I NSP I RAT ION FOR TRANSFORMI NG THE BUS I NESS OF FOOD
Adapting Post-Covid: What’s Changing For Restaurants?
The State of Sustainability DURING COVID-19 IN THE FOOD INDUSTRY
COST SEGREGATION BENEFITS FOR RESTAURANT OWNERS BY HENRY + HORNE
THE MAGAZ I NE OF THE AR I ZONA RESTAURANT ASSOC I AT ION
Innovation in the Face of Adversity One of the major things 2020 has shown us is how innovative and resilient the restaurant industry is and will continue to be. Dig into some of the innovation that we are seeing and how restaurants are adapting in this ever changing climate.
features I 7
THE STATE OF SUSTAINABILITY DURING COVID- 19 IN THE FOOD INDUSTRY
3 4 COST SEGREGATION BENEFITS FOR RESTAURANT OWNERS BY HENRY + HORNE
5 2 ADAPTING POST-COVID: WHAT ’ S CHANGING FOR RESTAURANTS?
Explore this global hub of industry news and commentary on food, drink, design and more. THE STATE OF SUSTAINABILITY DURING COVID-19 IN THE FOOD INDUSTRY I 7 INFLUENCER MARKETING BEST PRACTICES DURING COVID-19 2 4
Get to know Arizona’s food scene through stories, interviews and conversations with industry insiders. PRESIDENT’S MESSAGE 0 8
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RESILIENCE, INNOVATION WILL HELP THE RESTAURANT INDUSTRY REBUILD 4 2 ADAPTING POST-COVID: WHAT’S CHANGING FOR RESTAURANTS? 5 2 COST SEGREGATION BENEFITS FOR RESTAURANT OWNERS BY HENRY + HORNE 3 4
LOOKING AHEAD: ARA’S 2020 EVENT CALENDAR I 5
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5TH A NNU A L CHIP IN FOR EDUC A TION GOLF CL A SSIC THE AR IZONA RESTAURANT ASSOCIAT ION & THE I R EDUCAT ION FOUNDAT ION PRESENT THE
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owners took all the necessary steps to ensure they could welcome their guests back in a safe and healthy way.
nnovation in the Face of Adversity
...I cannot help but feel an overwhelming sense of pride for these business owners that continue to rise above... ffff
The evolution of the restaurant industry took place almost immediately — and it’s pretty impressive when we look back at all the changes and innovation that has taken place in just a matter of months. As an organization, we have also had to get creative when it comes to how we support the industry, and how we
If 2020 had a title, I think this would be it. In particular, I feel this applies when it comes to the food and beverage industry. The entire industry literally swiveled on its heels overnight to combat the challenges presented when COVID-19 basically shut it down in mid-March. As a longtime advocate for
could redirect our efforts to best help those in need. Innovation was, and continues to be instrumental, in how we do that going forward. Every day and with every new challenge, we are all given an opportunity to reimagine how we can survive — and even thrive — in these times. I am proud to be a part of the movement that supports our restaurant industry in good times and in tough times. And I love seeing the innovation that the industry has created amid COVID-19. As forecasts are positive that the virus spread is decreasing and the glimmer of hope that life can return to “normal” looms in the distance, I look forward to seeing how innovation continues to redevelop our industry for the better.
this industry, I cannot help but feel an overwhelming sense of pride for these business owners that continue to rise above the challenges that still exist each and every day during these pandemic times. It’s also been exciting to watch the industry reshape itself to provide diners with the sustenance they need. It’s important to remember that while many people have taken to cooking more at home, many people are still highly reliant on the restaurant industry for their daily meals. The expansion of third-party delivery has made it more convenient for people to dine at home, more restaurants are working to make online ordering, direct delivery, curbside pick-up and “drive through” windows more permanent options, and even fine dining establishments have found ways to offer their elevated and artfully presented
cuisine in a “take-away” fashion. And when the idea of reopening dining rooms began to take shape, restaurant 8
Steve Chucri President & CEO, Arizona Restaurant Association
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help the restaurant industry that has been so financially devastated by this pandemic.
Feature promotion and support of the hospitality industry. And now in perhaps its greatest time of need, we recognize that we must also be mindful of ensuring public safety above all. As a result, we have postponed the Foodist Awards until 2021 and look forward to gathering to celebrate the industry in what we hope is a post-COVID Arizona. We’ve also rescheduled our annual golf classic for November 9, with the hope that Arizona can maintain decreasing COVID-19 numbers. For more information on that event, click here . In the meantime, we look forward to reuniting with you-the talented individuals that make the hospitality industry in Arizona so vibrant- at a time when it’s safe to do so. We will continue to look ahead to brighter days while continuing to best serve our industry in these ever-challenging times. Hang on, stay the course and more importantly, stay safe. 2020 is almost behind us. Sincerely, When restaurants began to re-open their doors for dine-in guests, the ARA changed the way we promoted our beloved Arizona Restaurant Week to now include safety measures for dining in and to encourage take-out options for those not yet ready to do so. These decisions haven’t been easy nor have they been made in haste. If Covid-19 has taught us anything at all, it is that we must be willing to pivot and change. Our organization has always been committed to the
I think we can all agree,
I think we can all agree that 2021 and the hope it brings cannot come soon enough. 2020 has been a rough year for many and outright devasting for others. If asked for only one word to describe 2020, it would be loss. Loss of lives and livelihoods and, at times, of hope and optimism. Though we cannot know now whether 2021 will hold better days for us, looking ahead does provide the hope and optimism that we need to keep us motivated to put one foot in front of the other most days. When the COVID-19 pandemic hit our industry hard in March, the ARA had to rethink how to move forward with its own most popular events seemingly in jeopardy of cancellation. Indeed, we quickly made the decision to postpone our popular Spring Arizona Restaurant Week. Instead and practically overnight, we created Arizona TakeOut Weeks, encouraging diners to continue patronizing their favorite locally owned businesses, just in a different way. Arizona Take Out Weeks was born out of the ARA’s strong desire to As an organization, the Arizona Restaurant Association has made many of its decisions with hope for brighter (and safer) days ahead.
Alicia Casale Chairwoman, Arizona Restaurant Association
WE'LL SEE YOU IN 2021!
EVEN THOUGH WE CAN'T PHYSICALLY GATHER TO CELEBRATE THE BEST OF THE BEST IN 2020, WE SEE & APPRECIATE ALL THE HARD WORK YOU ARE DOING TO PROMOTE AND STRENGTHEN OUR INDUSTRY!
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Looking Ahead: 2020 Event Calendar
OCTOBER October 24 I Live & Local at Home Foodist Awards I We will see you in 2021
NOVEMBER November 9 I Chip-In For Education Golf Classic Arizona Biltmore Golf Club
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The state of Sustainability During covid-19 in the food industry
by Audrey Altmann
Foodservice industry prioritizes waste reduction, robust supply chains
As more consumers have shown concern for the environmental footprint of their food in recent years, businesses have taken notice. In a survey of senior executives at consumer packaged goods companies, a majority of respondents reported that corporate sustainability efforts improved revenue and customer loyalty. The National Restaurant Association’s 2018 sustainability report noted environmental sustainability as one of the top menu trends for the year. This trend is expected to be long-lasting, and consumers are still focused on sustainability even during the coronavirus pandemic. CPG products that touted their sustainable aspects experienced a 56% boost in sales in the second week of March — when consumer stockpiling of essential items was especially high, according to data from market research firm IRI and the University of New York Stern Center for Sustainable Business. This suggests the pandemic has not affected shoppers’ desire for sustainably produced food.
International restaurant chain Nando’s is one of many foodservice businesses committed to delivering quality food that is also made sustainably. These commitments include sourcing chicken from local poultry providers for its US locations. Because of these sustainable supply chain models, Nando’s was able to continue to meet consumer demand when the pandemic reached the US while still maintaining the company’s sustainable operations, according to Nando’s USA spokesperson Sepanta Bagherpour. Nando’s signature PERi-PERi chicken also requires the African Bird’s Eye chillies grown in Mozambique, Malawi and Zimbabwe. “Besides giving farmers access to the latest farming techniques, quality seedlings and finance, we also give them a fixed outlet for their crop, commit to a predictable demand, and provide a premium for every kilogram of chillies harvested,” said Bagherpour. “It’s the ultimate sustainability model.” The coronavirus pandemic has also created challenges for the food industry in terms of consumer waste. Many foodservice operators had large amounts of food that would go to waste during state-mandated lockdowns and decreased customer traffic — Nando’s quickly pivoted to ensure their excess food
is upcycled, compostable or recyclable. While operating during coronavirus-related shutdowns has been difficult, Oberon has found ways to navigate the obstacles. “COVID-19 undeniably impacted our ability to operate,” said Halley Chambers, deputy director of The Oberon Group. “However, with such a clear central mission, making decisions about how and what to serve is actually easier, because it needs to align with our long-term goals.” When takeout and delivery orders exploded at the beginning of the pandemic, Oberon’s natural wine bar Rhodora and catering company Purslane already had models in place that ensured zero-waste production, such as serving to-go beverages in
didn’t go to waste. Since March 26, the business has donated and distributed over 100,000 meals to health care workers, Nando’s employees and other out-of-work restaurant industry workers for free, Bagherpour noted. “Our customers care about the source of their food, and that doesn’t change during a pandemic…Customers care about quality and sustainability, but their top priority now, understandably, is our health and safety protocols — and that’s our top concern, too.” added Bagherpour. New York’s The Oberon Group comprises food, beverage and hospitality businesses that operate as carbon-neutral or carbon-negative establishments. The group’s supply chain management focuses on carbon drawdown measures and regenerative agriculture, and the packaging at all businesses 20
Increased CPG demand highlights need for systemic change
The demand for essential items at retail this spring caused CPG supply chain strains across companies. But, those pandemic- related challenges largely didn’t disrupt manufacturers’ sustainability efforts -- in fact, the pandemic has actually brought to light the urgency of sustainability issues in the industry. “COVID-19 and the increasing threat of climate change is further bringing to light the importance of building resilience and sustainable practices into the global food supply,” said Roberta Barbieri, vice president of sustainability at PepsiCo. Even during the new normal as a result of the pandemic, PepsiCo is still developing and testing new container technologies, such as compostable snack packaging, enzymatic recycling technology and the recently revealed paper-based bottle, according to Barbieri. Sustainable agriculture practices are just as important with increased demand during the pandemic; Barbieri also shared that PepsiCo is deploying technology to collect and analyze crop data. “While our global food system was under pressure before COVID-19, those pressures are even greater now,” said Barbieri. “Systemic problems require systemic solutions, and the pandemic has brought into even sharper focus the need for collective action and bold steps to address long-term sustainability challenges.”
reusable containers that consumers can keep and only using recyclable, compostable or reusable materials for food takeout. The group is also providing local compost services, which isn’t currently available to New York City residents, said Chambers. Even during the pandemic, The Oberon Group has launched sustainability programming via the Rhodora and Purslane social media accounts — bringing information and conversation to people outside of the industry. “This has allowed us to connect with a breadth of people, industries, and leaders, and to really show the connections between, and strength of, a truly sustainable economy in which businesses are focused on sustainability goals, alongside traditional profit motives,” said Chambers. 22
brush title tbd influencer mark ting
Influencer Marketing BEST PRACTICES DURING COVID-19
While influencer marketing has historically always had its challenges, COVID-19 has raised even more issues for the industry. However, when done properly, campaigns can perform well as we’re seeing record efficiencies for those campaigns we’ve modified and continued to run. As a result of these programs, we’ve compiled five influencer marketing best practices we recommend you follow if you choose to move forward with your campaigns during this crisis. Feel free to watch the video below or read this entire post for more detail on these best practices.
Influencer ambassador strategies have continually proven to be effective at driving ROI for brands, so now is the time to take advantage of those relationships. Because these ambassadors have continually supported your brand and products over a long period of time, it won’t feel forced or inauthentic for them to continue to talk about your products now. Authenticity is key during this sensitive time, so having an ambassador approach the content and messaging in a new way that you wouldn’t traditionally approve of because it’s more relatable right now is definitely the course to take. No ambassadors? No worries! If you’ve at least run one influencer campaign before, revisit that list of influencers for opportunities. Even better, if you have the ability to evaluate the performance of your influencers and can identify those who have helped you drive better results, prioritize those partnerships. We use our iStack ranking system to analyze the content quality, engagement rate, share rate, and influencer efficiency of each influencer in every program we run. This opens the door for ambassador relationships that we cultivate for our clients.
Check Your Messaging While this should be a priority with every campaign, it’s especially important right now (and during any crisis) to ensure your messaging is sensitive to the current situation. No one wants to see a sales pitch, and no one wants to see a brand trying to capitalize off a bad situation. Either of those could stir up some real trouble for your brand. Also, make sure you’re messaging relates to your target audience’s current situation. A recent survey conducted by our sister company, Ignite Social Media , revealed that there’s certain types of content that consumers want to see from brands right now -- but what they want varies depending on their social distancing status. For example, those who have
been formally quarantined are most likely to seek brand updates and want to be entertained. Meanwhile, medical and civil service workers are most eager for updates on hours and product availability. Capitalize on Content Right now, running a full-fledged influencer marketing program may not be a priority, so don’t force it! There are other ways to take advantage of influencer relationships, like leveraging their content creation capabilities. A recent survey from last month unveiled a 33% increase in brands looking to hire influencers to create their photo and video assets. This makes sense, as most influencers have everything they need to continue their business from the comfort of their homes. Don’t waste resources and money when you don’t need to, especially during an economic crisis. Additionally, you may not need to seek out new content assets from influencers at all. Take some time to look back at old campaign content and see if there are any assets you can repurpose . Like we recommended with influencers, try to evaluate the worth of each asset by comparing performance against other pieces and using those top-performing assets . While this may take a little time upfront, it’s going to be very cost effective in the long run.
Amplify with Paid Media While paid media might not always be a part of your influencer marketing strategy, now is the time to invest. We’re seeing record efficiencies in terms of decreased CPMs, CPCs, and CPLPVs (cost per landing page view) for campaigns we’re running right now, but we predict that this won’t last forever. As we start to roll “back to normal”, media costs are likely to return and possibly inflate as marketers resume paid advertising. Monitor Constantly As you should during any crisis, be sure to have a human-being monitor your content on a regular basis (at least daily). Using a tool to flag content is an okay alternative, but sometimes computers miss or misinterpret things, which you wouldn’t want to happen right now. By having someone there to see how audiences are receiving the content, it will allow your brand to optimize and/or pivot your strategy as needed to ensure optimal results (especially if you do decide to run ads with your influencer content).
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Cost Segregation Benefits for restaurant owners
by Kelly P. Lynch, CPA
During these uncertain times, you’re probably searching for ways to keep your restaurant operating and cash flowing. Relief may have come from the Paycheck Protection Program, and you may have focused on delivery and pick-up options to mitigate the recent health mandates. There is hope that sooner than later your restaurant can return to operating at full capacity. In the meantime, you should consider other options to generate cash flow. In particular, a cost segregation study could bring benefits in the form of increased tax deductions, especially if you have bought a building for your restaurant or if you have significantly built out a space or remodeled one of your locations. A cost segregation study captures all costs associated with a building or building improvement and breaks them out into their appropriate personal or real property classification. As a result, you can expense the personal property over a shorter period of time (5, 7, or 15 years) and benefit from the deductions up front rather than allowing the total construction cost to be written off over the life of a building, which is 39 years. The tax savings generated by depreciating more assets as personal property usually makes up the extra cost incurred in conducting the study. In addition, over the next several years, the benefits are even greater with bonus depreciation (write off 100% of cost up front). 36
The goal for the cost segregation study is to identify costs related to real property that can be reallocated to short-life personal property. An example of this could be identifying electrical or plumbing costs that may be related to kitchen equipment, which is generally depreciated over five years. Another example would be identifying other kitchen equipment hook-ups such as gas or water lines. Finally, another example would be identifying the decorative millwork and lighting. Decorative millwork and lighting enhances the theme or restaurant concept, but it is not related to the operation of the building itself. Ultimately, the reallocation of costs provides greater cash flow to your restaurant by reducing the overall tax burden and possibly creating a loss that can be used to offset income in a previous year or carried forward.
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Resilience, Innovation WILL HELP THE RESTAURANT INDUSTRY Rebuild
by Tricia Contretas
Restaurants are facing unprecedented challenges amid the coronavirus pandemic, but new technologies and the resilient spirit that’s always been at the industry’s core will help it bounce back, The National Restaurant Association’s Tom Bené said during a virtual conference session last week. Speaking at Menus of Change, an annual leadership summit hosted by The Culinary Institute of America and Harvard T.H. Chan School of Public Health, Bené outlined the efforts the
association is making to support its members during this trying time, and discussed what the future may hold for the foodservice industry. Bené, who only just assumed the role of president and CEO of The National Restaurant Association in June, said the pandemic’s impact on the industry by year’s end could be as much as $240 billion. An estimated 8 million foodservice industry employees have been laid off or furloughed since the beginning of the pandemic, and The National Restaurant Association responded quickly with its Restaurant Employee Relief Fund. Bené said the program raised more than $25 million, which has been distributed in more than 43,000 grants for restaurant workers. Grant programs like RERF have been overwhelmed with applications for months, and the industry is urging lawmakers to provide support on a much larger scale. The association’s Restaurant Industry Blueprint for Recovery includes a call to enact the Restaurant and Foodservice Industry Recovery Fund, which would allocate $240 billion to helping restaurants that have experienced a reduction in sales revenue of 25% or more. The blueprint, which the association sent to House and Senate leaders in a letter in April, also calls for additional grant programs and improvements to the existing Paycheck Protection Program.
Innovation shapes a bright future for the foodservice industry
This emphasis on off-premises dining will likely continue post- pandemic, and may lead to permanent changes for existing restaurant brands as well as the creation of new ones. “We’re seeing brands have opportunities to get to market faster because of things like ghost kitchens. We’re going to find that we all have access to more variety over time because of delivery and takeout,” Bené said. “I think the formats and the models may change, but I have no doubt this industry will come back very strong and will continue to be an important part of the economy and the way we live our lives going forward.”
“We’ve got a lot of challenges ahead of us but I continue to be optimistic about the future,” Bené said. “What we’ve got to work through right now is some of the challenges that exist with the closings and reopenings that have been occurring.” Steep sales declines and uncertainty about how long the pandemic will last have created a tumultuous environment for restaurants across the board, but some eateries are better equipped than others to deal with the unique challenges posed by the pandemic. “I’d say the biggest differentiator we see in the industry right now is...format type,” said Bené, who noted that restaurants that already had a robust takeout, delivery or drive-thru business are faring better than those that are scrambling to figure out off-premises sales for the first time.
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ADAPTING POST-COVID: What’s Changing for Restaurants?
by Joel Montaniel
COVID-19 has left no industry untouched, but none more devastated than the hospitality industry. With the restaurant industry expected to lose up to $240 billion by the end of 2020 , the economic effects of the pandemic will be felt for many months — and even years — to come. But there is a light at the end of the tunnel, with many states and countries heading for reopening as new cases decrease in the U.S. and abroad Here’s what will change in restaurants as they rise up to meet the new challenges of a post-COVID world. Shifting Delivery and Dine-In Experiences In a recent Coronavirus-related study , 89 percent of respondents said they felt safer eating food from a grocery store or at home, versus in a restaurant. The report went on to state, “Foodservice operators that can offer a responsible and safe solution should do so recognizing their true competition during these times isn’t other restaurants, but rather the consumer’s own home.” As consumers begin to eat out again when restaurants reopen, the question will be less about the food, and more so about what steps the restaurant has taken to ensure the health and safety of guests. So what can restaurants do to adapt their offerings to this changed consumer?
spaces between tables, eliminated host stand waiting areas, reductions of bar seats and even entirely new layouts for restaurants that highlight contactless offerings. We will also see a rise in use of virtual waitlist and reservation platforms across restaurants. Many restaurateurs who have previously been hesitant to incorporate these technologies into their front of house experience will revisit the use of these systems, leveraging their tool set to help them manage reduced capacities, minimize crowding and waits around their host stands and bars, and improve turn times to maximize revenue on each table. Regardless of how operators update their dining rooms, a focus on the health and safety of the guest is paramount in adapting a restaurant for reopening. Going Contactless As restaurants reopen and consumers return to dining out, guests will be worried about every public surface and interaction within a restaurant , with 38 percent of people saying that they were worried about touching things others have touched, and 28 percent saying it was being near other people that made them nervous. This is where contactless experiences will become an important tool for managing and exceeding guest expectations.
Since the start of the crisis, restaurants affected by mandatory closures have pivoted to delivery and takeout to sustain their businesses, with nearly half of Americans willing to leave home to purchase restaurant meals as long as there is a low or zero- contact way to pick up the orders. Today, that means restaurants have transformed their dining rooms into safe, no-touch pickup zones, with some even offering drive thru or curbside pickup for the first time. Once they open their doors, restaurants will need to continue to offer direct, contactless and safe delivery and takeout options for guests who are either unwilling or unable to eat on-site. However, restaurants will also need to address the same health and safety concerns for guests in their dining room as they have for delivery and pick-up. With social distancing guidelines in place and capacity and party size restrictions like we’ve seen outlined in other states , we can expect to see increased
Revisiting Tech Stacks to Connect Data
Imagine this: one of your regulars walks into the restaurant. After placing themselves on a virtual waitlist at their apartment, they drive over knowing the host will seat them upon arrival. As soon as they sit down, they read a card on the table that states, ‘Scan this image for access to our digital menu.’ Once they scan the QR code on their mobile phone, they are able to view the full menu, place an order where they add a dairy allergy note for the chef, and pay for the meal at the click of a button, all without interacting with a server or touching a physical menu. As soon as they’re done with their food and drink, they stand up and walk out. From there, your restaurant can seat new people off your waitlist, adding an extra turn (and more revenue) while your restaurant is operating at 50-percent capacity. This guest’s experience was fully contactless from beginning to end — giving them few opportunities to fear that they’ll come in contact with a virus or bug while at your property. Next weekend, this same guest wants to have a lazy Friday night in and decides to order delivery from your restaurant. Since you already have data on their allergy preferences, the menu they view on their phone has no menu items with dairy. This highly personalized experience can happen inside and outside the dining room — all powered by guest data. With contactless ordering, payments, delivery and more, operators can highly personalize the guest experience whether in-service or online.
With 71 percent of operators saying they had profit margins under 10 percent in 2019 alone, a focus on dollars and cents will be more crucial than ever post- pandemic. Those that come out the other end of this health crisis will be managing their restaurants with less staff, higher overhead costs, and a laser focus on the health and safety of their guests and staff. This is why it’s more important than ever to revisit the tech stack to ensure each system makes sense for the business. Where third-party delivery and reservation platforms were once industry standard,
we expect to see a ‘direct is best’ revolution. For the first time, we’ll see operators focus on systems that provide them direct access to their guests and their data, a monthly subscription model with no hidden fees or upcharges, and tools that help them capture and leverage data to build exceptional experiences, whether a guest is in the dining room or ordering to their couch. The solutions that will win will be end-to- end platforms that provide greater insights and opportunities to maximize that data across every part of the guest journey. Connected data will be more crucial to a restaurant’s operations than ever before, offering insights into each interaction the guest has across both dine-in and take-out. Restaurant operators who think strategically now about how they can update and improve their offerings for consumers, and implement those solutions thoughtfully, will reap the benefits in a post-COVID world.
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762,229 MEALS DONATED since March 8 th , 2020 Sysco Arizona Sysco Arizona continues to leverage the opportunities to serve our communities by donating meals through our Nourishing Neighbors program. Providing meals to those in need during Covid-19 and beyond will continue to be a priority at Sysco Arizona. Since March 8 th, 2020 Sysco Arizona has donated 762,229 meals locally. Sysco Arizona was recently recognized as St. Mary’s food distributor of the year for their contribution in donating 206,392 meals. Sysco was presented a trophy by President & CEO Tom Kertis and Chief Development & Communications Officer Lisa Notaro.