As we near the end of 2019, several themes have dominated the year’s restaurant industry news. Over the year, restaurants have seen viral campaigns turned into cultural phenomena while labor made a strong comeback as a force across the US. But it’s not the stories themselves that reveal meaning; it’s the causation behind them that is really where the lessons are to be learned.
With that in mind, below are our top restaurant stories from 2019 and our attempt at explaining their emergence and looking forward to their future relevance.
Top Restaurant Marketing Story: Popeye’s Chicken
If you are looking for good stories from 2019, there are few better than the Popeye’s chicken sandwich roll-out that went super viral. While the particulars of the Popeye story are spectacular, it’s what the success of the roll-out says that is emblematic of a big story. During the past year, restaurant marketing has succeeded by creating scarcity as a commodity. This is the new object of mass consumer desire and nothing proves that better than a brand like Supreme or the pop-up restaurant explosion we have seen over the past few years.
By adding either an event, like an internal pop-up restaurant, or creating a limited time offer (LTO) that has serious appeal, you are leveraging scarcity. It doesn’t matter if it’s FOMO that causes guests to get onboard or just wanting to be a part of the cool kids, scarcity drives interest and sales.
In fact, part of the appeal is the experience of being among the few. Silly distinctions though they may be, it also appears to be enough to get people out the door. Anything that does that is certainly a big story.
Top Restaurant Employee Story: The Rise of Labor
Things are definitely changing in our country. Like it or not, people are organizing and a labor is once again asserting itself. You need only look as far as the Fight for $15 to see organized labor is having an impact. With studies released this year that demonstrate minimum wage increases had no perceptible negative impact on the local economy, this push will only get stronger.
But it’s not limited to the issues of wage. Unions made advances in the industry that previously no one thought would be even be attempted. McDonald’s has found themselves on the organizing end of a labor action and has been fighting assiduously to knock it aside. With unemployment at historic lows, it would appear to be a seller’s market for labor as we have seen natural wage increases across the country.
That isn’t to say we are rooting for higher expenses for restaurant operators; we’re not. But it’s soon to be a reality you can’t avoid. Whether market pressures have driven wages up in your market or a statutory change forced them, you are now faced with deciding how to continue to pay the salaries that are your current and potentially future reality. This is the real story of the year: prices can no longer stay flat with all these upward pressures on costs. That will likely be an interesting the thing we discuss next, year as a result.
Top Restaurant Financial Story: Sales Up, Traffic Down
To say it’s been a roller coaster ride with the financials of our industry this year would be a massive understatement. From quarter to quarter, we didn’t know if we were facing economic headwinds or just humming along with consistent sales growth year over year. There have been month after month of sales growth, although sometimes a little anemic, coupled with alarming traffic declines. Understanding what all these contradictory economic signals means is a difficult task for the experts, never mind us line managers.
Here’s what we do know. The Restaurant Performance Index, kept by the National Restaurant Association, indicates that while growth has continued, it has slowed dramatically from a peak in 2017. In fact, through October of 2019, there was only one month of where more restaurants reported sales declines than sales increases which indicates we are continuing to see growth. Unfortunately, that growth has flattened during 2019 and it has been exacerbated by ever worsening traffic performance. Third quarter 2019 saw a 3.5% drop in traffic which is the worst result in the last two years.
All of this should be fair warning that our industry is about to experience some instability and more than it’s already fair share of uncertainty. The stories we read about in 2020 will center on a contraction of our industry and more store closing than openings which would be a first since the financial crisis in 2008.
We are strongly encouraging our readers to be cautious that they don’t become a subject of a tragic story in the upcoming year. Now is the time to put away some extra cash to help you navigate the tough times that invariably lie ahead.
Top Restaurant Operation Story: Sustainability
No doubt the story of 2019 includes radical suggestions about how to make our industry more sustainable. If it wasn’t another municipality banning single-use plastics, like straws and tableware, it was Berkeley implementing a ban on natural gas as part of construction. We can resist this at our own peril -- figuratively and literally -- especially if the climate change projections are to be believed. More importantly, it’s also something that can be turned to your advantage.
Millennials have already expressed their willingness to spend more for an experience they know is sustainable. By embracing the change rather than lamenting it, you can simultaneously attract customers by making sustainability about of your reputation. The folks at Blue Bottle Coffee have already committed to eliminating non-renewable waste to zero by the end of 2020. Sure, that’s extreme, but is also communicates to their guests that they want to be a part of the solution and not be a cause of the crisis. This is the exactly the type of purpose driven business approach that will keep you relevant in the long term, no matter what market you enter.
