Convenience Store Food Service Consultant- Dean Dirks: News, Articles, Events

May 19, 2008

THE PERFECT STORM – HOW TO NAVIGATE IT

Filed under: Speeches — Tags: , , , — deandirks @ 6:04 pm

Outline of “The Perfect Storm – How To Navigate It” speech I gave at the Pinnacle Summit 2008 in Grapevine, Texas.

By Dean Dirks

  1. THE PERFECT STORM
    Soft U.S. economy.
    Elastic retail prices.
    High food costs.
    Escalating labor costs.
    Decreasing labor pool.
    High turnover.
    Increasing credit card costs.
    Increased energy costs.
  2. QSR/Fast Casual Stock Values vs. 2007
    Jack in the Box (-18%)
    Wendy’s (-23%)
    Denny’s  (-29)
    Domino’s Pizza  (-58%)
    Panera Bread  (-12%)
    Ruby Tuesday (-68%)
  3. DETIORATING SALES
    McDonald’s same store sales down- first time in 56 months.
    Starbucks- closing 100 stores in 2008 .
    Taco Bell, Pizza Hut & KFC- 5% below projected  earnings.
    Domino’s same store sales down 1.6%
    Average QSR same store sales were  flat for Q1 vs. last year’s 3.7% growth.
    Quiznos and Krispie Kreme experiencing closure rates of 8-10%
  4. PRICE ELASTICITY
    QSR prices are elastic, chains are discounting to grow sales.
    While food and labor have increased, the average QSR has only raised prices 4-7%.
    McDonald’s, Burger King, Wendy’s discounted menu.
    Subway $5.00 sub promotion.
  5. QSR PLAN TO SURVIVE
    Enhance customer service.
    Upgrade accuracy.
    Increase speed of service.
    Attack new markets, coffee, breakfast & espresso.
    Technology to reduce labor & improve quality.
  6. POINT OF SALE
    80% of QSR customers are frustrated by the speed of service.
    Kiosks will increase speed of service with accuracy.
    70% of QSR customers stated that rude employees are the #1 reason for not returning.
    Kiosks will eliminate this issue
  7. POINT OF SALE
    80% of QSR customers stated that inaccurate orders will cause them not to return.
    Kiosks will increase order accuracy.
    70% of QSR customers will not come back due to drive through accuracy.
    Drive thru touch screens will increase order accuracy.
  8. KIOSK SALES GROWTH
    1 out of 3 associates will try to suggestive sell.
    “Would you like to add a combo meal for just 99 cents more? ”30% more success than“Would you like a combo meal?”
    Kiosks scripted for suggestive selling to advance. 
  9. TECHNOLOGY POINT OF SALE
    E-Menu boards can be updated in real time, enabling managers to highlight specials or make changes
    E-Menus that a will allow guests to place their orders, play a variety of video games and pay their tabs at the table.
  10. RISING FOOD COSTS
    Food prices rose 7.6 percent in 2007, the biggest price increase in 27 years.
    Corn price is $5.56 vs. $3.34 last year
    Wheat price is $10.38 vs. $5.80 last year
    Flour increased (93%), cheese (25%) and eggs (35%) in 2007.
    Food cost increases are a long term problem.
    Australian drought and Ethanol
  11. IDEAL COST OF SALES
    Recipe built, linked to raw goods.
    Raw product costs entered and   change the recipe costs.
    Items sold per wk multiplied by the recipe cost (100 burritos X .40)
    Total item costs divided/income.
    Ideal food cost based- sales mix.
    Variance to the ideal cost of sales.
  12. REDUCE FOOD COSTS
    Weekly inventories-daily protein.
    Smaller portions- lowered pricing.
    Menu changes-replace bacon w/ham to reduce a recipe cost
    Promos on low food cost items.
    Low cost coffee, fountain sales.
    Category manage raw products.
  13. RISING LABOR COSTS
    Federal minimum wage will increase from $5.15 to $7.25 an hour over the next two years.
    Current US average minimum wage is $6.27
    Washington-7.93 minimum wage
    Oregon- 7.80 minimum wage
  14. TECHNOLOGY LABOR MANAGEMENT
    Schedules- customer counts/ 15 minutes- sales/labor hour
    Labor tracked in real time, managers can at any time check labor costs via internet
    E-mail alerts -employees are close to overtime or real labor is exceeding scheduled labor.
  15. TECHNOLOGY ELIMINATE STAFFING
    3,200 of McDonald’s units have automated beverage systems linked to the cash register. Drops the cup, fills it with ice, soda and conveys it to the drive-through.
    Wendy’s in 2007 rolled out grills with flippers that cook a burger on both sides simultaneously.
    McDonald’s is testing an automated french fry machine.
  16. TECHNOLOGY ELIMINATE STAFFING
    Automated grill- will transport food from an attached freezer to the grill.
    U.of Wisconsin developed a robot that slaps the bun on a finished burger and will assemble three burgers per minute.
    Self-cleaning fryers & broilers.
  17. ENERGY COSTS
    Restaurants spend on average 3 to 5 percent of their total operating costs on energy costs.
    QSR’s are building much smaller foot prints and engineering kitchens for efficiency.
  18. SUMMARY
    The QSR industry is under a great deal of pressure.
    QSR’s have targeted the c-store market in terms of coffee, drinks and breakfast.
    Our industry must strive for the same standards and efficiencies as QSRs to succeed.

 

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