News Briefs

The NYU School of Professional Studies Jonathan M. Tisch Center of Hospitality and Boston Consulting Group (BCG), one of the world's leading management consulting firms, recently collaborated on a survey of hotel owners, management companies, and other industry stakeholders to gauge their sentiment and prospects for the hospitality industry.

The resulting white paper, titled “Hotel Borrowing Costs are Rising – But So Are Occupancy Rates,” projects positive outcomes based upon rising demand that will bolster key industry metrics, such as occupancy rates, average daily room rates (ADRs), and revenue per available room (RevPAR), while new construction is down to 2015 levels.

For the past three years, the Tisch Center of Hospitality and BCG have collaborated on critical research on the latest industry challenges and opportunities. Leading hospitality brands and organizations have come to rely on the insights from NYU SPS/BCG collaboration to help better inform their current and future business decisions.

“We expect this year’s report will arm industry stakeholders with valuable information to help move their businesses forward,” said Sean Hennessey, associate professor at the NYU SPS Tisch Center of Hospitality and contributor to this white paper. “While inflation increases operating costs, it can also help accelerate room rate growth. Further, interest rates rise in an inflationary environment, which affects the feasibility of new construction. On balance, the profitability outlook is attractive,” added Hennessey about the survey findings.

“Uncertainty, inflationary fears, and elevated interest rates will likely be with us for a while,” said Tom McCaleb, managing director and partner at BCG “All can have a chilling effect on hospitality investment. Despite these concerns, our latest work with the Tisch Center shows that strong room demand will keep the hospitality industry an attractive investment for the foreseeable future.”

Survey Highlights

While the NYU SPS/BCG analysis is far from gloom and doom for the hospitality industry, here are a few top-line results from the survey:

Guest Demand: A Major Source of Optimism

• More than 70% of survey respondents anticipate demand will at least somewhat increase by the end of 2023, and 42% expect significant increases in 2024.
• Hoteliers are looking for nominal revenue increases of 4.6% to 5.1% in 2023. Those expecting a significant increase in demand anticipate revenues to rise by about 12%.
• Real growth rates seem likely to exceed the rate of inflation. The revenue increases will be driven by both volume and price.
• Hoteliers expect room rates to rise by 8.3% to 8.8% over the next 18 months, expanding gross margins by about six percentage points.

 Interest Rates: The Biggest Threat for Investors

• Even though hotel industry participants expect the inflation rate to drop below 5% by the end of 2024, they are nonetheless wary.
• High-interest rates spook investors in hotels as in other commercial property sectors. In the current environment, 82% of hotel owners view the hotel industry as less attractive than other investment classes.
• The industry is approaching a trigger point. A summary of recent hotel financings shows spreads topping out at 400 basis points above the secured overnight financing rate (SOFR), which itself is approaching 5%. When borrowing costs exceed 8%.
• In this survey, 89% of hoteliers consider rates above 8% unacceptable for taking out a loan.

Persistent Labor Challenges Add to Investor Reticence

• Prolonged staffing shortages add to investor concerns; 70% of hotel owners view the hotel industry less attractive if labor problems persist.
• More than 60% of respondents reported that they are somewhat or severely short-staffed, which NYU SPS/BCG estimate costs hoteliers about seven percentage points of revenue and two points of operating margin.
• More than 75% of respondents experienced modest or better labor productivity gains in the last three years and are optimistic about improving employment going forward. More than 60% expect continued improvements in 2023, and 100% expect significant improvements in 2024.
• Two challenges still need to be solved in this area: the number of job openings and decreases in real earning potential for industry workers.

 

View the complete NYU SPS Tisch Center/Boston Consulting Group Survey.

For electric vehicle owners in British Columbia, Tim Hortons is now fueling road trips in more ways than one.  The company has announced the expansion of its electric vehicle charging station pilot launched earlier this year in Oakville, Ontario, by unveiling six new charging stations at restaurants throughout  British Columbia.

Tim Hortons announced the pilot in February in an effort to study the technology, its usage and opportunities.

"We have been thrilled with the results of the pilot so far.  Usage of the charging station in Oakville has surpassed our expectations and we received many calls with requests to expand the pilot," said Paulo Ferreira, Senior Director, International Strategic Restaurant Design and Building Standards, Tim Hortons. "With more than 3,300 eligible restaurants across the country, we continue to look for opportunities to expand the pilot and contribute to the EV infrastructure."

The BC expansion, supported by the Province of BC's Community Charging Infrastructure Fund and Koben Systems Inc. (KSI), placed charging stations strategically in Nanaimo, Langford, North Vancouver, Burnaby, Abbotsford and Coquitlam to create paths within the province, allowing guests to travel from restaurant to restaurant strictly on electric power.

Tim Hortons offers charging stations as a courtesy to guests at six locations.  As of March 31st, 2013, Tim Hortons had 4,288 system-wide restaurants, including 3,453 in Canada, 808 in the United States and 27 in the Gulf Cooperation Council. 

Panda Express announces the launch of Panda Rewards, its first points-based national rewards program.

It utilizes a personalized points-based system that rewards members with ten Panda Points  for every dollar spent on qualifying purchases. Once 200 Panda Points have been accumulated, guests can start redeeming their favorite Panda menu items. Each month, guests' first qualified purchase will unlock a surprise Good Fortune Gift ranging from bonus points to special discounts or even free food, along with a unique digital fortune cookie message to be collected. Panda Rewards members will also receive a birthday gift of their choice.

"Sharing good fortune is an important value at Panda, and we are delighted to launch our first rewards program nationwide as a heartfelt expression of gratitude towards our loyal guests for their continued support throughout the years," said Andrea Cherng, Chief Brand Officer at Panda Express. "We look forward to engaging our guests in a playful and meaningful journey of good fortune as they collect unique prizes offering exceptional value every time they dine at Panda."  

The more Panda Points members accrue, the better the rewards options. The rewards range from a free upgrade to a premium entrée, a free drink of choice to even a free Family Meal. Guests have a personalized experience to choose their preferred reward from multiple options. What's more, Panda Points do not expire unless there are no qualifying purchases in 12 months.

Panda Rewards members can earn and redeem Panda Points when ordering through the Panda Express mobile app or the PandaExpress.com website, in-store, or the drive-thru. Those ordering online that have logged in as a Panda Rewards member will automatically receive Panda Points for their purchase. For in-store and drive-thru orders, guests can easily access and present a QR code in the mobile app for a Panda associate to scan. Alternatively, guests can also enter a unique rewards code found on their receipt from an in-store order that can be entered in their account up to seven days from purchase in the app or online to earn Panda Points on that purchase.

Wendy's and Google Cloud announced an expanded partnership to pilot an artificial intelligence (AI) solution, Wendy's FreshAI. The technology has the potential to transform Wendy's drive-thru food ordering experience with Google Cloud's generative AI and large language models (LLMs) technology.

Demand for Drive-Thru

With 75 to 80 percent of Wendy's customers choosing the drive-thru as their preferred ordering channel, delivering a seamless ordering experience using AI automation can be difficult due to the complexities of menu options, special requests, and ambient noise. For example, because customers can fully customize their orders and food is prepared when ordered at Wendy's, this presents billions of possible order combinations available on the Wendy's menu, leaving room for miscommunication or incorrect orders. Google Cloud's generative AI capabilities can now bring a new automated ordering experience to the drive-thru that is intended to enhance the experience that customers, employees and franchisees expect from Wendy's. As HT reported last month, one Wendy's franchise, Wenspoke, is expanding its use of AI in the drive-thrus.

"Wendy's introduced the first modern pick-up window in the industry more than 50 years ago, and we're thrilled to continue our work with Google Cloud to bring a new wave of innovation to the drive-thru experience," said Todd Penegor, President and CEO of the Dublin, Ohio-based QSR. "Google Cloud's generative AI technology creates a huge opportunity for us to deliver a truly differentiated, faster and frictionless experience for our customers, and allows our employees to continue focusing on making great food and building relationships with fans that keep them coming back time and again."

Pilot Near HQ

In June, Wendy's plans to launch its first pilot of Google Cloud's AI technology in a Columbus, Ohio-area, Company-operated restaurant, using those learnings to inform future expansions to more Wendy's drive-thrus. The pilot will include new generative AI offerings, such as Vertex AI and more, to have conversations with customers, the ability to understand made-to-order requests and generate responses to frequently asked questions. 

This will all be powered by Google's foundational LLMs that have the data from Wendy's menu, established business rules and logic for conversation guardrails, and integration with restaurant hardware and the Point of Sale system. By leveraging generative AI, Wendy's seeks to take the complexity out of the ordering process so employees can focus on serving up fast, fresh-made, quality food and exceptional service.

Today's update builds upon Google Cloud's and Wendy's long standing partnership to enhance the Wendy's restaurant experience. Since 2021, Wendy's has leveraged Google Cloud's data analytics, AI, machine learning (ML), and hybrid cloud tools to make it faster, easier, and more convenient for customers to access the brand.

For the third year in a row, White Castle earned the Great Place to Work  Certification. The awarding of the certification is based solely on the thoughts and opinions of current White Castle team members.

The awarding of the certification is based solely on the thoughts and opinions of current White Castle team members.

White Castle is a 102-year-old family-owned business that carries on the traditions of its storied past. Founder Billy Ingram built White Castle on the premise that "Happy employees make happy customers." A commitment to team member centric policies has led to a track record virtually unheard of in the industry, including:

The Home to Happy Employees

• More than 1 in 4 of the company's 10,000 team members have worked at White Castle for 10 years or more.
• Nearly all 450 of White Castle's regional directors, district supervisors, general managers, and operations leadership team members started their careers behind the counter at White Castle.
• Each year White Castle inducts a new class to the 25 Year Club. The celebrated club has welcomed more than 2,200 team members.

"Our team members and their passion set us apart as a family owned business with a heart for hospitality", said John Kelley, chief people officer and fourth-generation family member.  "Their commitment inspires us as we continue on our quest to feed the souls of craver generations everywhere."

Great Place to Work^® is the global authority on workplace culture, employee experience, and the leadership behaviors proven to deliver market-leading revenue, employee retention and increased innovation. This year, with a higher participation rate compared to last year, 80% of White Castle team members said it's a great place to work – 23 points higher than the average U.S. company. The team member survey also invited comments. 

According to Great Place To Work research, job seekers are 4.5 times more likely to find a great boss at a Certified great workplace. Additionally, employees at Certified workplaces are 93% more likely to look forward to coming to work, and are twice as likely to be paid fairly, earn a fair share of the company's profits and have a fair chance at promotion.

Pressed Juicery announces the appointment of  restaurateur and entrepreneur, Justin Nedelman, as the company’s new CEO. Nedelman will lead the charge of the company’s evolution and drive its next phase of growth – focusing on product innovation, retail expansion and in-store customer experience.

Nedelman notably launched his career in real estate, and parlayed his unprecedented success into the world of hospitality with his prior roles as Chief Real Estate Officer of FAT Brands Inc., a global franchising company, and Co-Founder of Eureka! Restaurant Group, a chain restaurant group focused on local ingredient sourcing.

The company was founded in 2010 by three friends united by the shared belief that fundamental nutrition is the cornerstone of health and wellness.