Why Your Restaurant Leadership Needs to Be Real Estate & Tech Savvy

Transcription

1 Why Your Restaurant Leadership Needs to Be Real Estate & Tech Savvy How restaurants are using technology to attract customers RADHIKA PAPANDREOU Co-Head Hospitality & Leisure Ferguson Partners

2 WHY YOUR RESTAURANT LEADERSHIP NEEDS TO BE REAL ESTATE & TECH SAVVY The foodservice sector is growing even more competitive as consumers appetites for eating out show no signs of abating. Demographic realities, real estate trends and technological innovation are just as important as menu items and food costs. Restaurants need to consider key industry trends and think differently about the skills needed in board members and executives in order to stave off competition. Changing Demographic Trends Restaurants are increasingly filling retail real estate according to census data reported by CBRE. In 2015, restaurant sales outpaced grocery sales for the first time, and the gap continues to grow. Personal consumption spending on dining outside the home charted higher annual growth (5%) than dining at home (0%). This is especially true for millennials, 77% of whom visit a restaurant once a week or more, according to Oracle s report, Millennials & Hospitality: The Redefinition of Service. Members of this group favor eating experiences and destination dining -- and they re willing to pay for them. Food is not just for sustenance for these youthful customers, it is part of their identities. And many of them are using mobile devices to research, book, pay and document their meals. Developing Commercial Real Estate Trends As vacancy tightens and rents increase, restaurateurs are looking beyond traditional commercial space. Developing trends include: Malls & Food Halls: Millennials preference for experiential retail has many developers and property managers putting more emphasis on the restaurants in their tenant mixes. Owners of large spaces now see dining as the anchor draw, and CBRE notes they are filling spaces with a variety of concepts operated by one diversified restaurant business (as Eataly has done in Chicago), or populated with solo operators serving a range of eating options. This approach meets consumer demand for fast, interesting and local food that delights a range of palates. Co-Tenancy & Clustering: Co-tenancy is a scaled down version of the food hall. It is a popular option for smaller operators to go in with complementary restaurants (as Fiesta Restaurant Group has done in Boston), or for multi-concept restaurant groups to co-locate divergent eateries. Other restaurant groups are clustering properties in the same neighborhood, using proximity to leverage operational efficiencies and to give regulars additional choices without losing business to competitors. Food Trucks & Pop-ups: Other restaurateurs are dealing with tight commercial markets by using temporarily vacant space to test new concepts, build loyalty and attract new customers. These short-term options include food trucks 2

3 that can go where the diners are, or pop-up eateries that take advantage of a limited-time-only opportunity to drive traffic, and offer chefs a chance to test new dishes or concepts. Advancing Data & Technology Trends Another growing need in the restaurant business is experience in deploying technology. Cyber Security: As hackers continue to attack any operation large or small that has access to valuable data, businesses need stronger information and network security leadership. The 2017 Trustwave Global Security Report shows that food and beverage is the second-most breached industry; only retail outpaces it. Most of the breaches occurred via point-of-sale systems, but restaurant groups are also at risk for executive impersonation, wire transfer fraud, W-2 phishing and ransomware attacks. Big Data: Technology that creates and analyzes Big Data requires staff and board members who know how to turn that into actionable insights and initiatives, such as staffing smarter, understanding customers better and designing loyalty programs. Mobile: Restaurants must be mobileenabled. Oracle s data show that 39% of millennials have already used their mobile devices (mostly phones) to order food and beverages. In fact, 51% want to order delivery and takeout via mobile devices, and 41% want mobile ordering in the restaurant. Just over a quarter of millennials have used mobile technology to pay for those orders. And 52% of this age group wants to manage loyalty programs via mobile technology. The report notes that in many cases, particularly with loyalty programs in restaurants and room service in hotels, millennials want to use their smartphones and tablets even more, suggesting demand is outpacing current service availability. Recruiting new leaders with new skills Succeeding in this environment requires board members and corporate leadership with new skills and experiences. Board and executive recruitment strategies should emphasize: New Vertical Experiences: The days of a line leader reaching the executive level in a sole function have ended, according to Deloitte s 2017 Human Capital Trends report. Restaurants must acknowledge changing business requirements and recruit professionals with broader skills and experiences. Knowledge of cybersecurity and cloud computing ensures restaurants can respond to cyber attacks. Executives and board members who can extend Big Data and analytics FERGUSON PARTNERS 3

4 WHY YOUR RESTAURANT LEADERSHIP NEEDS TO BE REAL ESTATE & TECH SAVVY beyond operations and into marketing and customer behaviors will be able to identify and act on deeper, more valuable customer and operations insights. Action Item: Recruit for experience in property investment and management, retail, hospitality, franchising, travel and tourism, M&A, Big Data and cybersecurity. Innovation & Experimentation: According to a Deloitte report, 90% of companies are redesigning their organizations to be more dynamic, team-centric and connected. The foodservice business is no different. Seizing opportunities and meeting evolving dining preferences requires new operating models, concepts and experiences borne from innovation, experimentation and vision. Action Item: Seek directors and executives who are experienced in overseeing innovation and managing change, and those who have demonstrated the vision to guide organizations into new areas required to succeed. Age, Gender & Racial Diversity: To create authentic experiences that appeal to a more diverse customer base, leaders need to come from the demographic groups served. Their innate understanding of preferences and aspirations of diners can help you best competitors. Action Item: Identify candidates from the demographic groups propelling the industry and making decisions about dining out: millennials, people of color, women and the LGBTQ community. This is an exciting time in the restaurant industry. The business is riding a wave of change and the companies with visionary and experienced leadership will succeed. Capitalize on these opportunities by: Expanding the reach of recruiting to address challenges with the right people in the boardroom and on the leadership team. Engaging a recruiter to access the verticals where experience or connections are lacking. Serving up the dining experiences customers demand today and will desire in the future requires more deliberate recruiting and hiring to identify and retain strong leaders. 4

5 Radhika is a Senior Director at Ferguson Partners where her focus is on senior management and Board recruitment. She co-leads the Global Hospitality practice and leads the Chicago office. Radhika has expertise in recruiting for Boards in the Restaurant & Leisure sector working on full Board creation and Board refresh RADHIKA PAPANDREOU Senior Director, Co-Head Hospitality Practice Ferguson Partners rpapandreou@fergusonpartners.com projects. She frequently speaks about governance and Board recruitment trends at national conferences and in publications. Before joining Ferguson Partners, Radhika was a Managing Director at Lloyds Bank, running the Consumer and Healthcare practice for North America. She had responsibility for the management of the sector team and was a member of the North American Management Committee. She worked between the New York and Chicago offices, leading teams in both cities. Radhika has over seventeen years of banking experience. She spent the first ten years of her career at Citigroup in various roles, including origination in the Financial Institutions Group, capital markets credit, and Consumer and Healthcare relationship management both in New York and in London. Radhika earned her Bachelor of Arts degree in International Affairs and Economics from the Johns Hopkins University, and an M.B.A. in Finance from New York University s Stern School of Business. FERGUSON PARTNERS 5

6 About FPL FPL is a global professional services firm that specializes in providing executive and Board search and leadership, compensation, and management consulting solutions to the real estate and a select group of related industries. Our committed senior professionals bring a wealth of expertise and category-specific knowledge to leaders across the real estate, infrastructure, hospitality and leisure, and healthcare services sectors. Comprised of two businesses that work together, FPL offers solutions and services across the entire business life cycle: Ferguson Partners With an emphasis on the right fit, Ferguson Partners offers services in executive and Director recruitment,. We also also offers a full range of leadership services including CEO and senior executive succession planning, leadership assessment and coaching, and team effectiveness. FPL Associates Focusing on a wide array of business needs, FPL Associates assists with the assessment, design and implementation of compensation programs. We also provide organizational, financial & strategic consulting, bringing a wealth of industry and category-specific expertise to a broad range of projects.. Our service offerings FERGUSON PARTNERS FPL ASSOCIATES EXECUTIVE SEARCH LEADERSHIP CONSULTING COMPENSATION CONSULTING MANAGEMENT CONSULTING Board/Trustee Recruitment Board Assessment Chairmen/CEOs/ Presidents Senior Management/ Corporate Officers Succession Planning Assessment for Selection or Development Executive Coaching Team Effectiveness Benchmarking Program Design Contractual & Policy Arrangements Surveys Strategic Planning Organizational Design Corporate Finance Specialized Research Our industry practices Real Estate Private Equity/Real Estate Investment Managers, Public (REITs) & Private Owners/ Developers, Property Services (Brokerage) Firms, Commercial Finance, Residential Mortgage Investment/ Finance, Homebuilders, Corporate Real Estate Hospitality & Leisure Lodging (Brands/Owners), Gaming Resorts & Sports & Recreation, Amusement Parks & Attractions Healthcare Owners/Investors/ Operators/Financiers of Seniors Housing, Hospitals, Health Care Infrastructure, Engineering & Construction Infrastructure Investing: Transport, Energy, Social Infrastructure; Construction & Engineering Mortgage Investment/ Casinos, Restaurants, Service Providers Our office locations CHICAGO HONG KONG LONDON NEW YORK SAN FRANCISCO SINGAPORE TOKYO TORONTO 2017 FPL Advisory Group. The Ferguson Partners recruitment practice consists of five affiliated entities serving FPL s clients around the world: Ferguson Partners Ltd. headquartered in Chicago with other locations in New York and San Francisco, Ferguson Partners Canada Co. in Toronto, Ferguson Partners Europe Ltd. headquartered in London with a Japan branch located in Tokyo, Ferguson Partners Hong Kong Ltd. in Hong Kong, and Ferguson Partners Singapore Pte. Ltd. in Singapore. Ferguson Partners Europe Ltd. is registered in England and Wales, No , Registered Office: 100 New Bridge Street, London, EC4V 6JA. Ferguson Partners Singapore Pte. Ltd. is registered in Singapore, Business Registration No. (UEN) H, Employment Agency License No. 12S6233. FPL Associates L.P., the entity which provides consulting services to FPL s clients, is headquartered in Chicago.

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