5 Big Worries for Restaurants in 2023
Dark clouds that could temper restaurants’ enthusiasm for a new year. If we had predicted at the end of 2019 that a virus from China would shut down the world in the coming year, you would have recommended we seek help, pronto. Of course, there were few forewarnings back then of the upheaval to come. Heading into 2023, the evidence is far more concrete that several key what-ifs could worsen into oh-no’s over the next 12 months. Here are what we see as those anvils dangling over operators’ heads. If you don’t understand why California’s first-of-its-kind new wage law is a deafening wake-up alarm for all restaurateurs, get thee to a search engine. Because of its passage, fast-food operators on the West Coast are looking at a jump in wages during 2023 to as much as $22 an hour. Full-service operations—chain and independent—are not covered by the law, which gives fast-food workers and unions direct say on what crewmembers should be paid. But if fast-food pay soars to that level, how can other restaurant employers avoid a similar quantum leap in what they pay? Ironically, California operators could get a respite, the result of the industry collecting the million-plus signatures needed to get a Fast Act referendum on the 2024 ballot. The industry is suing the state to prevent adoption until voters decide if they truly want the measure to take effect.
Economic Doubts and Downturn?
Many experts predict a weakened 2023 economy. Although a solid 263,000 jobs were created nationwide in November within the context of a 3.7% unemployment rate, the US and New Jersey economies are nonetheless facing headwinds: Inflation remains high and the federal reserve’s attempts to control it by raising interest rates may be slowing the economy. Labor costs are also steep and are another factor that has contributed to employee layoffs at companies ranging from Amazon and Shopify to Netflix and Meta. And high energy prices, partly driven by the Russia-Ukraine conflict, are creating additional economic friction both in the US and abroad. “If the [Federal Reserve] keeps raising interest rates, the probability is high that we’re going to have a weakening economy,” says economist James W. Hughes, university professor and dean emeritus of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. “Whether that leads to a soft [economic] landing or an industrial-strength downturn is open to question, but I think that’s going to be the defining element of 2023.” Either way, Hughes predicts New Jersey will remain economically “in lockstep” with the nation. The Garden State has clearly been tracking the nation so far: As of October 2022, New Jersey recovered 104% of the jobs lost from 2020’s coronavirus-related “Great Contraction,” while the nation recovered a similar 103.6% of jobs.
2023 Trends to Watch for Restaurateurs and Brands
It’s shaping up to be an exciting year for the industry. The restaurant industry has faced numerous challenges in recent years, including the COVID-19 pandemic, labor shortages, and inflation. These challenges have forced many restaurants to make significant changes in order to remain profitable. As we enter 2023, there are several trends that restaurant owners should be aware of. One of the most significant trends in the industry is the easing of labor pressure. While labor shortages are likely to continue to be a concern for restaurant operators, the U.S. labor market has shifted, making it easier for restaurants to hire workers. This could help prevent closures due to a lack of staff and make it easier for restaurant owners to find and hire teams for individual locations. This is a welcome change for many operators, who have struggled with finding and retaining staff in recent years. Another trend to watch for in 2023 is the expansion of in-house delivery services. With the number of people using online food delivery services expected to reach 185 million by 2025, many restaurants will want to take control of the delivery experience to ensure quality and customer satisfaction, as well as to avoid third-party costs.
How to Keep a Major Restaurant Construction or Renovation Project
On track. While making a good first impression is important in all industries, it could be said that it’s essential in the restaurant industry. After all, patrons are paying for two things: the incredible food and the accompanied ambiance. If the experience is missing, that needs to change. While little things like restaurant apps and quality customer service are big ways to improve the restaurant experience, business owners should upgrade their physical space to stay current. Even if your restaurant attracts a lot of business, it’s necessary to give it the right facelift to keep up with new competition. A major construction and renovation project can drive more sales to your restaurant, but how can owners stick to their plans while they’re juggling everything else? If your restaurant has been open for 7 or more years and still looks the same, it’s time for a change. Here’s how business owners should handle their construction or renovation plans.
How Restaurants Can ‘Deliver’ on Revenue
During times of inflation. Inflation is dominating the conversation in every industry today and according to the Bureau of Labor Statistics prices rose 7.7 percent for the year ending in October. Despite inflation taking its toll, many people are continuing to prioritize and enjoy the convenience of takeaway and food delivery with recent Deliverect data revealing that more people are purchasing delivery orders today than they were before the recent increase in the cost of living. The survey found that in the U.S., 44 percent of consumers are now purchasing up to three takeaways per week, in comparison to 42 percent prior to the increase in inflation. Undoubtedly people are becoming more conscious of where they’re spending as we witness a rise in inflation and the research reveals that while people are putting more thought behind how they spend their money, food delivery remains a priority. Consumers are more likely to cut back on other activities outside of food delivery and spending such as buying clothing (44 percent), going out for drinks and dinner (47 percent) and traveling (43 percent) more.
Lawsuit Filed to Stop California from Implementing FAST Act
On Friday, the Sacramento Superior Court issued a temporary hold on AB 257. The Save Local Restaurants Coalition, which includes the National Restaurant Association, U.S. Chamber of Commerce and the International Franchise Association, has filed a lawsuit to stop California from implementing Assembly Bill 257, also known as the FAST Act. The controversial legislation was passed in September and includes the creation of a Fast Food Council to regulate the quick-service industry, including setting wages. Per an email from California’s Department of Industrial Relations to the coalition’s legal team at Nielsen Merksamer, AB 257 is expected to go into law January 1, 2023, despite the coalition’s collection of enough signatures to send the legislation to a referendum vote in November 2024. The coalition received more than a million signatures, exceeding the nearly 625,000 signatures required to hold off enactment until a referendum vote. On a press call Thursday afternoon, representatives from the coalition made it clear the lawsuit isn’t about AB 257 specifically – though the coalition was formed in September to challenge the legislation – but rather the referendum process made clear in the state constitution that they believe is being circumvented.
Hey Restaurants, If You Want Our Support
Stop making it so hard to book a table. The year 2022 saw restaurant lovers flocking back to their favorite places following locked-down 2020 and omicron-plagued 2021. But it has never been a bigger pain in the posterior to go to any of them — be they old, new, or merely too arrogant for their own good. With eatery owners howling to anyone still listening that they need every dime they can get after the pandemic, you’d think they’d go out of their way to let you in. Or at least to make it easy, right? Ha! They’ve made it harder to book tables than ever before. I’m not just talking about certain places that exclude you just for kicks, such as Casa Cipriani, Casa Cruz and several dining rooms at Fifth Avenue’s new Aman hotel. They’re all “private” and off-limits — unless you’re a club member, or a hotel guest dropping $3,000 a night. I mean normal-seeming restaurants that make reserving tougher than getting a yellow cab in the rain at rush hour. On OpenTable, Resy, Tock, SevenRooms and the restaurants’ own reservations portals, rush hour seems to be all the time. Restaurants are blocking out just about any time a normal person wants to eat, even when plenty of seats are available. The strategy is to book masochist nobodies at 5 p.m. well in advance and hold prime spots until closer to the date.
Did You Know?
The average American spends this much on tips at restaurants. Diners wend their way to reserved tables. The server approaches yours and delivers your food. As you settle in for a hot meal, you notice something offensive on your plate. A closer look reveals the object to be a long human hair. Gross. It’s certainly not yours. The food is probably fine, but eating the dish just feels wrong. You flag the server down, and they offer to replace the meal. You accept, but you’re forced to wait for round two. Your family chows down without you. Question is, do you tip the server? If so, how much?
Employee Tip
Restaurants face stepped-up requirements for pregnant and nursing workers. Restaurateurs and other employers will be required to make more accommodations for pregnant and nursing employees under two last-minute additions to the 4,100-page omnibus spending bill that became law last week. One of the provisions requires employers to make additional accommodations for pregnant employees, such as permitting the women to take additional bathroom breaks, carry a water bottle, switch to less taxing jobs and sit down while working a shift. The measure does not require the employer to make accommodations that pose an “undue hardship,” such as a significant cost or operational disruption.
Bielat Santore & Company – Restaurant Industry Alert
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