Harvest America CUES BLOG

The restaurant industry has been plagued with problems for decades – this international crisis has brought everything to a head. How many times have restaurateurs and chefs proclaimed that they couldn’t simply stop their current model and re-invent themselves? The challenges of today would always put a halt to significant movement towards long-term problem solving. Well, we now have the time.

Labor issues have been at the top of the list for decades: low pay, no benefits, unpredictable schedules, 12-hour shifts, and difficulty finding and retaining good employees when these issues persist. Low profitability, vendor challenges, rising cost of goods,    cumbersome regulations, high rents, expensive marketing, and ebbs and flows of business volume have collectively made this enticing business to enter – nearly impossible to maintain. “We can’t just stop what we are doing and find solutions to these problems – I am most concerned about getting through today.”

If there is a silver lining to the monumental problem that we are facing now, it might be time to think, assess, trouble-shoot, and plan for a brighter tomorrow. It appears that the federal stimulus bill may help small restaurants stay afloat for the next few months, but it will not solve the long-term issues that restaurants have sat on since the beginning of our growth spurt in the 1970’s. Now is the time, we have the time, and we have the ability to re-invent, to prepare for a bright tomorrow.

This virus has demonstrated just how important restaurants are to people of all ages and socio-economic backgrounds. It has also demonstrated just how fragile that need is. We must learn from this and plan accordingly. We know that the need to network with friends and neighbors is essential to all who live in communities throughout the world. Restaurants’ are a magnet for people to connect, discuss, smile, laugh, and enjoy each other’s company. Food is the universal language, a language that everyone speaks and enjoys using. We know that busy lifestyles demand that restaurants fill a physical need to eat when cooking at home is oftentimes too hard to arrange. We know that the restaurant industry is essential to the economic health of countries throughout the world – engaging more people than nearly every other employer outside of government. And, we know that restaurants provide millions of people with the opportunity to become entrepreneurs – a dream that exists in so many of us. Without restaurants – society just seems incomplete.

So..what should be part of our thinking right now? What can we do to prepare for a brighter future in the restaurant business? What can we do NOW to set the stage for future success? Here are some thoughts:

[]         LABOR:

We (restaurants) cannot continue to expect to find and retain competent, dedicated, passionate employees as long as our current labor model is accepted and used. A livable wage is something that talented, hard-working people deserve. Basic benefits of reasonable healthcare, paid vacation, and paid sick time are the standard in nearly every other industry and must become the standard in ours. More reasonable hours (realizing that peaks in business require extra effort) should be a goal. This does not infer that all restaurant work should be necessarily based on a 40-hour workweek, or that 8-hour shifts should always apply, but it should still be a model that we are moving closer to. Two days off per week (with some exceptions) is reasonable and helps employees find some balance in their lives. These are not excessive goals – this is a standard that we have ignored for far too long. To fail to do this will simply perpetuate the labor challenges that plagued us before the virus.

[]         CONCEPT DEVELOPMENT:

In order to address the labor issue above, we may very well need to reconsider our restaurant concept. What restaurant platform will continue to exceed customer expectations, build pride among employees, and establish a reputation for the restaurant that drives financial success, and will provide a reasonable living for our staff members?

[]         EFFECTIVE MENUS:

As the concept evolves there will be exciting opportunities for chefs to reimagine menus that work, menus that require fewer, well-compensated employees who still bring the talent and passion to the kitchen everyday. Let’s start from scratch and build a menu with these critical factors in mind.   Forget the established models that have been at the core of our existence since the days of Escoffier and look at what works in the 21^st century.

[]         BRICK AND MORTAR:

The cost of building, renovating, and maintaining a brick and mortar restaurant are excessive and oftentimes stand in the way of profitability. We are learning that people are interested in delivery, enamored by food truck style concepts, and willing to embrace a different style of service. What can we do to minimize the on-going investment in brick and mortar?

[]         RENTS:

Restaurants and landlords need to have serious discussions about rent and its impact on business survival. If the cost of rent exceeds 6% of sales then it is very difficult for the average restaurant to make a go of it. For the landlord – a successful restaurant is a magnet for growth in a community, a magnet that provides many future opportunities for revenue and financial success beyond that restaurant space. Maybe the restaurant is a means to an end for the landlord rather than an individual driver of revenue.

[]         SUPPLY CHAIN:

A marriage of local, regional, and large corporate vendors is a healthy model for restaurant success. Putting all of your eggs in one basket by limiting your purchasing to one vendor is never a good model to use. Building strong “trust” relationships with vendors should be a goal for both parties. Aligning with vendors who are able to work with the restaurant in creating a financially viable operation also works for all involved. Let’s work on this.

[]         SUSTAINABILITY:

This may be a perfect time for conversations between kitchens, vendors, and packagers to find better solutions to waste management, managing ingredient seasonality, protecting supplies of over-used ingredients, and helping the planet survive.

[]         PROFITABILITY:

If a restaurant can only look forward to 5-6% net profit then the business will always face financial challenges. The best restaurants not only prepare and serve great food, they are not only operations that treat their employees fairly – they are businesses that are financially solvent. We need to take the time to define a concept, a menu, and a system that will allow for a more reasonable and manageable profit picture.

[]         CONNECTING WITH THE MARKET:

This is the time to build a greater understanding of the new marketing environment for businesses. Those traditional methods of old either no longer work, or they are priced out of reach for the average small business. Learning how to leverage social media and word-of-mouth is critical for long-term success. Being able to collect analytical data that demonstrates, what, how, and why certain methods of marketing work will become even more important to the small business. Take the time to investigate ways that data collection can help you manage your marketing strategy moving forward.

Yes, we are fearful of what is before us, and of course there is real uncertainty of how to deal with todays challenges. Let’s put aside the fear and relish the opportunity of time to work on what tomorrow can bring.

PLAN BETTER – TRAIN HARDER

Harvest America Ventures, LLC

Restaurant Consulting

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