Multiple Orange County-based restaurant chains reported record sales for 2021 despite another year of constant challenges, facing pandemic-related issues, supply and labor shortages, and rising costs. Several attribute the rise in revenues and same-store sales to a shifted focus to online ordering and app-based customer interaction.
Chipotle Mexican Grill Inc. (NYSE: CMG) in Newport Beach, for example, saw digital sales grow 25% year-over-year—half from order-ahead transactions—which represented 46% of total 2021 sales for the nearly $43 billion-valued firm.
Tustin’s Pieology Pizzeria, profiled by the Business Journal last month, has plans to further virtual investment after the pandemic pushed it to become more delivery focused through digital transactions, according to newly appointed CEO Shawn Thompson.
Tony Smith, chief executive of Irvine-based Restaurant365 LLC, witnessed firsthand the early challenges of restaurants moving businesses online in 2020, and their comeback in 2021.
“COVID accelerated the adoption of [digital] systems by four years,” Smith told the Business Journal, speaking of major recent changes in the industry.
Restaurant365 offers a restaurant-specific software platform for a variety of businesses to connect restaurant operators and managers on the same page. Its technology is used by clients that include multi-concept restaurant groups and independent restaurants based throughout the country.
Food sales are about 7% higher than they were in 2019 and 34% higher than 2021 for the average restaurant, according to the company’s data.
That said, profitability is not rebounding as anticipated due to inflation, the company says.
Restaurant TechnologyÂ
Smith said companies were already asking about online ordering and delivery services before the pandemic hit, but many restaurants had to turn swiftly toward new ways of generating revenue.
“Now it’s here to stay—restaurants want to do whatever they can to make more dollars out of the same square feet.”
Smith and co-founder John Moody started the business in 2011 with intentions to further the industry’s efficiency and profitability through technology and software. The team created a cloud-based, easily-accessible system that allows all parts of a restaurant business to operate smoothly together.
As the company grew, the team was able to build multiple systems and modules to benefit different groups of clients. “It’s a maturing system. We never limited ourselves to the [first] concept.”
R365 Capital
When the Paycheck Protection Program (PPP) was released in 2020, Smith saw Restaurant365’s small business clients struggling to sign up, understand, and receive the benefits.
The company created a program that allowed restaurateurs to access the necessary capital to operate upon the replenishing of the PPP. Restaurant365 partnered with Utah-based Lendio to offer these options through lending service R365Â Capital. Free to clients, restaurant operators used the service to gain access to lenders who will advocate and guide the businesses to find the best aid.
Smith noted that the R365 Capital webinars the company offered to its clients were “wildly successful” and had the largest attendance he had seen.
Inflation Concerns
However, with the recent halt of the Restaurant Revitalization Fund and no renewal in sight, many small businesses will face 2022 with problems reminiscent of March 2020, according to Smith, who last September was honored at the Business Journal’s annual Innovator of the Year Awards event.
“With no new relief funds available, operators will be forced to run lean in response to inflation’s impact on food, labor, and gas costs,” Smith said. “The bright side is restaurateurs have shown how resourceful and able to adapt they are and there are great tools out there to help them run more efficiently.
Restaurant Resurgence
Smith notes that many same-store sales in mid-2021 were reported to be even higher than pre-pandemic numbers.
Restaurant groups such as Irvine-based Wienerschnitzel and Newport Beach-based Juice It Up both reported the brands’ best annual sales in each company’s history in 2021, up 28% and 26%, respectively (see story, page 52).
“There remains a love for restaurants,” Smith said.
With consumers returning socially, restaurants are seeing even more business and higher than average spending. Smith calls it the restaurant resurgence, because “it’s not just recovering—it’s above normal.”
