10 challenges restaurant operators can expect in 2019 Wavebreakmedia/iStock/Getty Images Plus

10 challenges restaurant operators can expect in 2019

Rising wages, high turnover and tech disruption will shape the year ahead

Jim Sullivan is a popular keynote speaker at leadership, franchisee and GM conferences worldwide. This article does not necessarily reflect the opinions of the editors or management of Nation’s Restaurant News.

Want to know what will be keeping you up at night next year? Read on for the 10 top challenges restaurant operators will face in 2019.

1. Team member staffing and retention. It’s been said that the person making the most money in the foodservice industry today is the guy selling “Help Wanted” signs, and there’s some truth to that. The average hourly employee turnover rate in foodservice is now 155 percent. Annual turnover among managers is clocking in at 61 percent.

We don’t have a labor crisis; it’s a turnover crisis.

This issue dwarfs any and all challenges we face in the coming year. So you have 3 choices: 1) double-down on creative strategies for finding and retaining the most talented people 2) invest in technology solutions that replace people, such as kiosks, tablet menus, robot cooks and third-party delivery or 3) both. If you assign full resources and apply fierce resolve to the retention issue in each unit, you can win the battle.

“We don’t have to solve the labor problem industry-wide,” Doug Thompson, COO of Texas Roadhouse said. “We just need to be the absolute best restaurant to work in for each and every community we serve. We want it to be the best job they’ve ever had.”

2. A $15 minimum wage. Just one short year ago a nationwide $15 an hour wage was not considered inevitable. In 2019 it most certainly is.

Amazon essentially raised every company’s minimum wage last month when it announced an across-the-board $15 an hour minimum wage for all of its warehouse employees. The potential financial hit is significant: A $15 an hour wage in a restaurant employing 35 people currently being paid $8 an hour raises labor costs an estimated $70,000 to $90,000 annually per unit. Offsetting that increase through menu price increases would mean a 5 percent to 6 percent if you offset the higher labor cost through the menu. The guest will certainly expect to see a 5 percent to 6 percent increase in value in exchange, so your hospitality and sales training must be ratcheted upwards concurrently with any significant wage hike and menu price increase. Your choices are straight-forward: complain or train.

And before you declare this the “End of the Restaurant Business” you may want to first Google similar pronouncements from 1971 when Congress proposed raising the minimum wage from $1.70 to $2.30. Most operators and pundits at that time warned we’d never survive. Yet here we are.

3. Continued commodity deflation. Grocery store prices are projected to stay low in 2019, and supermarkets are dedicating serious square footage into a restaurant look and feel to better capture their shopper’s prepared meal/to-go dollars. So, where can you add more value for your restaurant diners? Cleanliness, friendliness and recognition.

4. Oversupply of restaurants. Supply and demand coupled with rising real estate prices is correcting the spate of overbuilding we witnessed over the last two decades.

5. Undersupply of talent. The solution is to focus on retaining and developing the exceptional team members you already have, while treating them with dignity, care, respect, recognition and equity. Never treat a customer better than you do a crew member. There are three categories of employees: necessity, career and a calling. I contend that 90 percent of foodservice employees start in the first category and were mentored by caring managers to evolve into the second and third. The best leaders build their own replacements. 

6. Data onslaught and task saturation among managers. I’ve said it here before and I’ll say it again: We are drowning in information and starving for knowledge. Our regional managers and unit managers are being crushed with reportage and numbers and big data and the time they spend reviewing and responding could be spent on better training, developing and serving crew and customers. Filter the firehose; everything can’t be critical. Your 2019 strategy revolves around two words: reduce complexity.

7. Passive loyalty (among both guests and team members). “Before you spend one dime on marketing, fix the experience first,” Amazon CEO Jeff Bezos has said. To ensure that customers and crew come back, create an experience worth coming back for.  It starts with recognition and gratitude. Crew and customer recognition is like brushing your teeth; you don’t have to pay attention to all of them, just the ones you want to keep.

8. Increasing government regulation. Support fraternal associations that lobby against harmful industry legislation and don’t ever do anything that causes the government to become a partner in your business. It’s never pretty.

9. Third-party delivery. Due to space limitations, I would encourage you to revisit my earlier assessment of the pros and cons of third-party delivery services, which include DoorDash, Uber Eats and Postmates. The preponderance of said companies is having a huge impact on the industry. In fact, it’s reconfiguring the very design and meaning of restaurants. For instance: Do we really need tables? Should a burger restaurant offer pizza too?  Can a restaurant still be a restaurant if it offers food but has no customers other than the third-party delivery company?  The short answers are: maybe not, yes and yes.

10. Technology. Customers love technology because it gives them power, saves them time and adds convenience to their hectic lives. But it also comes with a learning curve and restaurant operators have not traditionally been early adopters. Stay ahead of the tech curve and invest in modern tools for both your crew and your customers. 

Jim Sullivan is a keynote speaker, author and consultant whose customers include Panera Bread, Chipotle, Starbucks, McDonald’s, The Cheesecake Factory and The Walt Disney Company. He has over 400,000 social media followers. Connect on LinkedIn, YouTube, Twitter and Sullivision.com.

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