Killer Burger is focused on competitive pay as it seeks to grow, says CEO John Dikos.
After years of delivery, takeout and self-ordering technology dominating the industry, menu pricing has become the spiciest topic in restaurants.�
A succession of restaurant executives at the ICR Conference in Orlando delved into the challenges and opportunities they see as inflation continues impacting customers, their own pricing power and the supply chain. The topic was so omnipresent that several moderators apologized before asking their own variants of pricing questions, ultimately gleaning economic predictions from a range of restaurant CEOs and founders in attendance.�
At Virginia-based Bartaco, which is now up to 25 locations, CEO Scott Lawton stressed that the brand’s simple menu hasn’t changed, but inflationary pressures have caused his team to think creatively on passing cost increases to guests.�
“At our price point, I think people see us as a value,” Lawton said. “We are more than just tacos and a drink. We’re a whole experience, the way it feels. Value is more than just your price, it’s the total relationship with customers and how they feel when they leave.”�
He added that “you can’t take it all on price, the customers are going to bite back if you do that,” and said Bartaco has been slow to increase its menu prices, only doing so once in the last two and a half years.�
The brand’s experience has shown customers are more willing to pay a premium for cocktails, and customers haven’t pushed back so far on price hikes. Lawton said this tracks with his belief that diners want an oasis where they can “forget about the stock market for a little while.”
As the brand prepares to enter Chicago, labor has been a parallel challenge, with an emphasis placed on growing hourly employees into assistant managers and then general managers who can lead the opening of new locations.
Killer Burger CEO John Dikos struck a similar tone, with a focus on paying employees well so they stick around as the Oregon-based brand pushes into franchising to grow its store count. Part of that effort is implementing guaranteed wages, so employees can “go to their friends and say ‘I make this much per hour, I make this much per month.’”
Dutch Bros. Coffee is drawing customers to its loyalty program to hit growth targets.
Rather than taking fries out of the basket or any other “shrinkflation” tactic, Dikos said the company separated fries and burgers as two menu items, allowing a family to come in and get four burgers and one basket of fries to save on their overall check size.�
Portillo’s CEO Michael Osanloo said his Chicago-based company has taken an especially precise approach to menu changes. “We don’t play games with ‘shrinkflation,’ we’re not taking fries out of the fry basket … Any time we touch our menu items, we’re increasing the quality,” he said.
During the pandemic’s peak, Portillo’s removed 80 to 100 SKUs, but added more salads and a better chicken sandwich intended to cancel the dreaded veto vote. A vegetarian offering, a portobello mushroom sandwich that was especially complicated for the back-of-the-house staff, was swapped in favor of a Garden Dog that Osanloo said provides “better margins, a better ring and it wins on every count—that’s the kind of innovation that we like.”
At Dutch Bros. Coffee, which went public in 2021 and this year plans to open 150 new units, CEO Joth Ricci said he’s in the “daily repetition business.” In the face of various headwinds, Ricci said locations opened after 2017 are performing at a 35 percent higher growth rate, increasing his confidence on the company’s oft-stated goal of hitting 4,000 locations over a 10- to 15-year interval.�
“We didn’t go big early,” Ricci said of three different “low single-digit” pricing increases. “In 2023, we would prefer not to take pricing action. There’s fatigue out there related to price … and we’re super mindful of that as we look into 2023.”�
Hitting growth targets for the brand means bringing more customers into its loyalty program, as Dutch Rewards members tend to be 20 percent more valuable overall.�
Geo Concepcion, CEO and president of Greene Turtle parent ITA Group Holdings, took the audience through a complicated growth strategy focused on giving its legacy sports bar concept a new path forward after recently closing 13 units.�
Aside from building five new locations this year, Concepcion said the company has prioritized southern states where taxes are generally lower and most large metros are growing. It’s doing so by selecting second-generation real estate sites, fiercely negotiating lease rates and being “hands-on” with commodity prices.�
“If I’m going to have really talented people on my team, I need to make sure I’m leveraging them to the maximum,” Concepcion added, listing new benefits like a 401(k) program for its corporate team. “Managing liquidity is a day-to-day event, especially when you are coming out of COVID recovery in rapid growth mode.”
Rajat Suri
Realizing the potential of digital
Several restaurant technology companies presented brand and industry updates at ICR, including Olo founder and CEO Noah Glass, who said “the restaurant industry is going through digital transformation, and if you look at every phase of the guest journey, digital transformation is impacting every single one.”
That includes big changes in how customers are paying the tab and in how they’re being identified once they walk in the door or enter the drive-thru lane, as well as new ordering channels and methods for capturing guest feedback.�
Highlighting its recent Borderless and Olo Pay additions, Glass said it’s time for restaurants to realize the true potential of this digital evolution 16 years after the announcement of the first iPhone.
Asked about macro challenges from food prices to labor, Glass said there is still a huge opportunity to grow the number of digital transactions, as just 6 percent of total industry transactions come through digital channels.�
“How do you digitize the drive-thru transaction, not in a way that makes it cold and sterile, but in a way that actually improves the guest experience,” Glass said as he noted technology is tied into staffing levels and guest expectations of service quality.�
The CEO of Presto AI, which brings automated voice technology to drive-thrus, said the labor crisis isn’t poised to change, but is an opportunity for restaurants to help their staff be more productive and do more with less.� “Even if you are able to fully staff, if they’re turning over at such a high rate, you lose the point of having the staff in the first place, because they always have to be rehired and retrained,” Rajat Suri said.�
With so many brands focusing on drive-thru locations that are a good fit for an increasingly off-premises customer, Suri said return on investment with voice technology can be nearly immediate through more upsell opportunities and reduced payroll.