Restaurant Strategy: There Are Many Ways Forward For Success
- By Aaron Allen
For those on the cusp of exponential growth, gearing up for public offering, or looking to raise capital in private markets, remember that the journey is as significant as the destination. This is what is worth doing — fostering environments where companies can thrive, cultures can flourish, and value is not just added but multiplied.
Here we share a few questions restaurant CEOs are thinking about while creating value for their companies.
Are Robots Coming for Your Job?
Yes. In fact, they’ve already taken more in the last two years than the previous twenty; and the momentum is only accelerating (automation is the new arms race in the global foodservice industry).
The biggest retooling of trade and technical skills is on the horizon and smart companies are already hiring other smart companies to help them figure that out: which jobs should we train the robots to take and which skills should we budget to enhance among our human workforce?
Is It Time to Do a Menu Overhaul?
Limited-Service Restaurants introduce new items with a cadence ranging between one new item (either LTOs or permanent) per week to one new item every 10 weeks (based on a sample of nearly 40 chains over the first 10 weeks of 2024).
Coffee and Snack chains are among the most frequent innovators, with Krispy Kreme, Dutch Bros, Dunkin’, Starbucks, and Tim Hortons leading the pack — especially with focus on LTOs for beverages.
Optimizing the menu can deliver great returns. When was the last time your brand undertook a menu engineering initiative?
When acquiring a company, paying a high valuation may be justified given growth prospects but it can also be particularly risky. Before buying into any size chain, it’s important to do due diligence to be sure investors have a high likelihood of recouping their investment during the intended holding period.
“Service Is Above Us, Not Beneath Us”©
In the bustling world of hospitality, where efficiency and speed often take the forefront, it’s the warmth of human connection that truly defines our industry. Remember the last time you were greeted with a genuine smile after a long journey, or when a staff member went out of their way to make your day a little brighter? It’s these moments of kindness and compassion that stay with us long after we’ve returned home.
Hospitality is not just a business; it’s a heartfelt service built on respect, empathy, and humility. It’s about creating a home away from home for our guests, making them feel valued and cared for. This is the magic ingredient that transforms a good experience into an unforgettable one. It’s a powerful reminder that service, in its purest form, is above us, not beneath us. Let’s continue to spread this kindness, one guest at a time. Because in the end, the heart of hospitality is all about connecting hearts.
Thinking of an Acquisition?
During the first quarter of 2024, restaurant M&A activity remained at similar levels as the same period in 2023. Acquisitions were evenly distributed across segments, from technology to fast casual to full-service and QSR. There was also the notable acquisition of Carrols by RBI (we saw a lot of activity for QSR franchisees in 2024).
If you are evaluating a foodservice acquisition target, we recommend you don’t skip due diligence. Without exception, the process reveals new perspective and insight across functional areas (from the efficacy of marketing and brand strength to how the P&L may change under different scenarios) that will contribute to improved business strength and performance during the holding period.
Getting Ready to Raise Capital?
In the fast-paced world of global foodservice, the journey towards raising capital in private markets (or even an IPO) is a multifaceted endeavor. At Aaron Allen & Associates, we’ve been engaged in some profoundly enriching dialogues that exemplify our commitment to paving the way for success in this dynamic sector.
Our approach is meticulous yet adaptive; we deeply understand that no two enterprises are the same. As we guide emerging and established brands through the complexities of preparing to receive investment, operational excellence, and cultural transformation, we’re reminded that the heart of strategic improvement lies in the confluence of data-driven insights and human-centric implementation.
The recent exchanges with executive leadership across the globe have reinforced a truth we always hold dear: the brilliance of an enterprise shines brightest when strategy and operations dance in harmony.
Looking for Opportunities in Emerging Markets?
In the restaurant industry, public companies in emerging markets such as India and China are reaching significantly higher Price to Earnings ratios than mature markets like Europe or the U.S. India current price to earnings is 3.7 times the U.S. values, and China is 2.6 times. At the same time, emerging markets are expected to continue to grow at a significantly higher pace than mature markets.
Our clients span six continents and 100+ countries, collectively posting more than $300b in revenue. Across 2,000+ engagements, we’ve worked in nearly every geography, category, cuisine, segment, operating model, ownership type, and phase of the business life cycle.
About Aaron Allen & Associates
Aaron Allen & Associates works alongside senior executives of the world’s leading foodservice and hospitality companies to help them solve their most complex challenges and achieve their most ambitious aims. We have helped evaluate and engineer menus for some of the world’s largest restaurant brands, as well as helped restaurant companies around the world drive revenues, increase profits, and enhance the guest experience through improved marketing, messaging, and menu engineering.
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