Harvest America CUES BLOG

The media has conveniently forgot the most significant challenges faced by the restaurant industry. Yes, it was the news flash for a few months, but now it is old news – old news that continues to haunt restaurants from coast to coast. The problem is that the glitter of excitement around becoming a cook and a chef is fading quickly. At the same time, the demand for restaurant experiences, at all levels, continues to grow as consumers rely heavily on restaurants to step up and provide the sustenance and experiences that they have become accustomed to.

There are very few restaurants in the U.S. that are not faced with the dilemma of finding enough people willing to work in the back or front of the house and dealing with those who did take the leap becoming more and more disillusioned. Some of us like to blame the younger generation and proclaim that they simply are not anxious to work that hard, or culinary schools for not doing a satisfactory job of preparing students for the reality of the business, but very few operators, chefs, or managers are looking in a mirror and questioning whether or not they are the source of the problem.

While the labor challenge continues to mount, the operator is also faced with a business reality that stings more and more every day – it is very, very hard for restaurants to be profitable. The question then becomes which problem is the cause and which is the effect? Is it time for us (the restaurant industry as a whole) to put the brakes on for a minute and truly examine the issues? Is it time for radical change as a solution to the problems that face the restaurant industry today? Consider this quote from one of the leading creative minds of the past 100 years – Buckminster Fuller:

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

-Buckminster Fuller-

Is this what is needed? Consider other industries that faced similar challenges in the past and how they were able to move forward:

*The recording industry was plagued with inefficiencies, cost over runs, and lower than expected profits. Along came Napster – a company that upset the apple cart, threw out the old model, broke a few rules of engagement and addressed the need for radical change. Out of this came iTunes – a new model that Apple proved to be profitable and in tune with consumer needs and desires. Now, the artists and recording companies have yet to realize the same level of success at this point – primarily because they are still somewhat stuck in the old model of thinking.

*Booking hotels and flights use to be a process of aligning with a travel agency, working with them through a process of research, investing in their expertise, and finally winding up with a physical ticket or itinerary for a trip. This was time consuming and frustrating for everyone involved. Now we connect to Travelocity, Hotels.com, Trivago, or other sites and book with a credit card and the click of a mouse, save money through their discount programs, and store an electronic ticket and confirmation on our cell phones. The travel agency disappeared, but new, vibrant industries evolved.

The restaurant industry, with all of the sizzle about new products and experiences, has not changed significantly since the first speakeasies of the Roaring Twenties converted to full service operations after Prohibition was repealed. Is it time for a change agent to upset the apple cart? Is it time to throw out much of, or at least some of the old model? Here are the challenges that every restaurant faces today; challenges that are not going away, challenges that must be addressed by someone or everyone if we are to continue to thrive.

[]         RESTAURANTS ARE LABOR INTENSIVE

What a restaurant is able to pay its employees is directly tied to the shear number of staff members we currently need to accomplish our work.

[]         WE DEAL WITH HIGHLY PERISHABLE GOODS

This is an even greater challenge today as restaurants become more concerned with the need for fresh ingredients – always.

[]         RESTAURANTS HAVE REACHED A PRICING CEILING

The cost of ingredients is only 30% of the reality of pricing. When we factor in labor, mortgage or lease, utilities, insurance, marketing, décor and tabletop expenses, etc., there is very little left for profit. Raising prices is no longer the sole answer – we must do a better job of menu planning, portioning, controlling costs, and educating consumers about the reason for pricing, as we must.

[]         LOW WAGES INHIBIT OUR ABILITY TO THRIVE

Everyone agrees that $8 per hour is a far cry from a livable wage, however, how much are certain positions worth? Simply raising wages across the board only puts a strain on the existing model of low profit and pricing ceilings. Wages must go up, but the model must change first.

[]         A LACK OF REALISTIC BENEFITS PUSHES GOOD EMPLOYEES AWAY

It is not unreasonable for a full time employee to expect simple benefits such as sick time, paid vacations, healthcare, and even an opportunity to pay into a retirement program. The current model simply does not allow for this to occur in most restaurants.

[]         LONG HOURS (SOMETIMES UNREALISTIC) CHALLENGE EMPLOYEE LONGEVITY

At what point does an employee become inefficient and a liability to success rather than an asset. Is it 40 hours, 50 hours, 60 hours? We need to study this and realize that just because it was the model that a previous generation accepted and saw as a badge of honor, doesn’t mean that it is right.

[]         UNPREDICTABLE HOURS MAKE IT DIFFICULT TO PLAN A LIFE

What other industries ask employees to accept the fact that their schedules will probably change every week, and sometimes several times within a week? Is it any wonder why people who are initially enthusiastic about working in restaurants eventually leave for a career change?

[]         FORMAL TRAINING IS ALMOST UNHEARD OF

Aside from a typically informal orientation period, many restaurants simply cut employees loose to figure their jobs out while on the front lines. Whatever the problem – training is oftentimes the answer.

[]         SERVERS ARE NOT CONSIDERED PROFESSIONALS

How can we expect more from our service staff when they find it difficult to hold their heads high and proclaim that they wait on tables for a living? In other countries – restaurant service is a proud profession. In America it is usually a transition job.

[]         SUB MINIMUM WAGE FOR THE FRONT OF THE HOUSE IS INSULTING

Enough said.

[]         TURNOVER IS MIND NUMBING

In most full-service and quick service restaurants, the turnover rate is more than 100% each year. It’s tough to get into a rhythm of consistency when your staff is always changing.

[]         THE PRESSURE COOKER ENVIRONMENT OF RESTAURANTS TAKES ITS TOLL

Next to air traffic controller and emergency room staff in a hospital, there are few professions with more intense, in the moment pressures than working in restaurants – especially busy ones.

[]         THERE IS NOT ENOUGH TALENT AROUND TO FILL THE POSITIONS THAT ARE OPEN

If we can’t fill our schedules now with more than 1,000 culinary schools in the country – where will they come from as the restaurant industry continues to grow?

[]         CHANGING WORKFORCE ATTITUDES ARE CHALLENGING THE OLD WAY OF THINKING

Plain and simple – today’s worker (most of them anyway) are not as inclined to simply accept “the way it is” in restaurants.

[]         LOW PROFIT MARGINS – HIGH FAILURE RATES

Put it all together and it is easy to understand why the failure rate for restaurants is so high.

So…what’s the answer? There is no single quick fix. This may very well be time for a change maker to turn things upside down and reinvent the industry that we know. To fail to change at this point is the kiss of death. This is a time for collaboration and ideation that must include all of the stakeholders: the National Restaurant Association, the American Culinary Federation, Slow Food USA, Chef’s Collaborative, CAFÉ (The Center for Advancement of Foodservice Education), the Research Chefs Association, our vendors, and others. We need to put our heads together, stop talking about the good old days, realize that this is a new industry and it must act accordingly, and embrace the opportunity to fix the things that may be wrong with the great business of cooking for others.

PLAN BETTER – TRAIN HARDER

Harvest America Ventures, LLC

Restaurant Consulting and Training