Restaurants are typically low-margin operations that must carefully strategize to make ends meet and generate profits while satisfying customers. Kitchen equipment can set restaurants back $100,000 to $300,000, according to some estimates, and other reports found that 67 percent of U.S.-based restaurants' expenses are tied up in payroll and purchasing, leading to a 6.2 percent average profit margin. These strains may be the reason that 80 percent of restaurants close within their first five years. Restaurant operators aiming to expand in high-rent cities like San Francisco thus need to find cost-effective ways to reach more customers while building and managing venues quickly, effectively and without sacrificing quality.
A technological approach to reducing restaurants' footprints can help owners tackle these issues by cutting expansion costs and simplifying operations management, according to Anjou Ahlborn Kay, co-founder of Japanese, Indian and Vietnamese-focused fast-casual chain Bamboo Asia, and Sebastiaan van de Rijt, the brand's CEO and co-founder. Commissary kitchens — commercial kitchens where restaurants can prepare and store food — can help fast-casual chains expand as they remove the need to construct and staff food preparation spaces at every new location, the pair added.
Cloud-based inventory management systems also provide relief when properly implemented, enabling restaurants to scale up while ensuring sufficient stock and product consistency across locations. Developing these strategies is not always easy, however.
Turning to Commissary Kitchens for Scaling and Consistency
Bamboo Asia ran into struggles when it first launched, trying out several approaches before keeping its meals consistent across locations, van de Rijt said. The company initially relied on a catering company for its Indian food selections, but this did not provide enough control over adjustments if items were not properly prepared. This prompted Bamboo Asia to make all of its own food, but grilling ingredients at all of its locations would have required expensive building upgrades without ensuring precise quality control.
Bamboo Asia ultimately chose to cook all of its meals sous vide — a method in which food is sealed in a container and submerged in a gradually heated water bath — at a single commercial kitchen, then deliver the items to its customer-facing storefronts. Staff members at each location then use specialized machines to heat the orders before handing them over to customers, van de Rijt said.
“[When we were grilling,] there was a lack of consistency in how everything was cooked at the commissary, and [the food quality was] that much more sensitive, because [everything] was cooked off-site and then brought to the restaurant,” he explained. “[But now] we sous vide cook everything at our [commissary] kitchen, giving us the perfect consistency every single time and without cooking out all the juices and nutrients in the food before it arrives at the restaurant. Thanks to that sous vide cooking technique, we’ve been able to drastically scale this process and deliver the same quality foods to every single one of our restaurants.”
The benefits of such an approach for fast-casual restaurants is two-fold. Sous vide is often considered a more precise cooking method because ingredients only reach the temperature of the water bath in which they are placed, removing the risk of overcooking on a grill or in the oven. There are also cost benefits, as handling intensive meal preparation at a central kitchen makes it easier for restaurants to scale. Each customer-facing location only needs to be able to quickly heat the meals, reducing floor space requirements and the demand for expensive equipment.
“We don’t have to build kitchen ventilation, grease receptors [or] underground plumbing,” Kay said. “In addition, the way we’re [primarily] cooking the food off-site makes us very attractive to landlords.”
Bamboo Asia’s commercial kitchen is a 10,000-square-foot operation that can support catering orders along with those from its 12 customer-facing San Francisco locations, Kay said. Each of the latter reportedly occupies just 250 square feet and can serve 1,000 people per day.
Small square footage and a lack of on-site cooking staff create savings that are critical for building out new restaurants in high-priced cities. Bamboo Asia locations have a slim footprint and don't have specialized construction needs, reducing per-store setup costs to $250,000 to $300,000, compared to what Kay said can be $850,000 for other fast-casual companies.
“We didn’t have to fight for the same 10 restaurant locations with all the other restaurants,” she added. “We’ve been able to go into spaces that were old UPS stores, retail [spaces or] banks in prime, high-foot traffic business districts because we have [lower] labor and infrastructure [costs] at each location.”
The staff is also able to serve customers faster because reheating is a rapid preparation process, van de Rijt explained.
“Staff at the restaurant level can prepare any bowl, salad or wrap within about 45 seconds,” he said. “Everything is prepared in a way that it can be assembled very quickly when the customer places an order. ... A line that’s 20 people deep will [often] take no more than five minutes for a customer to get through.”
Commissary kitchens and sous-vide cooking enable the speed that is key to helping Bamboo Asia increase its efficiency and improve its profit margins. These tools do not resolve all of the hurdles to cost-effective expansion, but specialized software can help.
Inventory Software for Management and Information
Maintaining smooth operations across a central kitchen and various store locations can be complicated, and the challenges are compounded when serving several types of cuisines that use sizable combinations of ingredients.
Ensuring that all elements work together requires careful attention to inventory levels and needs, van de Rijt said. This spurred Bamboo Asia to develop in-house tracking and management software.
“We have over 250 ingredients that we need to monitor on a daily basis,” he said. “All the inventory solutions out there worked great if you were a pizza shop and bought a jar of tomato sauce and some shredded cheese and combined them into something that could sell. But when you make everything from scratch and there are different sub-recipes and different layers of different recipes that go into the final product, there was nothing out there that could manage that.”
Bamboo Asia’s inventory management and analytics solution tracks its ingredients in real time, from delivery at the commercial kitchen to when they are served at restaurants or handed off to third-party catering partners. The technology also leverages sales information to anticipate ingredient usage and automatically places orders when stock is low.
A high level of inventory tracking also allows the restaurant to tell consumers where their ingredients are sourced, Kay said, and its system labels items with related information. These details can include the country of origin and whether items came from organic farms.
Serving diners is a complicated task for ambitious restaurants, especially those that have to manage complex recipes and high rent prices. Keeping up with consumers’ demands for fast meals at convenient locations is no small task for restaurants looking to turn a profit, though. Inventory management software supports and strategic buildout plans that focus on commissary kitchens may be what fast-casual companies need to keep customers satisfied, and to cost-effectively put their operations on the fast track to expansion.