As another year passes away, I am reminded of an old Yiddish saying that asserts, “Men plan, God laughs.”
Nothing could better describe the past 22 months, as our industry has been ravaged by a once in a century pandemic. The job of any prognosticator must be to review the trends and project how they will manifest in some upcoming timeframe. The complications these past couple of years have presented leads us to this year’s predictions.
However, don’t plan on me being too accurate lest we make a deity somewhere giggle.
Onto our 2022 restaurant predictions…
Labor Costs Will Drop in Proportion to the Technology You Adopt & Promote
On a recent visit to a Dave & Buster’s (note: a subscriber to the SportsTV Guide), the general manager described his success with their “online at-the-table” ordering system. His claim was an increase in service efficiency that allowed a single server to provide service to more tables. Unfortunately, guests are only adopting this paradigm about 50% of the time. But the benefits of this technology, and many others, is a demonstrable impact on labor costs.
The Dave & Buster’s example perfectly validates this outcome. By encouraging guests to order from their on-premise web-based ordering system, they address several choke points in the service cycle.
First is the initially delivery of beverages. The hosts encourage guests to engage the app with the promise of a faster drink delivery. And, in fact, that is exactly what happens. From there the server can deliver drinks on first contact which eliminates a trip to the table and delights the guest with faster service.
Other examples of the efficiency is at the guest check transaction. Here the guest pays when they are ready through the app. It simply eliminates the, often horrible, experience of waiting for a payment to be delivered, accepted, processed, and returned. Not only can your servers provide service to more guests per section, but you will also turn your tables faster. In volume that alone can translate into significant incremental sales.
There are other technologies like online ordering, waitlist management, scheduling, et al that also deliver efficiencies. Now is the time to embrace them so you get every penny of profit you can from an industry to prides itself in its thin margins.
More Bad News to Come as Indie Restaurants Continue to Close
How is that 10% of all restaurants closed and yet staffing hasn’t improved, sales are still sluggish, and rents are increasing?
This question is best answered by understanding the landscape we are inhabiting as the post pandemic normal emerges. One truth is, while yes 10% of existing restaurants have closed, chain operators have continued to grow. In fact, I would assert those operators that called it quits since the pandemic have actually allowed those chain operators to expand into the space they left behind. This can be true of both the physical spaces that have come free and of the market space released by those closings.
Unfortunately, the continued multiple whammies of the Great Resignation and runaway inflation are likely to victimize more restaurants over the next year. This further opens room for chain operation expansion and hastens the demise of the independent operator. This is NOT a good thing for the industry, including the chain operators. A diversity of choice is what has made the industry flourish for the past 25 years. By reducing that variety, you invite a boredom factor to the dining experience because it provides fewer and fewer options.
Also, innovation is a hallmark of the small players. When you run a single restaurant in a competitive market, it is incumbent upon you to find creative and unique ways to manage your challenges. This often-times trickles up to the big players and fuels new paradigms. One way to guard against the encroachment of a large competitor is to become larger yourself. We strongly encourage you to consider expanding your own operation as a strategy to counter this ongoing downward spiral for independent operators. Becoming bigger yourself helps you weather the storms of the economy and remain relevant in the long term.
The Trouble with Labor Continues
The aforementioned Great Resignation continues to effect operators across all segment and demographic markets. If you have visited a Starbuck’s that was closed at 1pm or experienced terrible service at the hands of an understaffed location, you know things are bad out there. Solving this problem can only happen when our industry comes to grips with the structure of our revenue and cost schemes.
There are operators that have embraced these challenges by raising their wages and improving benefits which were accompanied by price increases or service charge additions to guest checks. I’ll be direct, our industry isn’t an attractive option for low wage workers any longer, and the 800K+ that have not returned to work are proof positive we haven’t solved the problem.
In my humble opinion, we should start by ending the tipping paradigm altogether. A standard service charge, with all your employees sharing in the benefits, will help you staff your restaurant and give you more money to attract the best people.
We complain that people that work in our industry aren’t reliable and that is why they don’t earn more money. I would suggest it’s our own fault because that’s all the wages we pay will attract. This coupled with ending the earnings disparity between the front and back of the house are both compelling reasons to ditch tipping and make your restaurant a more stable workplace with better wages for all.
And let’s be honest, how our guests treat our staff (especially during the pandemic) hasn’t helped us at all, but we need to take a serious look in the mirror to see how we’re failing our teams.
Conclusions that Aren’t Really Conclusive
To be clear, we understand every operation is different. Predictions are a dicey business, if for no other reason, no one can tell the future. Just consider how you previewed your business outlook in February of 2020 versus today. These are broad brush observations made from a position of 30+ years of experience observing the industry and all its grandeur.
What do you think we will see in the upcoming year?
Let us know in the comments below. We look forward to reviewing how we did next year. Until then Happy New Year to you all and a hope that 2022 finally returns us to safe and normal operations.
