The world is your solution. McKinsey and Co. published a paper this July entitled “The Great Attrition is making hiring harder. Are you searching the right talent pool?”1 The paper examined the many causes of the worsening labor shortage and provided some potential solutions, but there is no escaping the reality that labor shortages are here and are not going away any time soon. The title of an even more recent article in the Wall Street Journal says it all: “Restaurants, Bars and Hotels Keep Hiring and Say They Still Don’t Have Enough People.”2. The answer to at least some of your staffing needs exists, but it’s not in the tight US labor market. The answer for many of my clients in my immigration practice is to recruit and hire overseas workers. Increasingly, restaurants and hotels realize that what they can’t find in the US, they can find in the international labor market. There, you have a diverse, large and motivated group of workers who would be eager to legally come and work in the US. In this new world of labor shortages, you may want to look at the labor pool in the entire world, not just the challenging US labor market, to meet your needs.
Why Restaurants Could Score Big with Holiday Takeout this Year
There’s ample opportunity at hand. The holiday season has never been a blockbuster for foodservice the way it is for retailers, but operational shifts from the past two years could change that, at least incrementally. Covid forced operators to refine—or in some cases, create—off-premises systems. That legwork has already yielded fresh revenue streams, which could grow even more at restaurants offering special holiday carryout options. “A lot of the ideas came because of the pandemic. And as restaurants, we learned very quickly that we’re not bulletproof and had to change up a lot of our models,” says chef Thomas Harvey, owner of the eponymous restaurant/market in Falls Church, Virginia. Last year, the chef struck out on his own after four years at Tuskie’s Restaurant Group, whose properties range from café fare and pizza to upscale, farm-to-table dining. This past March, Harvey’s made its debut. For the first month, it operated as a fast casual, but guests’ appetite for dine-in led to a full-service transition. Still, the retail arm remained an integral part of Harvey’s business model and now, with the holidays approaching, it’s adding a new layer to its off-premises program. Not only is the restaurant putting together special holiday baskets featuring wine, beer, meats, cheeses, and more, but it’s also cooking ready-to-serve sides.
Federal Proposal Could Switch Independent Contractor Status of Delivery Drivers
Less likely for a gig worker to be classified as an employee. The Department of Labor announced Tuesday a proposed rule change that would make it harder for third-party delivery companies to classify their workers as independent contractors. If approved, the federal government would equally consider multiple “economic realities” to determine whether an individual is an employee, including the extent to which the work performed is an integral part of the employer’s business, the worker’s opportunity for profit or loss, extent of the relative investments of the employer and worker, whether the job requires special skills and initiative, the permanency of the relationship, and the degree of control exercised or retained by the employer. The DOL is looking to replace a 2021 Trump era rule that weighed two of these factors—degree of control and opportunity for profit or loss—heavier than the rest and narrowed the facts to be considered. The goal is to prevent employee misclassification, which leads to a lack of workers’ rights and protections, wage theft, and certain employers taking advantage over other businesses, the DOL said. A survey of gig workers in 2020 conducted by the Economic Policy Institute found that 14 percent earned less than the federal minimum wage and that 62 percent lost earnings because of “technical difficulties clocking in or out.”
An Environmentally Friendly Strategy
To reduce restaurant costs. Food waste generated by restaurants has long been an expensive and environmentally harmful problem. Now, there are solutions to change this that actually turn the waste into a resource that doesn’t just benefit the environment, but the restaurants themselves. There is no longer an answer as to what’s stopping these restaurants from adopting organic waste management solutions. Now the question is, what are these solutions and how can restaurants finally put them into practice? Currently, the restaurant industry is generating a lot of waste, with each restaurant averaging at between 25,000 to 75,000 pounds of waste production per year. Tremendous amounts of food are being thrown away, accumulating to an astronomical amount of polluting waste, which mostly remains untreated and creates colossal environmental damage. Food production and consumption currently constitute over 30 percent of international greenhouse gas emissions, and the world food system’s ecological footprint is expected to greatly expand in the next few decades following an increase in world population, which is expected to reach 10 billion by 2050. The problem is only getting worse, yet, simultaneously, there has been a rise in environmental awareness, which encourages the food industry to adopt green practices in order to reduce the scale of pollution. The Food Waste Reduction Alliance stated in a report that only 14.3 percent of the leftover food is recycled, 1.4 percent donated, and the rest, 84.3 percent, is discarded.
The Rise of Exclusivity
VIP vs traditional discounting. Offering discounts to incentivize customers to enroll and engage with loyalty programs has been a common practice in the restaurant industry for years. But rapidly rising labor and food costs over recent months has heightened pressure on already tight restaurant margins. With the continued uncertainty of the current macroeconomic climate, brands must find ways to reduce marketing spend while driving more value from their customer base. Ultimately, restaurant businesses cannot afford to haphazardly discount their products, nor should they rely on discounts as the primary weapon to drive traffic. Targeted loyalty benefits focused on access and exclusivity are essential tools to drive cost-effective guest engagement. Loyalty programs have been the key to restaurants’ resilience throughout the COVID-19 era. Programs that enable data capture, incentivize direct ordering in the wake of third-party delivery (saving countless dollars in commission fees), and drive engagement have the ability to create compelling enticements without relying heavily on expensive discounts. Restaurants can encourage customers to spend more and visit more frequently by utilizing their loyalty program to create exclusive perks, unique to their brand. Exclusivity can offer as much or more traction as a traditional coupon or discount, with far less impact to a brand’s P&L.
Consumers’ Perception of Inflation is Much Worse Than Reality
Can operators afford to boost prices? If you ask a consumer what they think they paid for a menu item, there’s a chance they’ll recall a higher price than they actually paid. In ancient times (i.e., 2019), the theory was that if consumers thought restaurant prices were higher than they actually were, that signaled to operators that they could get away with raising prices (and revenue) with minimal impact on demand and traffic. Technomic’s Q3 2022 survey of consumers revealed that, on average, consumers believe that restaurant prices have gone up 22% in just in the last 6 months, when in fact, food-away-from home has increased 8% over the past 12 months according to the Bureau of Labor Statistics. In 2022, such a disconnect between perceptions and reality no longer points to an opportunity to take price and, instead, highlights an overall pessimism in the economy. Whether this is founded or unfounded is irrelevant. The real and psychological impact of prolonged high inflation – and the belief that prices will continue to rise – is impacting spending at restaurants, even for those in the higher income brackets.
Are Consumers Hitting a Price Increase Breaking Point?
It’s crucial for operators to be flexible and nurture distributor relationships. With continued supply chain issues and inflationary pressures mounting, it’s no wonder that most restaurants raised their prices this year. In fact, according to the Bureau of Labor Statistics’ Consumer Price Index, food away from home prices increased 8% from Aug. 2021 to Aug. 2022. But where can you find the biggest price increases? According to research published by personal finance technology company, MoneyGeek, San Francisco has edged out Los Angeles and New York City to be named the most expensive city for a burger, fries and a soda, with the average meal at major chains costing $15.30 in San Francisco, $14.59 in Los Angeles, and $14.22 in New York City (the other cities in the top 10 included Long Beach, Washington, Philadelphia, Boston, Sacramento, Seattle and Mesa). And while it is true that nearly every restaurant chain raised its prices at least once over the past year, some did so more than others. Using prices listed on Grubhub and allmenus.com, MoneyGeek crunched numbers to determine that Burger King had the largest percentage price increases on average over the past year, as the average price of a Burger King meal grew a whopping 21% from $6.76 to $8.18.
The Next Frontier of Restaurant Tech is in the Kitchen
Using tech to capture and maximize every sale. Transitioning paper tickets to a digitized, easy-to-use Kitchen Display System unlocks exponential efficiencies. Routing orders is no longer just about getting from point A (order) to point B (the cook who prepares it). A feature-rich system and app can help prioritize which tickets should be handled in what order and when for most efficient prep time and service, with the ability to auto-route tickets by time of day and traffic patterns, manage menus with a click and easily 86 menu items if the kitchen runs out of an ingredient or modifier, or even alert the kitchen when tickets are unattended for too long. Batch ordering rules can make food running more efficient; set an amount of time you want orders to be grouped by and let the KDS do the rest. A modern KDS can even be used to communicate directly with the guest, for example, to clarify an incoming order or to update customers on their prep times and order status quickly and efficiently. When integrated with mobile ordering and payment, the time saved and efficiencies gained really add up, freeing up restaurant and bar staff to focus on more meaningful interactions that build a better experience and guest loyalty.
Did You Know?
One way to get employees in this labor market. A Chick-fil-A operator in Miami recently got 429 applications for a job within a week of posting. The secret? A three-day work week. Justin Lindsey started a three-day workweek in February 2022, leading to some skepticism among restaurant leaders. All 18 managers had to be on board before Lindsey would start the program. He divided them into two “pods.” The pods essentially work three days of 13–14-hour shifts, then have four days off, with one seven-day stretch per month where they are off consecutively.
To retain the best employees, exceed their expectations. Restaurants depend on their employees bringing their best every day. To do so, people need to feel safe, empowered, and valued. What’s more—if they aren’t getting those needs met, they’ll take their work to the next company or industry. As the gig economy grows stronger, the flexibility of working on an as-needed basis is drawing many people away from shift-based work—and replacements aren’t so easy to come by anymore. The U.S. Bureau of Labor Statistics recently found there are 1 million fewer workers in the hospitality industry today than in 2019.
Bielat Santore & Company – Restaurant Industry Alert
UNION COUNTY, NJ “RESTAURANT & BAR” FOR SALE
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