The revenue growth of the restaurant industry has hit a “sustainability wall” as it confronts a sea-changing shift in consumer expectations. Consumers are increasingly viewing food as a hazard loaded with sugar, salt, chemicals and fat.
Led by moms, consumer outrage is growing over their weight gains and increased health risks that science is tying to the American fast food diet. The food industry is now naked before the blogs, tweets and videos posted by consumers exposing unhealthy business behavior toward people, animals and the environment. The result is a sea-changing search by consumers for affordable and authentic foods.
The strategic conundrum facing the food industry is one of mixed messaging. Consumers now view industrial food as a commodity. They buy at the chain restaurant offering the lowest price. The chains are attempting to offer healthier food but their brand positioning is limited by their failure to execute an enterprise-scale shift to affordable and sustainable foods. This fifth article in my “Re-thinking Restaurants” series profiles how enterprise-scale strategies in the food service industry grow sustainable revenues.
Sustainable enterprise-scale strategies are creating competitive advantage
Companies that include Chipotle, Panera Bread and a rapidly growing number of local restaurants are taking advantage of their competitors’ marketing conundrum through an enterprise-scale approach to selling healthier food. Their marketing advantage is as clear and succinct as Panera Bread’s marketing slogan: “Live Consciously, Eat Deliciously.” These companies are winning new customers, growing their customer loyalty programs and achieving industry-leading growth of same-store sales through their enterprise-scale strategy built upon sustainable best practices.
How to build an enterprise-scale sustainable business: Hotel Shattuck Plaza
Hotel Shattuck Plaza is located in Berkeley, California, and it offers its guests and visitors a restaurant experience serving fresh, local and tasty food. Its restaurant, FIVE, has a goal, says Executive Chef Banks White, to “nourish the community.” The Hotel Shattuck Plaza and FIVE provide a template for how to construct an enterprise-scale strategy built upon sustainable best practices.
It begins at the top
Perry Patel is a partner for the family-owned business that owns the Hotel Shattuck Plaza. Their business strategy, founded by his father, is to repurpose declining hotel properties. Sustainability is at the core of their values and business strategy. Their business plan is to invest in a diminished property in a manner that makes its operations cost competitive while also providing guests with a superior experience.
Their investment horizon extends multi-generations vs. today’s quarterly performance focus for many publicly-listed companies. Through Perry’s leadership the Hotel Shattuck Plaza was rebuilt using sustainable construction best practices. Just as importantly, his leadership has empowered his management team to operate in a sustainable manner. In the following exclusive video interview, Perry talks about his business strategy that generates attractive cash flows, increases the value of his firm’s property investments, offers a superior guest experience and advances the sustainable economic development of a re-emerging downtown community:
Operations management: Creative, engaging and sustainable best practices
Greg Mauldin is the Hotel Shattuck Plaza’s General Manager. Greg attributes the leadership of Perry Patel to making sustainability a part of the hotel’s DNA. But it is Greg’s creativity and engaging operational leadership that has turned vision into results.
Even in bright-green Berkeley, the Hotel Shattuck Plaza’s operational focus is on the customer. It is Greg’s operational leadership that links the two. For example, recycling under his leadership has assumed a consumer-facing focus. Using ideas supplied through the hotel’s green teams Greg has enabled the hotel’s repurposing of dated menus as drink coasters. Another green team idea came from the hotel’s goal of not using bottled water. The idea was to serve filtered water in repurposed vodka bottles.
Greg also engages his guests in fun and sustainable behavior by supplying them with a shower soap built with a donut-like middle hole that reduces the volume of unused soap. In the following video interview Greg explains his creative, engaging and sustainable operational best practices.
FIVE: A restaurant nourishing a community
“Sustainability means community” is how the Executive Chef Banks White defines sustainability for the hotel’s restaurant, FIVE. Farmers are one of Banks’ key communities. He has nurtured a community of farmers that now supply him with high-quality products that are a competitive advantage for his restaurant. His ability to offer fresh and locally-sourced food is his marketing and branding path for attracting customers.
Minimizing food waste is what sustainability means to Banks’ kitchen operations. He holds himself and his kitchen staff to the highest goal of having zero food waste. This is also smart economics since the food he buys carries a higher cost than industrially produced food. Food waste is a reflection of Banks’ respect for farmers, his appreciation of the quality product they deliver and astute cost control business practices.
Banks has, over the last four years, established a link between value and values with his clients. His menu continues to offer value-priced items. But his dedication to serving quality food in a nourishing environment has won loyal customers that recognize his ability to serve food that reflects his values and is also a good value. His ability to sell at a slightly higher price-point than chain restaurant prices reflects the trust he has earned from his customers.
Most tellingly, Banks’ focus is on how food and dining can nourishes a soul. In this definition of sustainability Banks see his restaurant as a platform for engagement among friends, family members and the community. Enjoy the following video interview with Banks White as he explains his path for building a successful business based upon enabling the development of community relationships:
Bill Roth is an economist and the Founder of Earth 2017. He coaches business owners and leaders on proven best practices in pricing, marketing and operations that make money and create a positive difference. His book, The Secret Green Sauce, profiles business case studies of pioneering best practices that are proven to win customers and grow product revenues. Follow him on Twitter: @earth2017