Padang Restaurant Going Global Could be the Next McDonald’s

We all know that The World is Flat because of the great book by Thomas Firedman creating an environment where disruption can come from anywhere. Harvard’s Michael Porter recently stated that “Industry boundaries are expanding, and they can expand even more.  We’re going to see a combination of barriers to entry going up and the opportunity for disruption going up simultaneously.”

One such case just might be the Padang Restaurant.  In the United States and many places around the world consumers looking for food that is affordable, Ready-2-Eat and great tasking think of McDonalds.  

However in Asia some people think that food should be cheap, delicious and is served in big a portion. That is not an easy combination, but it is not impossible. Indonesians, for example, will immediately associate those adjectives with “Nasi Padang” (nickname for food from Padang Restaurant or Restoran Padang).

Many in Indonesia describe ‘Nasi’ Padang as both cheap and delicious and that just might be what it takes to expand a successful global restaurant footprint today and Padang restaurant business model just might have the new restaurant success model.  Padang restaurants appeal to people from various backgrounds. You may find some of their popular menu familiar, with items the ilk of ayam pop and rendang.

Padang restaurant can be found easily all across Indonesia, and they have been expanding abroad although they don’t necessarily come from one restaurant chain thus the concept trumps anyone brand today.  Nevertheless, they share similar business model. An ex-employee at a Padang Restaurant, Sutan Pamenan, and citizen journalist Gus Kajung shared their knowledge on Resto Padang’s management here is what they identify as success clues:

“Financial transparency and profit sharing makes Padang restaurant unique. With that system, investors and/or owners regard their employees as partners. After all, employees are paid based on the restaurant’s profit. Each employee gathers points, which will be accumulated and exchanged with money every 100 days. Highest point is given to the chefs, as they are the decision makers.

Generally, the team consists of capital owners, chefs and assistant chefs (in charge of cooking and planning the grocery shopping), toke (grocery shopping and making financial reports), tukang sanduak (plating food), bahagian tengah (delivering food to customers and sending dirty dishes to the kitchen), dishwashers and cashiers.

Every night, the team counts their income. Based on that day’s income, the chefs will decide what and how much ingredients they will buy the following day.

Then, every 100 days or 3 months, they will count how much net income they can get. Depends on negotiation, investors usually receive 30 percent. The rest is divided based on ‘mato’ or percentage – 25 percent is given to chefs, 20 percent for toke, 15 percent for tukang sanduak, 15 percent for bahagian tengah, 15 percent for dishwashers and 10 percent for cashiers.

On the same day, they will also evaluate the performance of every team member. Everyone is free to speak up their mind. Then, the decision to fire a bad employee is made together, unlike the usual case where the investors and executive board are the decision makers.

The system creates a sense of belonging for each employee, driving them to work even harder for the sake of the restaurant. Besides, their wages are decided by the restaurant’s profit. Thanks to highly motivated workers, Padang restaurants is famous for giving quick service.

This system has indeed been applied since a long time ago, before Western restaurants make their way into Indonesia. Surprisingly, Padang restaurants’ management system is somewhat similar with famous restaurants’ system, such as McDonald’s. McDonald’s has a profit sharing and savings plans that lets employees further build ownership and reinvest in the company.

While McDonald’s sell fast food, Padang restaurants’ products are slow food that are all ready-to-be-served. They are both affordable and somewhat unhealthy – Padang restaurants’ food are cooked with coconut milk thus making it quite high in cholesterol.

In a way, similar to McD, Padang restaurant is a cultural icon. Padang restaurant represents cheap, delicious-but-not-so-healthy big portioned food. It certainly go up head-to-head with McDonald’s, which is the icon of USA, of delicious-but-unhealthy junk food and hang out place, with their 24/7 services and free wifi.

Padang restaurants have a competitive edge on the menu offering as well. One of the usual menu items in Padang restaurants, rendang, has been nominated as world’s most delicious food and is being used as burger’s patty – even by famous brands such as McD and Burger King.

Combined with its managerial system, it can certainly compete globally. There are even Padang restaurants which are successful in various countries such as Singapore, USA and China. With the right support system, Padang restaurants can certainly shine on the global stage.  

Huge array of food served in typical Padang restaurants (Photo credit: GIV/TS),

 Is your business ready to come to the United States?  If so www.FoodserivceSolutions.us can help.  Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a brand leveraging integration strategy.  Foodservice Solutions of Tacoma WA is the global leader in the Grocerant niche.  Contact Steve@FoodserviceSolutions.us Call: 253-759-7869

Private Label Manufactures Targeting C-Stores for Growth

Traditional grocery stores continue to capitulate customers to other retail channels.  In fact according to Willard Bishop Consulting the future is not in mainstream supermarkets.  Therefore, we have found that private label manufactures are looking elsewhere.  Look at some facts from a recent Willard Bishop study on why and where consumers are moving:

1. WB found, the traditional grocery channel's dollar share has decreased by about half since 1988, while non-traditional grocery and convenience stores competed for the food dollar.
2. Specifically, the non-traditional channel's dollar share jumped from 2 percent in 1988 to 39 percent in 2014,
3. The convenience channel's dollar share almost doubled from 8 percent to 15 percent over those 25-plus years.
4. By 2019, Willard Bishop predicts traditional supermarkets will continue to lose dollar share to other segments of the traditional grocery channel, like fresh format and limited assortment.

Well, that said if you're trying to break into the Convenience Store (c-store) channel as a private label supplier, here are some numbers to better understand the scope of the industry:

1.        There are 153,000 c-store retailers

2. 160 million consumers shop in these stores every day
3. The average store footprint is 3,200 square feet
4. There are 3,500 items in an average store
5. There are 1,200 vendors
6. There are 450 wholesalers that move about 9,000 items

If that seems overwhelming, you are looking at the glass half full.  The C-store channel is growing faster than any other channel in retail foodservice today.   Here are our three steps to success entering the C-store channel: 

     1. Differentiation  how is your brand different, know your competition and where they fall short

2. Address retailer's brand requirements minimums, guarantees. shelf life, delivery, and other product attributes
3. Facts sell. Provide support metrics be prepared with factual data, margin impact, incremental growth and measurable goals

Success does leave clues.  Outside Eyes can provide top line sales and bottom line profits if and when you are ready for success. Food manufactures think success think C-stores. 

Visit: www.FoodserviceSolutions.us  if you are interested in learning how Foodservice Solutions 5P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization or you can learn more Contact: Steve@FoodserviceSolutions.us

 

Breakfast at HEB, Publix, Sheetz, and Wawa Catching On

Once again the American Egg Board (AEB) examined how and where we are eating the incredible edible egg.  The AEB looked at new competition and how it's affecting where America eats breakfast. 

When John Howeth, AEB senior vice president, foodservice and egg products stated "Breakfast all day is a definite opportunity for supermarket foodservice operations," Foodservice Solutions® Grocerant Guru® jumped up and declared they are talking about our work once again.  Regular readers of this blog know that Foodservice Solutions® has been the leader in the Grocerant niche since 1991. 

Howeth went on to say "Millennials are driving the trend for all-day-breakfast we’re seeing at QSRs, so it's only logical they'd look for breakfast items when they're at the grocery. Breakfast foods—especially egg-based ones—fit into any daypart." 

The AEB study found consumers are often turning to the c-store and grocery stores for Ready-2-Eat and Heat-N-Eat fresh prepared breakfast needs. This has hurt Cereal manufactures and QSR restaurants. 

Wawa, Sheets, and Rutter’s Farm Stores are sector leaders

Conveniences operators are capitalizing on breakfast's popularity to transform people stopping for gas on the way to work into breakfast patrons. And it seems to be working. Mintel's 2015 report, Convenience Store Foodservice, reveals 32 percent purchased a made-to-order breakfast sandwich at a convenience store in the last three months.

Grab-and-go is still a required part of the c-store equation, so premade sandwiches are a must to capture customer attention. But made-to-order has become important in building relationships with new customers, especially millennials. Connections are made with patrons when the store employees customize their breakfast sandwiches. C-store managers are now required to have foodservice experience, according to the AEB report.

Grocery stores have one bright spot Ready-2-Eat and Heat-N-Eat fresh food

Grocery stores began introducing prepared meals in the 1970s, but it was three decades before the concept got real traction. Today, the grocerant niche defined buy Foodservice Solutions® Grocerant Guru® refers to any retailer selling Ready-2-Eat and Heat-N-Eat fresh prepared food including companies the ilk of Walgreens, Pinkies Liquor Stores, HelloFresh and AmazonFresh.  Grocery stores have upped their focus of late and are doing a very good job of selling wide array of prepared meals, either for eating on site or taking home, and that is there one bright spot of growth for the sector.  

Here is an interesting note according to NPD, while QSR dinner sales have declined, eating dinner at grocery stores rose to 1.8 billion visits annually in 2014. Yes, I would say that the grocery sector is beginning to understand the opportunity. 

He AEB report went on to say “freshly prepared food items are often the highest-margin products in a supermarket. Innovation is evident in both foodservice offerings and operations, attracting customers with heightened expectations. Upscale deli items, trend-responsive prepared foods, soup and salad bars, and dining areas are common at grocerants, but breakfast food offerings are not as well represented as foods aimed at other dayparts, and thus have room to grow, according to the study.” Will this become a disruptive force within the AM Day-Part?

Are you trapped doing what you have always done and doing it the same way?  Interested in learning how Foodservice Solutions 5P’s of Food Marketing can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit:  www.FoodserviceSolutions.us for more information

Shake Shack Sales Growth a True Take-Out Success

By now you have heard that Same-store sales at Shake Shack soared in the third quarter, rising 17.1 percent year over year. Those are sector leading numbers simply put took out the competition in the better for you burger sector.  Net income at the burger chain rose to $1.5 million, up from $0.5 million during the year-ago quarter, on revenues that increased 67.4 percent, to $53.3 million.  

Total revenue increased 67.4 percent in the quarter to $53.3 million from $30.2 million due largely to those same-store sales and new restaurant openings, including four in the quarter and 12 for the year.

CEO Randy Garutti said in a statement. “The third quarter marked another strong quarter in terms of same-Shack sales growth, as we continued to execute on our strategic plan and drive engagement with our guests,” He noted that the company expects to open at least 14 new locations next year. “We remain well positioned for continued success as we capitalize on our unique development opportunities.”

Shake Shack plans to enter four new markets next year, including West Hollywood, Calif., Scottsdale, Ariz., Phoenix and Dallas where consumers like Eating-Out while Eating-In according to Foodservice Solutions® Grocerant Guru®. From the beginning Shake Shack focused on the customers and build in Take-Out options to help drive unit sales.  It has worked and continues to drive top line sales and bottom line profits.  

In fact Shake Shack net income in the quarter tripled to $1.5 million or 10 cents per share from $500,000 or 2 cents in the same period a year ago. Restaurant-level operating profit more than doubled to $15.6 million from $7.6 million in the same period last year. And restaurant-level operating profit margins increased 530 basis points to 30.4 percent of revenues due to lower food costs and leverage on labor because of higher sales.

Success does leave clues and the “better for you” burger sector is no exception as Shake Shack growth in top line sales and bottom line provides all the proof one needs to understand that Ready-2-Eat fresh prepared food does drive customer adoption.  That is our Take-Out clue of the day. 

Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a brand leveraging integration strategy.  Foodservice Solutions of Tacoma WA is the global leader in the Grocerant niche.

Contact Steve@FoodserviceSolutions.us Call: 253-759-7869