A chef who offers health benefits, paid vacation, and a 401(k) plan raised base pay to $18 to $24 per hour and says he’s not struggling to hire workers

dining out eating at restaurant pandemic coronavirus mask waiter cocktails
  • The restaurant industry is facing a staffing crisis, with 75% of operators struggling to hire.
  • Several restaurant owners are finding a solution by paying workers more, according to the NYT.
  • Chef Jason Hammel said adding a higher wage to his benefits package makes it easier to find staff.
  • See more stories on Insider’s business page.

The past two decades have been busy for Chicago chef Jason Hammel, who opened Lula Cafe in 1999 with a four-burner stove and some thrifted pots and pans, growing the restaurant into an internationally recognized favorite.

When the pandemic forced a pause on eating out, Hammel told the New York Times it was also a chance to take a step back and think about how he did business.

“The pandemic gave me an opportunity to start with a blank slate and say, let’s rebuild the model and the way we’ve always done things,” he said.

Arguably the biggest change Hammel made was raising base pay for all employees to between $18 and $24 per hour – on top of Lula Cafe’s existing benefits package that includes paid vacation time, as well as health and retirement benefits.

At a time when the biggest problem for 75% of operators is the struggle to hire and retain employees, according to the National Restaurant Association, Hammel says his approach is making it easier for him to land the 40 new staff he needs.

A 20% service charge on every check and distributing additional tips to the full team help make the math work.

Corrinna Stum, the owner of Ruby’s West End in Maine, not only added a 20% service charge, she told the Times she also skipped on expensive scheduling and reservation software and passes the savings along to her staff.

The base wage at Ruby’s is now $12.15, which is the full minimum wage for Maine, rather than the sub-minimum wage for tipped workers that is allowed in 43 states in the US, according to the worker advocacy group One Fair Wage.

A recent two-week study by One Fair Wage found 1,621 restaurants across 41 states who, like Lulu Cafe and Ruby’s West End, provided the full minimum wage or more for tipped workers, with the average being $13.52 before tips.

Higher wages may be the biggest area where restaurants need to improve to attract workers, but it’s far from the industry’s only problem.

Richard Wahlquist, president of the American Staffing Association, the country’s largest recruitment industry group, told Bloomberg his organization is still struggling to find 10 temporary workers for an upcoming conference, despite offering up to $25 per hour. He’s found two.

Applications for restaurant jobs declined by about 3% each week for the past nine weeks, according to data from restaurant-management software company Restaurant365. Plus, the decline has even continued as enhanced unemployment benefits have ended.

Dozens of restaurant workers have shared with Insider deep frustrations with long hours, poor management, and abuse from customers, and said that change is long overdue. Matt Murphy, who has worked in restaurants for 25 years, told Insider he welcomes the disruption these labor difficulties bring to the workplace.

“It is causing some positive change in our industry,” he said. “Employers who would ordinarily just treat people like disposable workers are now treating them like real employees. It’s definitely changed perspectives on things.”

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Chipotle says it will repay some teachers for buying school supplies. Here’s how to get a shot at a refund.

Woman shops for school supplies
94% of public school teachers pay for school supplies out of pocket.

Chipotle is giving away $100,000 to help teachers buy back-to-school supplies, and 140 teachers have already replied to the tweet for a chance to reimburse the costs of their back-to-school material.

In the US, 94% of public school teachers have personally paid for school supplies, with the average teacher spending $479 out of pocket and others spending thousands to outfit their classrooms.

To participate, teachers can reply to the tweet with the hashtag #SuppliesContest and a photo of their school-supplies receipt. Teachers have responded with pictures of receipts for everything from printers and books to colored pencils and crayons.

Public-education funds have tightened, and teachers in 42 states are paid less than they were a decade ago. As a result, teachers and school districts often resort to stopgap measures like social media and GoFundMe pages to raise money for essential classroom supplies.

We wanted to lend a hand to a community that has endured so much over the past year,” said Chris Brandt, Chief Marketing Officer. “Chipotle is a company that’s been committed to supporting teachers and we will continue to find creative ways to show our appreciation for the professionals who are cultivating a better future for our communities.”

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Nathan’s Famous now has more than 220 ghost kitchens. An exec breaks down why the chain is bucking the trend by opening them in city center locations.

Nathan's Famous hot dogs
Nathan’s Famous opened its first ghost kitchen in 2019.

  • Nathan’s Famous has doubled its number of ghost kitchens since last June.
  • It now has 223 worldwide after opening its first in 2019.
  • Unlike many other chains, Nathan’s Famous is targeting city-center locations for its ghost kitchens.
  • See more stories on Insider’s business page.

In just 13 months, Nathan’s Famous has doubled the number of ghost kitchens it operates.

The fast-food chain, which also owns the virtual brands Wings of New York and Arthur Treacher’s, now has 223 ghost kitchens worldwide, it said Wednesday – and it’s targeting city center locations.

Ghost kitchens don’t have dining rooms and cook food for delivery, and in some cases collection, too. Usually, customers can only get food from the locations when they order in advance on the restaurant’s website or app or via a third-party delivery service like DoorDash, Grubhub, or Uber Eats.

Nathan’s Famous opened its first ghost kitchen in 2019 but the concept only really gained traction during the pandemic, when dozens of other chains started opening them too.

Read more: Ghost kitchens operators like CloudKitchens, Kitchen United, and All Day Kitchens are expanding their business models beyond the rent-a-space model as competition heats up

Ghost kitchens allow restaurants chains to boost their delivery capacity with much smaller real-estate requirements. This is because they don’t need dining rooms or customer-facing facilities like parking and restrooms, James Walker, senior vice president of restaurants at Nathan’s Famous, told Insider.

While “location is everything” for physical restaurants, ghost kitchens don’t need to be in high-traffic areas because they rely on delivery rather than dine-in customers. This means chains can open them in areas with lower real estate costs, Zenreach CMO Megan Wintersteen said.

But ghost kitchens have increasingly been moving into city centers and highly populated areas, Walker said. He said that Nathan’s Famous had always focused on more densely populated areas, which makes delivery times faster and opens up opportunities for collection rather than just delivery.

“You want to go into these higher-populated areas because that’s where the density of people are and to be able to do so at a rent that is workable from a business model,” Walker said, adding that ghost kitchens have a much quicker time to market than full restaurants.

“What we’re seeing though is that these ghost kitchens are morphing,” he said. “They’re changing, they’re evolving to provide customers even more accessibility.”

And alongside the lower real estate costs, ghost kitchens can save on other costs because they need less labor for waiting tables and cleaning the restaurant. Ghost kitchens can have double the margin of dine-in restaurants, Kevin Burke, managing director and member of the consumer team at Citizens Capital Markets, part of Citizens Bank, told Insider.

They also allow companies to operate multiple brands – including virtual brands, which exist only on delivery platforms – from one kitchen.

Nathan’s Famous, for example, launched Wings of New York as a delivery-only concept last year, and is also relaunching seafood chain Arthur Treacher’s as a virtual brand. Ghost-kitchen franchisees can choose to open one, two, or three brands, he said.

Nathan’s Famous opened its first ghost kitchen in 2019 with Franklin Junction, a company that matches brands to restaurants with surplus kitchen capacity. The kitchen then becomes a host for the other brand, which they sell for delivery-only.

CEO Rishi Nigam told Insider that Nathan’s Famous opened around a third of its virtual kitchens through host restaurants it found through Franklin Junction.

Nathan’s Famous has also worked with Softbank-backed Reef Kitchens to launch in new markets in the Midwest, as well as Kitopi, which is helping it deliver across New York.

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Chick-fil-A is Americans’ favorite fast-food chain, according to new survey – and McDonald’s ranked last

Customers being served at restaurant
The recent American Customer Satisfaction Index survey shows that consumers prefer full-service restaurants over fast food.

  • The American Customer Satisfaction Index released a list of the best chain restaurants.
  • Chick-fil-A once again topped the fast-food list, while McDonald’s ranked at the bottom.
  • Full-service restaurants beat fast-food chains in this year’s rankings.
  • See more stories on Insider’s business page.

The American Customer Satisfaction Index released its yearly ranking of the best chain restaurants, showing full-service restaurants outperforming fast-food chains Chick-Fil-A topping the fast-food rankings, with McDonald’s at the bottom.

The report, which involved interviewing almost 20,000 customers, asked participants to rank chain restaurants on a scale from one to 100 on 11 different categories, including food quality and taste, the quality of the mobile app, and helpfulness of the waitstaff.

Chick-Fil-A came in first place with a score of 83, marking the the seventh consecutive year that Chick-fil-A topped the rankings list among fast-food chains. During the pandemic, Chick-fil-A benefited from strong customer loyalty and a heavy focus on drive-thru, mobile-ordering, and contactless payments. Chick-fil-A was five points ahead of its nearest competitor, Domino’s, and 10 points ahead of McDonald’s, which ranked last with a score of 70.

Customers’ satisfaction with sit-down restaurants increased by 1.3 points from 2020, indicating that customers enjoy sitting down for a meal even during the pandemic, when delivery and take-out became the preferred methods of ordering, according to Yahoo News.

The top-ranked restaurant in the full-service category is “all others,” a term encapsulating all smaller restaurants not big enough to be included on the ranking. Following that, Longhorn Steakhouse continued to rank near the top of the list, while Olive Garden and Red Robin also made gains. Red Lobster saw the biggest decline, ranking two points lower this year than last, and TGI Fridays and Cracker Barrel also saw decreases.

On the fast-food list, Wendy’s and Arby’s saw the biggest declines in customer satisfaction, with the chains losing three and two points respectively. Chains like Domino’s, Pizza Hut, and Starbucks saw incremental gains.

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I tried Taco Bell and Chipotle’s drive-thrus, and they’re two totally different takes on quick service Mexican food

taco bell drive thru
A Taco Bell employee delivers an order to a customer at the drive-up window of the restaurant on March 31, 2020.

  • I visited Taco Bell and Chipotle to compare their drive-thrus.
  • Though both sell Mexican food, they have totally different price points and wait times.
  • Taco Bell has a classic drive-thru setup, while Chipotle’s emphasizes mobile orders.
  • See more stories on Insider’s business page.
Drive-thrus have become more important than ever for fast food and fast casual restaurants because of the coronavirus pandemic.

Taco Bell

Fast-food chains have invested in drive-thru technology over the last few years, especially as customers showed that they prefer drive-thrus to other ways of ordering.

Chipotlane

I visited Taco Bell and Chipotle to see two sides of the very different Mexican-American food drive-thru experience.

taco bell

First up, Taco Bell has a classic drive-thru in the style of McDonald’s and other seasoned chains with a line, menu board, and windows for payment and getting food.

Taco Bell drive thru

Taco Bell’s app is easy to use, with the menu broken down into easily-understood categories. It is also searchable.

Taco Bell mobile ordering app

It also makes it easy to customize every item on the menu, which is a key part of the chain’s appeal.

Taco Bell menu app customization options

Vegetarians tend to like Taco Bell for the many meatless and vegan options, and the app smartly highlights those items.

Taco Bell mobile ordering app

Taco Bell has prioritized its drive-thrus over the past year and made some major changes as a result.

Taco Bell drive thru

To some customers’ dismay, last year the chain cut over a dozen items, including potatoes, to shorten wait times.

taco bell

Source: Insider

The cuts paid off – in the third quarter of 2020, Taco Bell served 30 million more customers than in all of 2019, and each order was completed 17 seconds faster.

Taco Bell drive thru

Source: Insider

I saw those changes firsthand during my Taco Bell visit. Though the line was at least ten cars long, I gave the name for my mobile order at the speaker and was holding my food in about five minutes.

Taco Bell drive thru

The chain has plans to further improve drive-thrus, with double lanes for mobile orders and bellhops to take orders on iPads. Both of these steps resemble Chick-fil-A’s setup and have been implemented at chains like Starbucks and McDonald’s.

Taco Bell Go Mobile
Three Taco Bells in Oklahoma and Texas have added dual drive-thru lanes as part of the new Go Mobile format.

Source: Insider

Part of Taco Bell’s speed and efficiency is likely due to its embrace of drive-thrus and mobile orders.

Taco Bell drive thru

Every Taco Bell has two food assembly lines, one for the drive-thru and one for the inside counter.

Taco Bell drive thru

Source: NBC

Trimming down menus help workers keep both lines moving faster.

Taco Bell drive thru

Taco Bell doesn’t make many claims about nutrition or authenticity, but the drive-thru experience is reliably fast and delicious.

Taco Bell drive thru

I also tried out Chipotle’s “Chipotlane” drive-thru to compare.

Chipotle drive-thru

At Chipotle, I also ordered through the app, though this time I didn’t have a choice. Chipotlanes exclusively serve mobile orders.

Chipotle app mobile ordering

The app makes it easy to find a restaurant to order from, and it helpfully displays which ones are Chipotlanes.

Chipotle app mobile ordering

Chipotle has been working on Chipotlanes for a few years, although they’re getting more investment thanks to the pandemic.

Chipotle drive-thru

By early 2019, Chipotle had 10 US Chipotlanes, and executives told Insider that they planned to open dozens more, while also investing in digital ordering.

Chipotle drive-thru

Source: Insider

Chipotle’s digital sales exploded during the COVID-19 pandemic, making up more than half of sales in 2020. For Chipotle, more so than for other brands, digital and drive-thru sales are completely tied together, because that’s the only way to order at a Chipotlane.

Chipotle drive-thru

Source: Insider

The app makes it easy to choose a dish and chose your protein, rice, and other options in the same order that you would inside the store.

Chipotle app mobile ordering

After ordering, you select a window of when to pick up your food. The windows are at least 20 minutes out in my experience.

Chipotle
Chipotle app.

The Chipotlane has no speaker or alternate windows. You just drive up to the single window and give the name associated with your order.

Chipotle drive-thru

If you go to the window too early, you might be told to come back in five minutes, which was what happened to me.

Chipotlane
Chipotlane.

Like Taco Bell, Chipotle works on an assembly line model, where customers move down the line of ingredients to choose what they want in a burrito or bowl. Chipotle locations also run a second assembly line behind the scenes dubbed the “digital make line.”

Chipotle

Source: Insider

Unlike Taco Bell, though, speed does not seem to be the top priority at Chipotle.

Chipotle Burrito

My food was good, and it was ready at the time the app said it would be.

Chipotle drive-thru

The different ordering styles show how Chipotle and Taco Bell are differentiating themselves in the drive-thru Mexican food space.

Chipotle Burrito

You can go into nearly any Taco Bell and leave with a combination of dozens of different menu items in under ten minutes. It doesn’t take planning ahead or much money – it’s an easy lunch or dinner most people can agree on.

Taco Bell

At Chipotle, on the other hand, it’s more of a commitment. A Chipotle order typically means 10 to 20 minutes spent in line, or a mobile order at least 20 minutes ahead of time.

Chipotle

Even in the drive-thru, Chipotle seems to see itself as a more upscale destination compared to Taco Bell, and assumes customers will be willing to wait for that experience.

Chipotle
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Restaurants are buying less food than before the pandemic as they struggle to stay afloat

indoor  dining nyc
A waiter delivers food to a table at Bottino Restaurant in Chelsea as New York City restaurants open for limited capacity indoor dining on October 1, 2020 in New York.

  • Spending levels at 40,000 restaurants nationwide dropped significantly last year because of the coronavirus pandemic.
  • Restaurants in some states, including Wyoming and Wisconsin, had spending levels similar to those before the pandemic.
  • Restaurant operators were spending more on carryout boxes and bags as the demand for takeout and delivery increased during COVID-19.
  • Visit Business Insider’s homepage for more stories.

Restaurants nationwide spent significantly less on food and other supplies last year as the coronavirus pandemic forced many eateries to temporarily shut down and host fewer in-store customers, new data shows. 

Around 40,000 restaurants nationwide spent 24.5% less on food and other items per quarter in 2020 than than they did prior to the pandemic, according to a report by Buyers Edge Platform, a digital procurement network for foodservice that tracked and analyzed restaurant purchases. 

Restaurants spent $2,700 each week purchasing food and products from their suppliers during the start of the pandemic last spring, down from $5,220 per week in the months prior.

Spending on food and supplies was at its lowest level during the week ending March 22, falling 67.5%, as stay-home orders were enacted and restaurants temporarily closed to in-person dining, leading to mass layoffs. By the end of 2020, there had been a rebound, with restaurants spending $4,531 per week on food orders and other items.

Spending levels had dropped to around 30% by the start of 2021, as COVID-19 cases surged across the country. 

“The real challenge for operators was the uncertainty of managing labor and operating expenses,” said John Davie, CEO of Buyers Edge Platform in the report. 

Read More: 85% of independent restaurants may go out of business by the end of 2020, according to the Independent Restaurant Coalition

The report also analyzed the purchasing habits of 5,000 restaurants in ten states experiencing the highest drops in spending levels, including independent restaurants and large chains.

Buyers Edge Platform said the steepest declines were in Nevada and Hawaii, two states whose economies heavily rely on hospitality. Average weekly food orders during the pandemic dropped 65.1% in Nevada and around 59% in Hawaii.

Order levels also fell in Washington by around 41%, Vermont by 40.1%, Connecticut by 35.8%, and Colorado by 33.8%, Arizona by 32.5%, Illinois by 31.8%, New Hampshire by around 31%, and Alaska by 30.3%. 

Read More: New Trump rule could cost waiters more than $700 million in lost wages by allowing employers to take more of their tips to pay other workers

Restaurants’ spending levels dropped due to the in-door dining restrictions and job losses across the foodservice industry during the pandemic, according to the digital procurement network. Chain restaurants combined have permanently closed more than 1,500 locations since the pandemic began.

Buyers Edge Platform said that the numbers slowly improved and orders were slightly exceeding pre-pandemic levels as dining restrictions loosened last year, but those levels dropped again as restrictions went back into place.

Read More: These 38 retailers and restaurant companies have filed for bankruptcy or liquidation in 2020

Restaurants in Wisconsin, Wyoming, and South Carolina ordered more food, however. The average weekly restaurant orders during the pandemic were 1.8% higher in Wisconsin, 4.2% in Wyoming, and 7% higher in South Carolina compared with pre-pandemic levels.

Restaurants were stranded with a stock of food in their refrigerators in March that they were unable to profit from as bills piled up, according to Davie. Some restaurants kept their staff on payroll for longer than they needed because owners found it difficult to navigate the Payroll Protection Program, part of a federal relief package for business owners.

Restaurant operators also changed their buying habits as they focused on obtaining certain products during the pandemic. Orders for frozen dessert products increased 145%, but orders for hotel products fell 69% and slumped 57% for fresh fish and frozen crab meat orders. Pen orders also declined by 67% as in-person dining that involved in-person check-signing decreased.

Read More: 12 restaurant chains have filed for bankruptcy in 2020 in the wake of the pandemic

The demand for carryout boxes and bags increased during the pandemic, according to the analysis, as consumers were heavily relying on takeout and food delivery. 

During the period between February and December of 2020, Restaurants’ orders of disposable bags soared 115%, while orders for disposable boxes increased 114% and disposable lid orders spiked 96%.

Additionally, orders for health and food safety products increased by 81% during the same period.

In December, a new rule was rolled out that allows restaurants to pull tips from their waitstaff to pay cooks and other employees. The 148-page regulation published by the Department of Labor is expanding on employers’ ability to pool tips and share them among employees who usually receive them.

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