 23% in the U.S. The motives behind the increasing popularity of plant-based foods are health and taste. Other prominent factors include climate change, animal-based food and lactose intolerance, and animal abuse.

 11. Localize Your Supply Chain

Many F&B organizations started looking for local ingredient alternatives to serve their kitchens amidst the supply chain disruptions caused by the Russo-Ukrainian War and the pandemic.

Localizing your supply chain, to some extent at least, is less risky and more cost-efficient than relying on overseas suppliers. Your restaurant operations are less likely to be affected due to supply chain issues if you focus on shifting to local suppliers.

Our Two Cents

To recap, cutting costs, digitizing your customer experience, and carefully expanding into new markets are great ways to get your restaurant business back on its feet in the economic crisis.

Many of the risks in the F&B industry can be minimized or even eliminated with cloud kitchen solutions. Opting for a cloud kitchen service is the fastest, cheapest, and least risky way to reach wider audiences in your target markets.

At Brito Cloud Kitchens, we take care of the whole life cycle of your restaurant business, from order processing orders, and kitchen operations, all the way to delivering them to your customers and analyzing your sales performance. Fill out this form now to let us know how we can help you!