ICR Conference 2023: Key Takeaways for the Hospitality Industry

The Hospitality Hangout podcast hit the road and landed in sunny Orlando, Florida, for the annual ICR Conference 2023! This event is a crucial gathering for restaurant and hospitality industry leaders, investors, and innovators. We had the chance to sit down with some of the brightest minds in the business and get their perspectives on the current state and future of the industry. This blog post serves as a deep dive into the key takeaways from those conversations, covering topics from investment strategies and expansion plans to technology adoption and strategic advisory. You can listen to the full conversations and hear more insights in our latest episode: On the Road at ICR | Season 8, Vol. 17.

Introduction: Hospitality Hangout at ICR Conference 2023

The ICR Conference is known for bringing together the most influential figures in the restaurant and hospitality world. It’s a melting pot of ideas, strategies, and predictions, making it the perfect place to get a pulse on the industry's direction. This year's conference was particularly insightful, with a strong focus on navigating the challenges of a dynamic market and leveraging opportunities for growth. We were fortunate to connect with Jim Balis from CapitalSpring, Scott Lawton from Bartaco, and Fred LeFranc from Results Thru Strategy, each offering unique perspectives and valuable insights. This blog post will break down those conversations, providing you with the key takeaways and actionable intelligence that can help your own business thrive.

CapitalSpring's Investment Strategy with Jim Balis

The Current Landscape of Restaurant Investment

Jim Balis, Managing Director at CapitalSpring, joined us to discuss the firm's investment strategy and their outlook on the restaurant industry. CapitalSpring is a private investment firm focused on the branded restaurant and retail sectors. Balis leads their Strategic Operations Group and brings a wealth of experience to the table. He highlighted that CapitalSpring recently closed a new fund and is actively seeking investment opportunities in the restaurant space. What sets CapitalSpring apart is their flexibility in investing in both debt and equity, providing tailored solutions for growing restaurant brands.

Debt vs. Equity: A Balanced Approach

Balis emphasized the importance of understanding the nuances of debt and equity investments. While equity investments can provide significant capital for expansion and innovation, they also come with a dilution of ownership. Debt financing, on the other hand, allows businesses to maintain control but requires a disciplined approach to repayment. CapitalSpring's ability to invest in both debt and equity allows them to structure deals that align with the specific needs and goals of each portfolio company. This flexibility is crucial in today's market, where restaurant brands are facing a variety of challenges, from rising costs to labor shortages.

Focus on Emerging and Established Brands

CapitalSpring's investment strategy targets both emerging and established restaurant brands. For emerging brands, they look for concepts with strong unit economics, a clear brand identity, and a scalable business model. For established brands, they focus on companies that are looking to revitalize their operations, expand their footprint, or navigate strategic transitions. In both cases, CapitalSpring provides not only capital but also operational expertise to help their portfolio companies achieve their growth objectives. Balis specifically mentioned their interest in brands that are embracing technology and innovation to improve efficiency and enhance the customer experience.

Navigating the Current Economic Climate

The conversation also touched on the current economic climate and its impact on the restaurant industry. Balis acknowledged the challenges posed by inflation, rising interest rates, and supply chain disruptions. However, he also expressed optimism about the long-term prospects for the industry, noting that consumers continue to prioritize dining out and experiences. He emphasized the importance of operators being nimble and adaptable, focusing on cost management, menu optimization, and customer loyalty programs. He also noted that strong brands with loyal customer bases are better positioned to weather economic downturns.

Bartaco's Expansion and Tech Focus with Scott Lawton

Bartaco's Growth Trajectory

Scott Lawton, CEO and Co-founder of Bartaco, shared his insights on the brand's expansion plans and technology initiatives. Bartaco is a popular upscale street food concept known for its vibrant atmosphere and innovative menu. Lawton revealed that Bartaco currently operates 24 company-owned restaurants and plans to open six more locations this year. These expansion plans include entering new markets like Chicago and Charleston, demonstrating the brand's confidence in its continued growth.

Post-COVID Expansion Strategy

Lawton explained that the upcoming openings are the culmination of deals made during the COVID-19 pandemic. This strategic approach allowed Bartaco to secure favorable real estate opportunities and position the brand for a strong recovery. He highlighted the importance of having a long-term vision and being proactive in seizing opportunities during challenging times. The expansion into new markets like Chicago and Charleston represents a significant milestone for Bartaco, further solidifying its position as a leading player in the upscale casual dining segment.

Leveraging Technology for Efficiency

The conversation shifted to the role of technology in the restaurant industry. Lawton emphasized the importance of leveraging technology to improve efficiency and drive profitability. He stated that the biggest tech trend for 2023 is finding "better ideas" and achieving "better efficiency" through technology. He stressed the need for operators to find ways to improve their bottom line without necessarily increasing top-line revenue. This could involve streamlining operations, optimizing inventory management, or enhancing the customer experience through digital channels.

The Human Touch in a Tech-Driven World

While embracing technology, Lawton also acknowledged the importance of maintaining the human touch in the restaurant experience. He emphasized that technology should be used to enhance, not replace, the personal interactions that are so critical to customer satisfaction. This could involve using technology to personalize the dining experience, provide faster service, or offer more convenient ordering options. The key is to find the right balance between technology and human interaction to create a seamless and enjoyable experience for guests.

Adapting to Changing Consumer Preferences

Lawton also discussed the importance of staying ahead of changing consumer preferences. He noted that customers are increasingly demanding convenience, personalization, and value. Bartaco is responding to these trends by investing in mobile ordering, online reservations, and loyalty programs. They are also experimenting with new menu items and dining formats to cater to a wider range of tastes and preferences. By continuously adapting to the evolving needs of their customers, Bartaco is positioning itself for long-term success.

Results Thru Strategy's Advisory Role with Fred LeFranc

The Need for Experienced Advisors

Fred LeFranc, CEO of Results Thru Strategy, provided insights on the importance of strategic advisory services in the restaurant industry. Results Thru Strategy is a consulting firm that helps emerging and established restaurant brands navigate the complexities of growth and revitalization. LeFranc explained that the firm was founded in 2007 with the goal of providing unbiased and experienced advice to restaurant operators. He emphasized that the industry needed an advisory firm that was not just filled with "unemployed execs trolling for a job," but rather a team of seasoned professionals with a proven track record of success.

A Team of Industry Experts

LeFranc highlighted the depth of experience within Results Thru Strategy, noting that the firm has over 15 entrepreneurial experts with a minimum of 30 years of experience in their respective areas of expertise. This diverse team of professionals brings a wealth of knowledge and insights to the table, allowing them to provide comprehensive solutions to a wide range of challenges. Their expertise spans areas such as operations, marketing, finance, technology, and real estate, ensuring that they can address all aspects of a restaurant business.

Serving Emerging and Legacy Brands

Results Thru Strategy works with both emerging and legacy restaurant brands. For emerging brands, they help develop a pathway to growth, focusing on areas such as concept development, menu engineering, and operational efficiency. For legacy brands, they help revitalize their operations and reconnect with their customers. This could involve refreshing the brand identity, updating the menu, or implementing new technology solutions. In both cases, Results Thru Strategy provides customized solutions that are tailored to the specific needs and goals of each client.

Bridging the Gap Between Tech Companies and Restaurants

LeFranc also discussed the firm's work with technology companies that are trying to sell to the restaurant space. He explained that Results Thru Strategy helps these companies understand the unique needs and challenges of the restaurant industry, ensuring that their products and services are a good fit for the market. This involves providing market research, product development guidance, and sales strategy support. By bridging the gap between technology companies and restaurant operators, Results Thru Strategy helps to drive innovation and improve efficiency throughout the industry.

The Value of Objective Advice

LeFranc emphasized the value of objective advice in the restaurant industry. He noted that many restaurant operators are too close to their business to see things clearly. An experienced advisor can provide an unbiased perspective and identify opportunities for improvement that might otherwise be missed. This can be particularly valuable during times of rapid change or economic uncertainty. By leveraging the expertise of Results Thru Strategy, restaurant operators can make more informed decisions and achieve their growth objectives.

Quickfire Round and Crystal Ball Insights

During our conversations at ICR, we also had a fun "quickfire round" with our guests, asking them about their favorite industry trends and predictions for the future. Jim Balis highlighted the continued growth of off-premise dining and the importance of investing in technology to support these channels. Scott Lawton predicted that we would see more consolidation in the restaurant industry as brands seek to gain scale and efficiency. Fred LeFranc emphasized the need for restaurants to focus on creating memorable experiences for their customers, noting that consumers are increasingly seeking out authentic and unique dining experiences.

When asked about their "crystal ball" predictions for the next year, our guests offered a mix of optimism and caution. Balis expressed confidence in the resilience of the restaurant industry, but also cautioned that operators need to be prepared for continued economic volatility. Lawton predicted that we would see more innovation in menu development and restaurant design as brands compete for customers' attention. LeFranc emphasized the importance of data analytics and personalized marketing, noting that restaurants need to leverage data to understand their customers better and deliver more targeted offers.

Conclusion: Key Takeaways for the Hospitality Industry

The ICR Conference 2023 provided a wealth of insights into the current state and future of the hospitality industry. Our conversations with Jim Balis, Scott Lawton, and Fred LeFranc highlighted the importance of strategic investment, technology adoption, and expert advisory services. Key takeaways include the need for operators to be nimble and adaptable, focusing on cost management, menu optimization, and customer loyalty programs. Technology should be leveraged to improve efficiency and enhance the customer experience, but not at the expense of the human touch. And finally, seeking out objective advice from experienced advisors can help restaurant operators navigate the complexities of growth and revitalization. You can hear the full interviews and get even more in-depth analysis on our latest podcast episode: On the Road at ICR | Season 8, Vol. 17. We hope these insights will help you make informed decisions and achieve your business goals in the ever-evolving world of hospitality.