There’s a widening gap in the restaurant industry. On one side of the gap are progressive restaurants using next-gen tech to optimize their businesses. On the other side are traditional fine dining restaurants that have found a rare groove in old-school systems.

And those other middle-of-the-road restaurants? 

They’re being swallowed whole.

We’re entering Food 2.0, a new era of the restaurant industry being shaped by technology, semi-automation, and efficiency.

Food 2.0 companies leaning into the future are thriving, but most restaurants are gripping for dear life to the old ways, unable to adapt to the 2.0 world—and they’ll continue to struggle.

And here’s why: the difference between a Food 2.0 restaurant and an old school restaurant isn’t just fancy gadgets and software—it’s a +3% margin boost.

Imagine what you could do with 3% higher margins on your food. You could better develop your staff. You could open new locations. You could finally give yourself a long-deserved break.

In this article, we’ll discuss:

• The evidence that the Food 2.0 era is arriving

• How you can start adapting to the times (and stay relevant for years to come)

• The exact steps you need to take to realize a +3% margin boost of your own

But first, the bad news.

The Restaurant Market Is A Difficult Place To Survive

It’s getting harder and harder to make it as a restaurant as threats grow from every corner of the Food 2.0 economy.

Across retail as a whole, people are spending less time visiting brick and mortar stores and more time purchasing things online. And fewer people out and about shopping mean fewer people wandering into restaurants.

In fact, restaurant traffic is in a three-year-long slump—and still falling. November was an especially rough month as traffic across the industry fell 5.4%. Casual dining and fine dining establishments saw a 9.4% drop, but sports bars saw the worst performance with an 11.5% drop.

And these issues are only compounded by a shrinking labor pool and rising labor costs, which rose 0.4% in Q2 of 2018. Many have tried to compensate for these increasing expenses by raising costs, but it’s not a long-term solution. 

“We’ll never raise the price enough to offset the kind of labor headwinds that we’ve got right now and that we foresee for a period of time to come,” Tara Comonte of Shake Shack said in December.

Food delivery, changing consumer tastes, more competition—the list goes on and on.

It’s not enough to serve good food, have great service, or be in a perfect location anymore. To thrive in the Food 2.0 world, restaurants must be faster, smarter, and more efficient.

Here’s How Food 2.0 Brands Are Learning To Thrive

Most restaurateurs at some point imagine delivery platforms as the solution to their loss of traffic and revenue, but with fees as high as 30%, partnering with a delivery platform can be risky. Committing to that kind of fee when most restaurants don’t even know accurate margins can be detrimental as expenses outgrow revenue.

Others think that online reservation platforms like OpenTable will fill their tables again, but these services can also be quite costly for the restaurant: $250/mo for basic service, $1/person for reservations, and as much as $1,000/mo for access to customer data per location.

Here’s what thriving Food 2.0 brands realize: restaurants must evolve and optimize at the roots of the business to adapt to the market, not simply add features or revenue channels.

And here’s how they’re doing it:

• Mastering Food Costs — Accurate food costing keeps you from working off hunches and intuition, which keep you in the blind about the inner-workings of your business. Accurate food cost data can transform everything from the ground up by enabling data-driven decision making.

• Calculating Precise Margins — Margin data helps you find ways to increase margins (and know which factors lower them). It also empowers you to develop newer recipes and menus with higher margins altogether.

• Purchasing Smarter With Data — With smart inventory software that blends ingredient usage and sales forecasts, Food 2.0 restaurants can order the right amount of food at the right time to cut wasted inventory, increase margins, and optimize production planning.

When efficiency is built into the core operations, restaurants are free to explore those other revenue channels, like delivery platforms, with confidence and flexibility.

And that +3% margin boost we mentioned? 

It’s real.

Enter Galley, The Platform That Puts Your Kitchen On Autopilot

We built Galley to help restaurants stop working off hunches so they can master their day-to-day operations, increase profitability, and grow confidently. 

Most restaurants work off a 4-5% margin on food. 

Here’s how we empower you to raise that to 7-8%:

• Galley automates real-time food costing. Galley calculates food costs in seconds by connecting with your vendor prices. You can see where your money goes, develop high-margin recipes, and increase the profitability of your menu.

• Galley puts inventory and purchasing on autopilot. Galley creates purchase orders that are optimized with historical sales data and trend forecasting so you can restock in seconds and reduce over-purchasing.

• Galley generates optimized production plans for your team. Your team will know exactly what and how much food to produce each day to reduce labor, cut waste, and maximize profits.

And with higher margins, smoother operations, and more time and energy, restaurant owners are able to focus on the things that really matter, like growing their businesses.

You don’t have to grip the old ways with white knuckles.

With Galley behind you, you’ll be free to enter the Food 2.0 world with confidence.