Justin Nedelman

The resurgence of the restaurant industry — and our return to eating out now more than ever — is starkly documented by the The Wall Street Journal's real estate reporters. In addition to the expansion of tables and seats as restaurants expanded into sidewalks and streets during COVID, they're also now taking over the vacant retail space the pandemic left behind, and are now a sizable — and the fastest growing — commercial real estate tenants. Buried in the infographics, is the remarkable spending habits of Americans who now spend well over half their food on meals cooked by professionals (and closer to 65% when prepared meals in grocery retail are included). That's something Changing Tastes has been pointing out over our past decade of work and strategic advice https://lnkd.in/eV6MM3F7

6

Restaurant success hinges on a deep understanding of key metrics. We all know the importance of cost of goods sold (COGS), average guest check, and average table check. RevPASH (Revenue Per Available Seat Hour) reigns supreme. RevPASH dates back to 1998. credited to professor Sheryl E. Kimes of the Cornell University School of Hotel Administration, RevPASH was inspired by the airline industry's metric. RevPASH offered a more holistic view, considering not just revenue but also seat utilization and time. Why RevPASH Matters RevPASH goes beyond just sales figures. It helps you identify areas for improvement by asking crucial questions: Are we maximizing our seating capacity during peak hours? Could we adjust service times to optimize table turnover? Are there opportunities to increase revenue per seat through menu adjustments or upselling strategies? By analyzing RevPASH, you can make data-driven decisions to: Increase revenue by optimizing seating and service efficiency. Improve profitability by maximizing return on investment per available seat. A higher RevPASH means that the the restaurant space is being effectively managed.

6

SB478 law is making many of us in the California restaurant industry crazy with its ambiguity. If this law is passed, and surcharges and service charges are no longer allowed, what considerations are you looking at making? I am hearing more and more from restaurant clients on how they will be taking surcharges and adding that % to their menu pricing. Would love to hear what other considerations are being thought about.

8

1 Comment

We get asked a lot about bars Jumping Kegs (aka: daisy chain) and the impact on quality. Here's a short video that explains the antiquated concept and an alternative system.

29

1 Comment

I am proud to announce that I just joined the Board of Directors for Spirits Capital Corporation https://lnkd.in/eWCERwUn Spirits Capital Corporation ( https://lnkd.in/ew_JAa9d ) is a #fintech company that merges #technology with the alternative asset class of premium American whiskey and other spirits. The Company's mission is to develop, utilize, and monetize the spirits industry through technology-driven platforms that enable investors, family offices, and institutions to value, invest in, and profit from maturing spirits. Founded with a focus on American whiskey, Spirits has built a platform that provides #investors with a secure and transparent way to capitalize on the growth in value of the spirit while it matures in the barrel. In addition, Spirits has created the Distilled Barrels Financial Exchange (“DBFEX”), a cutting-edge digital platform for the global trading of aged whiskey barrels. DBFEX uses a proprietary artificial intelligence (“#AI”) driven pricing tool, known as the Barrel Value Optimizer, to analyze an extensive array of market data and barrel-specific information to suggest optimal price ranges for aged whiskey barrels. Todd Sanders https://lnkd.in/ew_JAa9d

193

17 Comments

The consumer will decide?!?!?!?! So much to unpack in this article! Worth a quick read. Writing from my own observations as a former supplier and wholesaler, the top two beverage distributors referenced in this article partner with the top 20 US Suppliers who make up 75%+ of wine market share nationally. The combination of consolidated distribution houses in parallel with national and regional chains streamlining beverage options for efficiency, deeper pricing terms, and minimal distribution partners has resulted in limited options for end consumers when walking a wine isle. As national and larger regional chains remain flat or down in annual wine sales, category managers are reviewing and applying increases to margin. 30% margin was a staple, 40% margin is now the norm increasing price points substantially. Circling back, where has this consolidation captured competitive pricing for the end consumer? I look forward to continued reading of the FTC review on regulatory practices. #winebusiness #winetrends #competitivepricing #wineconsolidation

6

WITHOUT RAISING PRICES (and having an instant impact).... How is Pepper Lunch Restaurants recapturing margins? CEO Troy Hooper spoke at the California Restaurant Association Presidents Panel, a few months ago; and one of the hottest discussions was how to defend restaurant profitability: ✅ From constant attacks of rising costs and regulations; and ✅ Without customers' having to carry the load I clipped this one-minute, forty-five second answer. Please watch and repost, so that it helps as many of our peers as possible! The restaurant industry will be here, forever. What are other ways we operators can be here forever, too?

69

23 Comments

The resilience and growth of the fast-casual segment are impressive, especially in these uncertain times. It's fascinating to see how it's outperforming other dining categories and attracting both investors and consumers alike. This trend towards fast-casual dining seems to align well with the evolving preferences of today's diners, making it an exciting space to watch. #FastCasual #FastFood #FARE 🌿

11

Restaurants are the new 🔥 HOT🔥 investment. Why new restaurant investors are suddenly knocking at the door: 1. Investors looking at uncertain costs of capital and market conditions are taking the long play on an industry that's poised for growth alongside population. People gotta eat, even when they have less spending power; the winners in times of economic contraction are QSR and Fast Casual. 2. The industry is well past 2019 volume and recovered strongly post-COVID. It is projected to cross 1 TRILLION dollars this year in sales. The risk of failure or contraction at this point is de minimus. 3. We're the third largest employer in the US, and one of the top 5 contributors to GDP. Political winds of change are not likely to affect the industry's output, in the larger scheme of things. 💡 Let's go one step deeper, because not all restaurant investments are created equal. Here's why I love Fast Casual as an investor and former owner/operator: 1. Double-digit growth as a segment, with a CAGR estimated between 11-13% through 2027. 2. It’s got a shorter payback period of 2-3 years. With lower capital outlays, we recoup investment and throw off cash faster than more expensive QSR builds and larger, full service restaurants. 3. Flexible labor model that allows us to stretch limited service as needed per brand, and even per location. 4. Easier to franchise: simpler builds, faster training, so we have wider pool of entrepreneurs willing to become first-time restaurant franchisees. 5. Ready-made for bolt-on revenue streams like delivery, catering, and non-traditional locations. Curious to learn more? If this is interesting to you, let's talk! We have a seat at the table for you. #restaurants #restaurantindustry #fastcasual #qsr #investing #privateequity #venturecaptial

51

3 Comments

McDonald’s is cranking up the heat on the discount wars next week, as they roll out a $5 meal deal promotion aimed to draw in value-conscious customers. With economic anxiety on the rise, and our recent data showing a notable pullback in consumer spending across dining, entertainment, and retail, will the move be enough to pull customers away from competitors? Thanks again Nation's Restaurant News for featuring my article! Curious to see which chains might feel the heat and which ones are better positioned to weather the storm? Click the link below for the full insights! #restaurants #discounting #customerexperience #value #nrn

24

6 Comments

📰 The Kapnative Newsletter Edition 20 🌐 This Week's Edition Highlights: 1️⃣ Roark Capital's Subway Acquisition: Roark Capital completes its $9.6 billion acquisition of Subway, adding the renowned restaurant brand to its extensive portfolio, which includes Arby's, Buffalo Wild Wings, and Dunkin'. 2️⃣ HighVista Strategies' Private Equity X Fund: HighVista Strategies concludes the final close of its HighVista Private Equity X fund at $675 million, attracting support from existing and new investors. The fund focuses on small, privately-held companies and aims to invest in the lower middle market secondary space. 3️⃣ Golub Capital's Credit Opportunities Fund: Golub Capital achieves a final close of $2 billion for its sixth credit opportunities fund, GEMS Fund 6. The fund garnered support from a diverse investor base and focuses on various credit strategies tailored for sponsor-backed companies. 🚀 Stay Tuned for More Insights!  Stay ahead in the world of alternative investments. Our mission is to keep you well-informed and prepared for the exciting opportunities in the ever-evolving financial landscape.

373

12 Comments

ALERT A LENGHTY POST ! Before investing in the restaurant industry assess Peter’s Five Forces! I will be using examples to facilitate. 1. Rivalry Among Competitors (High): Fast Food: Chains like McDonald's and Burger King battle for market share through aggressive pricing, promotions, and convenient locations. Casual Dining: Applebee's and Olive Garden compete for families and casual diners, offering value meals and comfortable atmospheres. Fine Dining: Michelin-starred establishments compete for a more exclusive clientele, focusing on unique cuisine and impeccable service. Local Independents: Independent restaurants compete by offering unique menus, local sourcing, and a personalized experience. 2. Threat of Potential Entry (Moderate): Barriers to Entry: While starting a restaurant requires investment, the barriers to entry are lower than some industries (hitels, airlines) . However, obtaining licenses, permits, and securing prime locations can be challenging. 3. Bargaining Power of Suppliers (Moderate): Large restaurant chains have more bargaining power with suppliers due to bulk purchasing and established relationships. Independent restaurants may have less leverage with suppliers, potentially facing higher prices or limited product availability. Restaurants focusing on local ingredients may have stronger relationships with smaller suppliers, potentially negotiating better prices. 4. Bargaining Power of Buyers (High): With a wide variety of restaurants available, diners have significant bargaining power. They can easily compare prices, menus, and reviews online before making a choice. Price Sensitivities: Consumers are often price-sensitive, especially with fast food and casual dining options. 5. Threat of Substitutes (High): Many consumers choose to cook at home, perceiving it as cheaper and healthier. Meal kit delivery services and grocery delivery options offer convenient alternatives to dining out. Gas stations and convenience stores (trolley) offer prepared food options for on-the-go consumers, threatening quick-service restaurants.

6

Here’s a look at the top independent restaurants across the country and how they grew year over year📈 See The Entire List Here: https://bit.ly/3sBDkgS Joe's Stone Crab Restaurant The Boathouse Tavern on the Green Pastis NYC Branded Hospitality Ventures #Restaurants #Hospitality #Technology #Business #Innovation #AI #investing #podcast #venturecapital Jeff Finkelstein Jason Eisen Bill Peet Restaurant Business Online

10

Have you ever seen a manufacturer demand rapid price increases for product that is experiencing rapid decline in demand? If you have purchased fountain soft drinks, you have. Fountain soft drink syrup prices have increased at a rate more than 50% higher than inflation, and without regard to underlying commodity pricing. Limiting soft drink companies’ increases can be a tough negotiation but getting a palatable level is possible if you approach it correctly.

4

Exciting news from Craveworthy Brands As many of you know, I love to hint at our next big moves. Some might question this approach, but I believe it’s crucial to show my commitment to pushing our team and our dreams to new heights. Our latest acquisition is a game-changer, bringing Taim and Hot Chicken Takeover into our family! This strategic move will supercharge growth for our beloved Soom Soom and The Budlong Southern Chicken providing them an extraordinary platform to thrive. Additionally, it accelerates the expansion for Sigri Indian BBQ, offering immediate opportunities for two to three new locations. We’re also setting the stage to launch Costeño Rojo, testing a few locations to refine our concept further. But it’s not just about growth—it’s about people. We’re thrilled to collaborate with the fantastic teams at Taim and Hot Chicken Takeover. Their passion and innovation are exactly what we need to reach new heights. I’m excited to see what we can achieve together with this incredible talent. Stay tuned. We’re just getting started! #CraveworthyBrands #BusinessGrowth #Acquisition #FoodIndustry #Leadership #Innovation #RestaurantBusiness #Teamwork #Entrepreneurship #BrandExpansion

286

33 Comments

Yesterday marked National Craft Distillery Day, providing a pause moment to reflect on our incredible journey. Over the past decade, the craft distilling industry has experienced remarkable growth, and yet, I've witnessed firsthand how the Fear of Missing Out (FOMO) can haunt entrepreneurs. In this industry, "going all in" holds a unique meaning for each of us. At Durham Distillery | Conniption Gin, it meant a bold commitment to one category: gin. We placed our bet on American gin. It holds immense potential, but it's not without its challenges. We are tasked with reintroducing it as a leading white spirit in this country and educating consumers that gin is naturally flavored vodka. Those unpleasant college memories of harsh London Dry gins? Total anomalies. Our mission is to ensure people understand that with the right gin, magic happens. Starting a craft gin distillery is not for the faint-hearted. FOMO is always present – it seems like everyone else has more resources, more people, more $$$$. We've seen other American gins backed by celebrities, but that’s not our path. We chose to be the rebels, to carve our own path, and to believe in Conniption Gin and our incredible team, from brand champions to our distributor partners. It's all about passion and perseverance – knowing that small steps can lead to giant leaps. Embracing the FOMO has been part of our story. While it can be a powerful motivator, pushing us to innovate and stay ahead, it also reminds us of the unique path we've chosen. Instead of chasing trends or celebrity endorsements, we've focused on what makes Conniption Gin special – our dedication to quality and our connection with our customers. The real joy comes from our gin lovers. Meeting customers who enjoy our gin, gift it to friends, or share their cocktail recipes with us is truly fulfilling and reminds me why we embarked on this adventure. Each positive interaction makes this marathon worthwhile. There are no shortcuts, and while I sometimes wish I could sprint to the finish line where Conniption Gin is the beloved American gin of choice, I wouldn’t trade this journey for anything. Well, maybe I’d trade one thing. Hey, Ryan Reynolds, you didn’t choose the right (best) American gin. 😉 Cheers to my colleagues on National Craft Distillery Day! Here’s to believing in our passion, pushing forward, and embracing the FOMO. #AmericanGin #Gin #ConniptionGin #FOMO #Entrepreneurship #Resilience #CraftDistilling #Spirits

68

4 Comments

The #beverage companies want operators to sign contracts based on purchases of a certain amount of product (i.e., a “volume commitment”), instead of a certain length of time. This makes the contract very predictable for the soft drink companies. They can exactly predict the maximum amount they will spend on you. But it makes it very unpredictable for the restaurant operators because of price increases and declines in consumption. Unless you are front-loading the financial benefits of a long-term agreement, you can and should avoid volume commitments. Stick to a time-based commitment to avoid an unpredictable outcome.

4

**If I had to give one peice of advice to a new brand ** No retail buyer will pass on a product that is in demand. In early stage beverage industry we would flood the parking lot of key chain accounts with cold drinks on hot days, we would catch people leaving the store not going in; the pitch was simple: “Stay safe in this heat; and Thank you for shopping at (store name)” 1. Who passes up a cold drink on a hot day? 2. We got the product into their car (not a trash can) 3. We built consumer association with a store we’re not even in. 4. We show a kind act that we cared about their safety. You know who took us into the store? The kids having to collect carts, they would grab a drink while in the parking lot and go inside and tell 2-3 friends that would then come out and grab a drink and take it into the store and next thing you know it would make it to the break room, a desk, at a register… but it wasn’t sold there YET.. Two things would happen; we would be asked to leave the parking lot (happened a lot but we’d be back) they would eventually tell us to speak to XYZ about getting our product in. And this is how we broke into retail pre sales force, call center and cold email, cold text era. A lot of times the store manager wouldn’t have the authority to bring the product in but they would send it up the chain; if 4-5 of your stores start making the request, it moved the dials. We landed smith, krogers, Safeway all through these style activations. Note* we would also send people in asking managers for the product. Yeah ok, maybe we sent in 25 a week asking for it in exchange for free product but that’s another program. 🤷🏻‍♂️ Activations win customers

21

7 Comments

FAST FOOD WARS AGAIN This is a very good #restaurant franchisee survey with comments from real franchisees dealing with the current spate of value menu wars currently underway. CNBC's own Kate Rogers has done a great job of covering this from the McDonald's perspective and elsewhere. We analyst types could see this fast food war coming. It is unfortunate and has happened at least twice in the past. This condition, a circumstance and downside of the franchise model, happens because restaurants copy one another--all the time, in almost all ways. My question is did this really need to happen again in 2024? Is there any evidence that this spate of low prices will solve the "price shock'' that is present with some consumers because of our own pricing mistakes in 2019-2023? Chris Kempczinski and staff can take a stab at this. The industry needs to focus on the middle of the P&L to find cost savings. What is the next step to transition guests out of discounting mode?

17