Jan. 5, 2022 "The pandemic is changing how restaurants do business — and it might be for good": Today I found this article by Roberto Rocha, Albert Leung, and Judy Trinh on CBC news:
Beckta, a storied upscale restaurant in downtown Ottawa, was buzzing one recent day — but it wasn't because of diners. The second-floor dining room was converted into an assembly line where staff were packing three-course dinners into paper boxes.
Dozens of these kits — with lamb shank confit, prawn lettuce wraps and espresso tarts, along with a wine pairing — stood ready to be delivered to diners' homes by one of the restaurant's in-house drivers.
Beckta began offering them in May 2020. They're such a big money-maker that the restaurant cancelled its lunch service and reduced opening hours. It now operates five days a week and is employing a record number of staff.
It's even made restaurant work, usually a gruelling affair with long hours, something with some work-life balance, owner Stephen Beckta said.
"For me personally now, my workday is probably eight to six most days," he said. "I used to do a lot of nights in the restaurant, so I get to see my family a lot more than I used to."
Like other restaurants devastated by the COVID-19 pandemic, Beckta had to adapt. And like other restaurants, he found that takeout and delivery helped keep his business afloat, mitigating the losses experienced due to lockdowns and capacity limits. When paired with a full return to indoor dining, he said, it meant pulling in more cash than ever.
"Full-service restaurants are adopting the takeout mentality," said Jacob Mancini, associate vice-president for restaurants and breweries at Canadian Western Bank, which lends money to restaurants.
"We're seeing specialized menus specifically for takeout. We're seeing food that's easier to make or have higher margins. These are efforts to encourage customers who can't come to the restaurant."
As the pandemic drags on, with new variants and new restrictions sending Canadians back into lockdowns, it's changing the way restaurants operate and plan for the future, restaurateurs and industry observers say.
And it's heralding big changes to the dining experience, such as
smaller restaurants,
dedicated takeout counters,
and a shift toward snazzier experiences
to lure back indoor diners.
Restaurants are coming back … but differently
There's good news for restaurants: after a brutal slump and many closures, countrywide sales were nearly back to pre-pandemic levels last summer.
Limited-service restaurants, such as fast food and takeout counters, hit all-time highs.
But the costs of doing business also shot up.
Appliances and ingredients are more expensive due to a global supply-chain choke.
Providing workers with protective equipment
and enforcing vaccine passports
also costs money.
A severe labour shortage, especially in low-wage jobs, is also pushing restaurants to increase salaries and offer incentives to lure back waiters and cooks.
On top of that, Canadian restaurants have a combined $15 billion of debt from the pandemic, according to Vince Sgabellone, a food industry analyst for NPD Group, a market research firm.
"It's a big hole. Restaurants were already a low-margin business, in the single digits. Now it's even thinner," he said.
Shifting to meal kits has allowed Beckta to continue offering paid sick days and benefits to employees after three months on the job — something he feels is important for the industry.
"Everyone is upping their game from increased wages, increased benefits and just better working conditions. It's wonderful to see because this was long overdue in our industry," Beckta said.
But not every restaurant is in the same position; many are saving costs where they can. In his surveys of sit-down restaurant owners, Sbegallone found that many are in no hurry to reopen for indoor dining.
"They say they're doing OK with delivery, that it's not worth rehiring staff. Why even bother with sit-down dining anymore?"
Redesigning for takeout
With a stronger focus on delivery and takeout, restaurants no longer have to rely on large spaces with many tables to make money. As a result, more restaurants are looking to smaller venues with cheaper rents, said Mancini.
This was already happening before the pandemic, but it turbocharged the trend.
"The need to have huge boxes was already less important," Mancini said. "I don't think it will go back to how it was before."
To make the takeout experience more seamless, sit-down restaurants are rearranging floor plans to create dedicated takeout windows. According to Restaurants Canada, an industry advocacy group, some establishments are adding multiple drive-thru lanes to ease bottlenecks, with dedicated lanes for delivery drivers.
A peek into this future is evident in downtown Toronto at Box'd, a concept for high-density office towers by Middle Eastern chain Paramount.
Customers order with a mobile app and cooks prepare the food behind a wall of cubbies.
Customers are notified when the order is ready and they grab their food from one of the cubbies. Throughout the whole process, the customer doesn't talk to anyone.
Box'd owner Ahmad Daify calls it the first automated restaurant experience in Canada. He says he's getting a lot of inquiries around the globe for franchising.
"Once there is some predictability in the downtown core, we would like to continue to expand the brand," Daify said.
The ghost of kitchens yet to come
In a nondescript building on a drab street in the Toronto neighbourhood of Etobicoke is one of the hottest restaurant concepts.
There are no tables, no wait staff, but it's full of delivery drivers who watch a screen like an arrival board at an airport, waiting for their orders to ring up.
Three dozen cellphones and tablets are constantly pinging, registering new orders from delivery apps.
Kitchen Hub is a ghost kitchen, a service that prepares food for other restaurants solely for delivery orders.
"We're getting rid of a lot of the upfront headaches [for restaurants]," CEO Adam Armeland said.
"We're dealing with
the infrastructure.
We're signing the lease,
we're financing,
building everything out.
All that they're doing is bringing
their chefs,
their food
and their brand."
The company raised $10 million to expand this concept. The company's goal is to open 50 facilities across Canada within five years, Armeland said.
This model will only become more popular, according to food industry analyst Sgabellone, allowing restaurants to serve customers beyond usual business hours.
"It caters to people wanting what they want when they want," he said. "They're enabled by digital orders."
Luring diners with the experience factor
Does this push toward smaller restaurants that prioritize delivery over indoor dining sound the death knell to dining out? Hardly, analysts say. There will always be a place for celebrations and romantic dates.
But the dining experience won't be just about the food. Restaurants, especially full-service ones, will have to stand out by offering other sensorial experiences, Mancini predicts.
"They'll need to have an environment that's engaging, whether it's trivia night or a patio with games, or some kind of engaging activities inside."
What's happening with restaurants is, in many ways, what happened with movie theatres in the last decade as streaming services took over and large screens became affordable.
Theatres had to offer an enhanced experience with rumbling chairs, 3D and immersive sound.
"When you're at home, there's a million ways to get good food," Mancini said. "To encourage people to come out, you have to offer something they can't get."
The pandemic is changing how restaurants do business — and it might be for good | CBC News
Jan. 27, 2022 "A global ghost-kitchen experiment is growing out of a Vancouver parking empire": Today I found this article by David Reevly on the Financial Post:
OTTAWA — When bylaw officers checked out the Wendy’s delivery kitchen, operating in a trailer in a parking lot in Little Italy west of Ottawa’s downtown, they shut it down.
The trailer was operated by Florida-based Reef Technology. Backed by Japanese conglomerate SoftBank and an Abu Dhabi sovereign wealth fund, Reef owns thousands of parking lots in the U.S. and Canada, and it’s trying out many, many, many different uses for its urban spaces as the whole industry struggles with a pandemic-driven collapse in demand for downtown parking.
In Reef’s hands, a bare, boring, minor eyesore is a potential community hub, solving “last-mile” problems for multiple industries. But finding new uses for old asphalt can be fraught, with bylaws and regulations insisting, for instance, that a kitchen have running water and a power source other than a big diesel generator that exasperates the neighbours.
Reef bills itself as “The Neighborhood Company,” transforming “open spaces into multi-purpose places that create jobs and bring new goods, services and experiences to your neighbourhood.”
So far, maybe its most visible venture has been with Wendy’s. In November 2020, the burger company announced its first “neighbourhood kitchen” experiment with Reef, in Toronto. Last summer, that blew up into a five-year, 700-location deal covering Canada, the U.S. and the U.K.
“This partnership with Reef is testimony to our ambitions, the potential we see to grow our beloved brand and our quest to reach more customers in more ways,” the announcement of the expanded partnership quoted Wendy’s executive Abigail Pringle as saying.
But those trailers are just one of the uses Reef is proposing for its parking lots. Its website is dizzying.
It’s in the microwarehouse business.
. DJ Khaled is selling chicken wings via its kitchens after “the biggest restaurant launch in history” that did not involve what you’d ordinarily think of as a restaurant (via online delivery services, Reef sells fast food with numerous brands besides Wendy’s). All in addition to offering technical services like pay-by-app to other parking operators.
“Reef’s origins were in making parking lots more efficient, but the company’s mission grew to include supporting other applications that make sense for commercial lots and benefit local neighbourhoods,” Reef’s California-based head of global communications, Mason Harrison, told The Logic by email. Besides all the above, the company is excited about the potential of vegetable farming in shipping containers, to address food deserts.
At its core, though, Reef remains in the parking business: Harrison wrote that kitchens are its fastest-growing segment, but parking “continues to drive the largest amount of the company’s revenue.”
What’s now Reef began in 2013 as ParkJockey, a company with a smartphone app that was meant to make it easier to find and pay for parking, directing users to spaces in members’ lots and handling the payments.
But in 2018, ParkJockey made a gigantic splash. Armed with investments from SoftBank — best known for its high-profile backing of disruptive businesses like WeWork and Uber — as well as Abu Dhabi’s sovereign wealth fund Mubadala, reportedly totalling as much as US$1 billion, it bought two of North America’s large parking concerns at once.
Vancouver-based Imperial Parking, known better as Impark, with 3,600 properties in 330 cities, went to ParkJockey from the Ontario Teachers’ Pension Plan for an undisclosed sum.
ParkJockey also acquired Citizens Parking, itself an agglomeration of Lanier, Ameripark and ParkOne parking brands.
The next year, ParkJockey rebranded itself as Reef Technology. In late 2020, it raised another US$700 million, again drawing on Mubadala and SoftBank, for its vision of itself as a “proximity platform,” offering its urban lands for multiple uses.
Then COVID-19 knocked the struts out of downtowns.
“With so many people working or attending school from home, driving significantly decreased during the pandemic. Of course, fewer people driving meant fewer people parking, leaving some parking lots vacant for months on end,” the company said in a meditation on the state of the parking industry posted this month.
Removing friction from finding and using paid lots is a no-brainer for increasing those lots’ value to their owners, but there’s a lot more to try, the web post reads.
Unlike Uber or Airbnb — famously the biggest taxi company with no cabs and the biggest hotel company with no hotels — Reef owns an awful lot. It claims 18,000 workers and 5,000-plus locations now.
So it has boots on the ground throughout North America and abroad. But food service is an industry full of complex regulations that vary from municipality to municipality, let alone country to country.
In November 2021, The Wall Street Journal reported on Reef’s problems with its kitchens in cities across the United States. Those have included shutdowns over the company’s failure to secure permits for its trailers, and workers injured by fireballs blown out of the trailers’ propane equipment.
In Ottawa, it ran into regulators who don’t have a scheme for a semi-permanent trailer kitchen on wheels, catering only to app-based delivery services like SkipTheDishes and DoorDash.
“It could be one of two things,” Catherine McKenney, the city councillor who represents the area, told The Logic. “It could be a food premise, in which case you would need site-plan approval … it needs to be licensed, it cannot run a diesel generator [and] it has to have a water source, which this one didn’t have.”
Or it could be a “mobile refreshment vehicle.”
“To be a food truck, you cannot take up any parking spots. Oddly enough, that’s the rule,” McKenney said. “You would need a zoning amendment.”
This kitchen trailer has been stationed against the wall of a building with a dentist office and yoga studio. When The Logic went to see it, it had a big generator on a separate trailer and a line from two large gas cylinders on the asphalt several metres away. Plus two big waste bins and a portable toilet outside its door. Residents had complained about the generator and about litter on a nearby path.
Wendy’s told The Logic that three Reef-operated trailers with its smiling-redhead logo on them in Ottawa have clean health inspections. But two have had to be closed “due to a power supply issue only, and not related to any health or safety concerns,” wrote vice-president Heidi Schauer, in an email. (The third is powered without a generator, a fat cable plugging into a box on a nearby retaining wall.)
“It’s another one of those disruptive businesses,” said McKenney. “Similar to Uber or Airbnb, now we have these ghost kitchens.”
“Creating a new category of anything comes with its fair share of obstacles, especially for a business as operationally intensive as restaurants,” Harrison told The Logic.
“When we’ve stumbled, we’ve succeeded in learning, adapting and improving as we’ll continue to do. We welcome the scrutiny that comes with being a market leader because it helps us continue to improve.”
Toronto lists 16 duly inspected Reef kitchens. Edmonton has seven, Calgary eight, Vancouver one. Reef has openings across Canada in the “parking field” and “kitchens field.”
These experiments with underused parking properties aren’t unique to Reef, and the pandemic has increased the urgency.
The board chair of the International Parking & Mobility Institute, a trade group, is Dave Onorato, whose day job is heading the Pittsburgh Parking Authority. Before COVID-19, he said, his agency’s garages and surface lots were routinely full by 8:30 a.m. That hasn’t happened in nearly two years.
The Pittsburgh authority projects it’ll be back to 85 per cent utilization by the end of 2023 and that will be the new norm. “We don’t anticipate getting back to where we were in 2019, either for revenues we had or the demand,” Onorato said.
Indigo Group, a French company with extensive Canadian operations, is also rethinking its real estate, in a process begun before the pandemic.
Indigo’s focus is on its underground garages, but the basic idea is the same as Reef’s: retrofitting them with everything from bike-share stations to kitchens to container farms to delivery warehouses to data centres.
“The entire business model for our industry is transitioning,” said Brett Wood, a consultant based in Charleston, S.C., specializing in parking- and transportation-demand management. Demand for street parking has largely recovered but off-street lots haven’t, he said, and the monthly leases that used to be the core of that business might never.
As crowds returned for pro sports and downtown theatres, Onorato’s agency tried offering the first floors of garages as designated spots for Uber and Lyft drop-offs and pickups, to clear room on streets. They’ve had farmers’ markets — being under cover meant markets could run later in the fall, Onorato said. They’ve set up garage roofs as event venues. They’ve tried using garages as transshipment points for courier services.
Some of these moves have been good for people and neighbourhoods, he said, “but it hasn’t made a significant impact to the authority from a revenue standpoint.”
Wood said many municipalities are repurposing street spaces as restaurant patios or pickup zones for delivery services — since surface lots and garages are underused, people can park in those instead. Finding a way to replace the revenue those street spaces generated for cities and towns is a million-dollar question, though.
“We are now seeing a lot of companies that are beginning to automate that, where they’re working with food-delivery operators to basically determine the number of transactions that are happening at the curb, and then monetizing that, or monetizing it using an interface between the vehicles, GPS, and the curbside environment,” he said. None has been a resounding success, though.
Wood said he’s worked with one Texas town that took a municipal lot and made it a food-truck centre. “We’re seeing communities implement that as a service to their constituents,” he said. “Reef has been out in front with the ghost kitchens.”
Both he and Onorato said Reef’s reputation in the parking business is solid. In Impark and Citizens, it bought established businesses and hasn’t monkeyed with their core activities.
But it’s a tough time, Onorato said. Technology was changing the industry and COVID-19 has increased the pressure.
He said he’s seen one ticket-processing company try to become a vendor of whole parking meters and meter companies get into pay-by-phone apps, with poor results.
“I do see that once in a while when companies expand beyond their expertise, that they could even weaken what they’ve been strong at doing in the past.”
The Logic
A global ghost-kitchen experiment is growing out of a Vancouver parking empire | Financial Post
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