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Adapting Your Business to a Changing Restaurant Industry

Chef @TonyMantuano and crew at “Meet The Masters” panel in Aspen today! #amextrade

A photo posted by Spiaggia Restaurant & Lounge (@spiaggiachicago) on

The rapid changes rippling through the restaurant industry in recent years — technology, social media, rising costs, to name a few — demand that restaurateurs adapt quickly to changes in their business. During a panel at the Food & Wine Classic in Aspen over the weekend, moderator Andrew Zimmern discussed the idea of adaptation with some of the most respected leaders in the industry: Hugh Acheson, chef and restaurateur behind four Georgia restaurants, including 5&10; Tom Douglas, owner of 18 Seattle restaurants; Barbara Lynch, chef/owner of Barbara Lynch Gruppo in Boston; and Tony Mantuano, chef/partner at Chicago’s Spiaggia.

Andrew led the group in a conversation around change — what the industry is experiencing, why it matters, and how they are evolving their roles and businesses to stay ahead.  

Changes & Challenges

What kind of changes are restaurateurs adapting to now? To put it simply, restaurants have to be more things to more people to keep up with rising costs and competition.

A couple of years ago Spiaggia turned 30 — a tremendous accomplishment in this industry, where spaces can turn over by the season. The restaurant had thrived as a place for guests to celebrate special occasions. Still, Tony gutted the entire dining room and took on a massive remodel project, as he says, “to keep the restaurant going for the next 32 years.”

He recognized that Spiaggia needed to be more than a special-occasion place; it needed bar and lounge menus that would please every age group and every type of guest.

“Thirty-two years ago we were the only fine-dining Italian restaurant around,” he said. “Now, there are four or five on our block.” He felt the pressure to compete and reach the next generation of diners.

Tom said he and his team thought of themselves as “such f*cking great artists” that they didn’t need to do delivery. Today, delivery is 10% of his business and he’s opening a dedicated delivery kitchen. He revealed that with 6% average margins in his restaurants, he relies on everything else — retail, catering, books — to sustain the business.

From Chef to Owner

Andrew pointed out that for restaurateurs on this group’s level, taking control and ownership of the business aspects of the restaurants is a necessity. How are they adapting to their changing roles?

“You just do it,” said Barbara, adding that she has actually grown to love the business part. That’s what allows her to give her staff new opportunities to develop and take on more responsibility. By trusting people and delegating, she and her restaurants become more successful.

Hugh said that when he opened his first restaurant, he was the chef, plumber, answerer of phones, payroll coordinator — the list goes on. Now, he sees it as his job to hire people smarter than him and encourage them to be authentic. Getting into the business side happened out of “dire necessity,” he said, because the cost of doing business has increased so dramatically.

Making It Work

With the industry searching for ways to address rising costs, new ideas are coming to the forefront. Here are a few that came up in the discussion:

Dynamic pricing. Why not do as hotels and airlines do and charge more during high-demand times? Tom said that he would be willing to consider it, but everyone else was against the idea. “We depend on repeat customers; I wouldn’t feel good about that,” said Barbara. Hugh compared the idea to a real-time, ticking stock exchange: “I’ll take the salmon! I’ll take the salmon!”

Tipping. Tom has eliminated tipping in 75% of his restaurants, adding a 20% service charge instead that allows most of his servers and cooks to make more money and him to have more control over how revenue is distributed. He said it’s working fine, but predicted it will take a few generations before guests get used to it. “People want to tip,” he said.

Technology. From pay-to-play reservations to delivery services to big data, new technologies are on the forefront of conversations about hospitality. Tony expressed a desire for more data about his guests to understand who they are and where they’re coming from. The rest were less enthused about new solutions, but hungry for authenticity and real connection with their guests that only a dedicated, passionate staff can provide.

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