“A business without long-term thinking is a business that’s unable to invest in the future. And a business that isn’t investing in tomorrow’s opportunities and technologies is a company already in the process of dying." —Simon Sinek, author
I didn’t invent the hypothetical situation, but let’s just suppose for a second that I did.
What if the restaurant business as we know it is radically misaligned to the desires of 21st century customers and crew? Would this explain the recent industrywide drop-off in customer counts across segments? Or why we’re unable to optimize our labor model so that the best people are fighting to get into our industry instead of out of it? Or if a foodservice industry based on the principle of getting the most work out of people while paying them as little as possible is still a sustainable business model?
As the page is about to turn from 2016 to 2017, it’s time to address the unthinkable: that the restaurant business is broken, and we’re running out of time to fix it. You either change with the times, or the times will change you.
The restaurant organizational model we use today was built for a time, place and populace that no longer exists. We use systems, processes and organizational models based on a foodservice industry that was, not one that is, for a time that had been, not for one that is about to be.
Our business model originated two centuries ago via the French military-trained chef Auguste Escoffier for Cesar Ritz’s hotels. His stratified kitchen org chart reflected 19th century norms, with an emphasis on centralized command and control. Power was hierarchical and centralized in the kitchen, and flowed outward to the dining room.
This model worked well enough to be universally adopted, with minor changes, for the last 150 years. In fact, if a chef fell asleep in a restaurant kitchen in 1886 and magically woke up today, 130 years later, he’d know exactly where he was. The most significant modification to Escoffier’s design was that the owner and GM attained equal or higher standing than the chef, unless the chef was the owner.
But this old hierarchy, and the processes that support it, are doomed. Festering, unresolved, decades-old people issues, coupled with government regulations and disruptive technology that is rapidly transferring control from owners to their customers, is destined to make the next three years a long-remembered transition period for the foodservice industry.
In the future, the history of the restaurant industry will be divided into two eras: pre-Internet and post-Internet. The biggest difference between yesterday and today is that we are all Internet companies now. For the last 10 years, the transformation in our industry has been gradual, but glacial. In the next five years, the changes will be seismic and ceaseless. We’ll be laying track while the bullet train is running. Here are our three biggest challenges:
1. The labor situation is unsustainable. Our outmoded labor model is falling apart at the seams. We are now in full-blown crisis mode, as evidenced by a 110-percent industrywide turnover rate among hourly workers, and a stumbling casual-dining segment.
There is no longer a labor pool; it’s a puddle. Which means we have probably just passed a dark threshold where there are now more customers who want to patronize restaurants than there are employees willing to work in them.
Foodservice success always comes down to people: getting the customer experience right means first getting the employee experience right. And that’s a lot harder than, say, menu planning. Menu trends are easy to spot, calibrate, and replicate: simply track sales and follow recipes. Employee tenure, satisfaction and customer service are much more complicated, since they’re so intertwined and dependent on a host of variables, including culture, wages, training, leadership, systems, process, psychology, career path and, most importantly, execution. (Intent versus performance is a yawning gap in most restaurants.)
Job No. 1 is creating a culture that attracts and retains high performers. Give your teams a purpose, every shift. Show them how to be better people, not just better employees. Coaching is a pay-me-now or pay-me-later leadership proposition. You know how to upsell customers. Time to upserve your teams daily.
2. Traditional roles are disappearing. Disruptive technology, in the form of tablets, kiosks, smart kitchens, beacon marketing, robotics and smartphones, will soon eliminate the need for paper menus, currency, TV advertising and a good deal of recruiting, hiring and training. Many traditional roles, like cashiers, servers and grill cooks, will soon be replaced by screens, robots, sous vide or AI. How will these efficiency gains affect the traditional role of unit managers? That is for you to determine, and fast.
At a 110-percent hourly employee churn rate, about 35 percent of a manager’s time is currently spent recruiting, hiring and training new employees. If we can ease or eliminate that burden with technology, how should a manager’s duties and priorities be reallocated? When hiring new managers, are you looking for competencies that were valuable five years ago, or the ones most valuable five years hence (like the ability to effectively deploy social media)?
Now is the time for your leadership teams to discuss these issues and devise a “Restaurant 2020 Plan” that accounts for all the changes in our customers and crew. Watch how successful competitors are resolving these very same issues.
3. You can’t manage the customer experience. Dining out is now a common activity for consumers, not a rare occasion. As a result, customers are more sophisticated than they’ve ever been. Social media has given them reviewer and marketing power. And competition is no longer linear in segments or dependent on price. Why should my experience at your fast-casual restaurant not be compared to my Disney World experience?
Put the right people and processes in place to help shape a positive customer experience, but abandon hope of “managing” it. Your priorities: 1) Solve customer problems first (before yours), 2) Work at the speed of your customers (not your processes), and 3) Be the simplest solution (or be the target of one).
It’s not the future we should be afraid of; it’s repeating the past. Sometimes the best way to get out in front of things is to ask a contrarian question like, “What’s the opposite of what we always do?”
Jim Sullivan is a popular keynote speaker at foodservice leadership conferences worldwide. His two books, Multiunit Leadership and Fundamentals, have sold over 400,000 copies. To access his free tools, apps, resources and training catalog, visit Sullivision.com. Follow him on LinkedIn, YouTube and Twitter @Sullivision.