The everyday tools of business that improve a restaurant business

Responses to the question, “What makes your concept great?” read like a script: It’s the people, it’s the food or it’s a combination of both. Often overlooked are the tangible tools of everyday business, the things that get the job done. A continually evolving lineup of the right fixtures, supplies and equipment helps carry a concept a long way toward executing at the highest level.

The study, selection and purchase of these items are crucial for success. Recent research—presented at the 2003 State of the Industry Conference held by Foodservice Equipment & Supplies (FE&S), a sister publication to Restaurants and Institutions—offers a look inside this process. The State of the Industry Survey reveals the hows, wheres and whys of equipment purchases as well as operators’ suggestions on what they would do if they were designing foodservice equipment.

Market expectations
The economy may remain tight, but most equipment dealers and manufacturers expect higher demand for their products this year versus 2002. While only 43% of dealers and 25% of manufacturers view the current state of the foodservice industry as strong or very strong, nearly 80% of each group expect their sales to grow in 2003.

Among operators, about one-third say they plan to spend more on equipment this year. This figure rises to about 40% in the full-service chain and full-service independent segments but falls as low as 24% among white-tablecloth respondents. Operators express similar expectations regarding supplies and smallwares purchases.

Regarding their own sales performance, 58% of operators overall anticipate sales growth this year, while 10% predict a decline. These numbers vary significantly by segment, however. Nearly three-fourths of full- and limited-service chains expect sales growth in 2003, compared to just 43% and 48% in the noncommercial healthcare and education (primary and secondary schools, colleges and universities) sectors, respectively.

Connect the dots
Operators searching for the best solutions for their equipment and supplies needs have a variety of resources at their fingertips. The majority of purchases are still made through dealers, but many operators also buy some percentage of goods from broadline distributors, manufacturers, club stores and other untraditional sources such as auctions, liquidators or local restaurant-supply stores.

Shake’s Frozen Custard, a 10-year-old chain based in Fayetteville, Ark., typically works with an equipment broker. The broker contacts manufacturers, who then direct-ship merchandise to a bonded warehouse in the Shake’s unit’s market. With this method, the company also is able to form direct links with manufacturers to discuss more specialized equipment needs, says President and CEO Corey Osborne.

“As we’ve grown and experienced success, we started to understand that improving the brand may require equipment specialization or innovation,” he says.

For example, Shake’s is seeking a partner to help develop a blender that can more efficiently work with the chain’s thicker products. The broker put Osborne in touch with several possible resources to help develop proprietary equipment.

Cornelius Gallagher, executive chef at Oceana in New York City, also worked through an equipment broker to find large pieces such as stoves and refrigeration units for a recent broad-scale kitchen renovation. Veteran of such high-end restaurants as Daniel and Lespinasse in New York City as well as Michelin three-star restaurants in Spain and France, Gallagher says he relies mainly on experience to select the best kitchen tools and equipment. Years of accumulated knowledge helped him understand that he needed just the right cookware for his new kitchen: French pots that conduct heat “perfectly” and come with a lifetime warranty. He found them at a local restaurant-supply store.

“They have cutting-edge equipment there that you won’t find anywhere else,” Gallagher says.

Alternative routes
While many foodservice operators are reluctant to use the Internet as a purchasing resource, some view the growth of this high-tech method as inevitable.

“The Internet is so easily accessible, you really can’t not use it,” says Chris Simms, president and partner in The Lazy Dog Café, a “rustic American”-themed casual restaurant that opened this month in Huntington Beach, Calif.

To build and equip the new restaurant, Simms consulted product reviews and specifications online but bought most equipment and supplies through a purchasing agent. He also worked directly with manufacturers to buy larger-ticket items such as the refrigeration and draft systems.

“We went direct because we wanted to develop a relationship for the future,” Simms says, noting that he plans to build several more Lazy Dog units.

At white-tablecloth Duane’s Prime Steaks & Seafood Restaurant in Riverside, Calif.’s Mission Inn, the Internet is the first place Food and Beverage Manager Dennis Sperat turns for information. He cites quick response and wide selection as key advantages of an online purchasing approach.

When using the Internet to find equipment, Sperat often purchases directly from manufacturers, who he says can provide cost savings and faster service than working through channels. He predicts others in the industry will warm to this method, noting that Internet procurement is likely easier for single-unit independent operations such as Duane’s that have full control over such decisions.

Whether online or not, most operators currently do not purchase a majority of their equipment directly from manufacturers; however, some, like Simms, do it on a selective basis. Among those queried in the FE&S survey, 24% have bought directly for up to 25% of equipment purchases while 7% did the same for 50% or more of purchases. Just over 60% of operators have not purchased any equipment directly.

Special deals
There are situations in which operators can work closely with manufacturers without actually purchasing direct. When White Plains, N.Y.-based Livanos Restaurant Group designed its latest City Limits Diner unit in Stamford, Conn., finding the right equipment was crucial for the on-site bakery, which bakes all breads for four restaurants. The biggest-ticket item was a $50,000, custom-made bread oven.

“The oven had to be built on site. Because of how technical it is and the fact that very few suppliers have experience with it, the pastry chef dealt directly with the manufacturer,” says co-owner Nick Livanos.

For the purchase, however, Livanos went through a traditional dealer. “We were willing to pay the markup because then they are ultimately responsible,” he says.

In other cases, operators can work with manufacturers and not have to pay for a product at all. This may occur if the vendor wants to test or showcase new equipment or introduce products to a new market.

The latter was the case for Simms at The Lazy Dog Café. An Australia-based manufacturer, looking to break into the American market, gave him a fully installed, custom-made oven at no charge.

“It’s a win-win situation for both. They needed a venue to bring potential customers and we needed an oven,” Simms says, adding that the manufacturer even designed a triangular unit that fits into a corner to maximize kitchen space.

Noncomm needs
For chain restaurants and noncommercial operations, the research and purchasing process usually is more structured. For the most part, upper management must approve purchases, and manufacturer selection may be restricted.

At Blue Cross Blue Shield of Texas’ offices in Richardson, most equipment information comes from catalogs, trade shows and current vendors, says Mike Hoptay, manager of food services. All purchases must be made through approved vendors, and large-scale work typically is put out for bid.

“We don’t have the flexibility to shop around unless it’s a purchase with enough lead time to be able to do that,” Hoptay says.

Purdue University in West Lafayette, Ind., also maintains a list of preferred vendors, partly because the campus’ in-house maintenance staff is trained to service those suppliers’ equipment. For the recent renovation of a 720-seat dining facility, the school worked with a foodservice design consultant to help with layout and equipment selection, says Sarah Johnson, director of dining services for Purdue University residences. An equipment contractor handled the purchasing aspect.

Johnson, who will oversee several more renovations as well as new construction at the university over the next few years, says she has gleaned some important lessons about the process during her tenure.

“I’ve learned to look for areas where we can be efficient in labor, but I’ve also learned we need to look at food quality and how the ultimate end product will come out of that piece of equipment,” she says.

Drive-thru technology with digital audio and video to personalize the experience for the customer Portable equipment, from refrigeration to POS systems “Smart” equipment that tells an operator when maintenance is needed, that gives notice when it’s time to update/change buffet chafers or that notifies when food is cooked to the proper degree of doneness and automatically switches to a holding mode Cost-effective biometric technology to scan customers’ eyes or fingerprints so bar code IDs would not be necessary Signage that makes it easy to convey ingredient/nutrition information Larger food hot boxes on wheels for easier loading and transportation Fryers that dispense a programmed amount of fries into bags Thermometers/sensors to more often, more accurately and less invasively measure and record temperatures with built-in solutions/alerts when too low or high Ergonomic worktables with adjustable heights for different shifts

To help suppliers understand how to set themselves apart and better serve their customers, operators were asked about what kinds of new customer service or marketing concepts they’d like to see from equipment manufacturers.

Tech invasion
Operators across the board are increasingly turning to technology to make their businesses better, faster and more efficient. Below, responses to the question, “In what area of operations are you most likely to make technology investments during the next two to three years?” shed some light on their key areas of interest.

Methodology
In early 2003, Foodservice Equipment & Supplies, Reed Research Group and Technomic Inc. conducted a study to learn about trends in the foodservice industry across three segments: operators, distributors/dealers and manufacturers.

The study consisted of three separate questionnaires and was conducted via the Internet. An e-mail containing the survey link was sent to qualified readers of Foodservice Equipment & Supplies, Restaurants and Institutions and Chain Leader. An incentive was offered.

Results of the study are based on completed surveys: 1,038 for the operator segment, 133 for the distributor/dealer segment and 75 for the manufacturer segment. The study had a 97% confidence level with a margin of error of plus or minus 3%.

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Commercial Fryers. Cooks food quickly and uniformly. Gas and electric models available.
Commercial Ice Machines. Choose between standard cube or pack and mold machines. Some have energy saving features to reduce costs.

Commercial Ovens. Variety of ovens to best fit your needs. Select features to your cooking preferences.
Commercial Freezers. There are different shapes and sizes available with various features for quality & safety.

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