Sunday, March 20, 2011

Creepers and sleepers

Sometimes a shift in the business environment takes awhile to build. It seems to hit all at once, when in fact the pressure has been mounting for weeks or months.

So it is with several developments currently taking shape in the restaurant business. Consider these sleepers, for instance:

Watch for a spike in uniform and linen-service prices. The cost of raw cotton increased 136% between last August and February 2011. Most restaurant uniforms are made from tougher-wearing materials like polyester or poly-cotton blends. But soaring cotton costs could ratchet up demand for the synthetics, driving up those costs as well. Cotton figures more regularly into restaurant tablecloths and linens, particularly fine ones. Services may soon be paying more for tablecloths and napkins, with at least some of the cost possibly passed along.

Look for more investment interest in franchisees. One of Taco Bell’s largest franchisees, the 166-store K-Mac, recently moved from one private-equity firm to another. The price wasn’t disclosed, but the seller, Olympus Partners, disclosed that it collected eight times what it originally paid for the company, which also operates Golden Corrals. Investors are realizing that a brand’s owner may not provide the best cash flow after all. At the same time, there’s pent-up desire on the part of many franchisees to sell. Tough times made them want to cash in and move on, but business conditions prevented them from getting a reasonable price. That’s changed. And investors who’ve already shopped the franchisors are finding a whole new store aisle to peruse.

Green mandates could be the next industry bane. South Carolina restaurants, for instance, are bracing for a rise in hauling fees because the state wants to require recycling by any establishment with a bar license. The South Carolina Restaurant Association has estimated the increase at $800 to $4,000 per restaurant. But the state is hardly the only jurisdiction to be eying green obligations for eateries. California is widely expected to require composting, following the lead of San Francisco, and water-consumption limits have already been leveled from time to time when areas see their reservoirs dip. Those rare situations could become far more common as suburban sprawl taxes limited supplies.

QR codes may be The Next Big Thing in restaurant technology. If you don’t know what they are, think of supermarket bar codes that impart key marketing info about your operation. Consumers with a smart phone in essence take a picture of the codes, which look like a section cut out of a composition book’s cardboard cover. The pattern is actually a code that the phone reads with an app, which often comes pre-loaded as a freebie (iPhone and Droid users can download one for free). The process can call up a ton of info in just a few seconds. For instance, a code posted in a window could inform passers-by of the night’s specials, instantly and effortlessly. Or, if the restaurant prefers, reading the code could call up the place’s page on Yelp or Open Table. It’s a cinch to turn info into a QR code using a free program, and the info you can load is daunting. The tool makes tremendous sense for restaurants, though they’ve been slow to adopt the technology in the United States.

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