MAR/APR 2014
IN THIS EDITION
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Minimum Wage Momentum
Kids Dine Out
Recruiting Good Managers
Helping Restaurateurs Adapt to a Changing Marketplace
INDUSTRY UPDATE
2014 Restaurant Industry Forecast
The National Restaurant Association recently
presented its annual outlook on restaurant industry
opportunities and challenges for the year ahead.
Based on analysis of the most current economic
data and extensive surveys of operators and
consumers, the NRA’s 2014 Restaurant Industry
Forecast provides some valuable information and
insights for all segments, including:
positive view), 42% of consumers said they are taking
a wait-and-see approach and have cut back somewhat
on spending until the economy improves; and 34% say
they are very concerned about the economy and have
Nearly half say
they aren’t dining out (43%) or ordering in (42%)
as much as they would like, resulting in what
Classes Are In Session
INDUSTRY SALES are expected to reach a record
terms, this will be an increase of 1.2% (up
slightly from 1% in 2013). “In size and scope,
the restaurant industry is larger than 90% of
the world economies,” says Hudson Riehle,
SVP, Research and Knowledge Group, National
Restaurant Association. “If the industry were a
country, its economy would rank number 20.”
However massive that is, and while this will be the
sales, Hudson acknowledges that gains will
remain below what might have been expected –
in part due to the depth of the recession and in
part because the recovery continues to lag well
behind those of the previous four recessions.
Illustrating the challenging environment that
persists, the projection for real growth in limited
service (quickservice and fast casual segments) is
a modest 2.1% (down from 2.4% in 2013) and in
only 0.2% – the third straight year below 1%.
A key factor in industry sales is consumers’ ability
and willingness to spend. “CONSUMER CONFIDENCE
has edged up but remains fragile,” reports Hudson.
In fact, he says, the mindset of consumers has
improved very little over the past several years
– evidenced by their perceptions of the overall
consumer research conducted at the end of 2013
found that 37% described the overall economy as
“fair,” and about 50% gave it a “poor” rating. And
despite the economy gaining momentum and the
consumers appear stuck in a recessionary mindset,
same in December 2013 as they did in December
2010. Nearly 60% still describe their personal
increased consumer spending when the economic
climate is more positive and consumers are more
35% of consumers think
“Our butchering classes are probably our
than it was in 2013.
($85) in how to professionally butcher an
JOB GROWTH always has been a key driver of
restaurant sales, and this will be the case in 2014
more than any time in recent history, predicts the
NRA. “It will continue to be an environment where
consumers are very deliberative about where they
spend their dollars,” Hudson cautions. However,
restaurant. Since we opened two years
whole hogs, plus grilling of mixed meats. We
do two demo classes a month, plus a couple
of private classes ($105) for those who want
to be hands on (popular for bachelor parties).
All classes include a burger meal in the
restaurant afterwards and attendees have
the option to purchase whatever is butchered
marketed on our website and in house.”
Allen Sternweiler
Burger,
lackluster – by the end of 2013, employment still
recession peak – 2014 is projected to be the economy’s
best job-creating year since the end of the recession.
The NRA expects total U.S. employment to rise
1.8% in 2014 (the strongest increase since 2006).
the NRA estimates that real disposable personal
income will increase 2.8% in 2014 (up from
a modest 0.8% gain in 2013 and, again, the
strongest increase since 2006). “For an industry
in which a large proportion of growth is driven by
cash on hand, steady gains in disposable personal
income are essential to boosting restaurant
patronage,” says Hudson. The NRA expects eatingand-drinking places to add jobs at a solid 2.8% rate in
2014 – down from the 3.7% gain in 2013, but a full
in total U.S. employment. (The overall economy
Butcher & The
“To take advantage of the growing interest
in mixology these days, we offer three levels
overview ($75) – how to set up a bar and the
top 25 drinks everyone should know how to
garnishing. The intermediate focuses on how
to taste spirits, and the advanced is devoted
also offer private classes for companies,
groups, etc. Examples of such classes are a
Vesper Martini, as well as the history of the
martini, gin, vodka, and vermouth. If you’re
can do classes – get started, don’t wait for
perfection, tweak as you go. And be sure to
make the classes fun, that’s important.”
Cory Cuff
Restaurant & Bar
Also meaningful to the restaurant industry is the
fact that, regardless of how they feel about their
U.S. employment only rose 5%.)
(For more, visit
Cielo
)
>> continues on page 2
restaurantbriefing.com
pg 1
INDUSTRY UPDATE (continued)
>> continued from page 1
Nearly half of quickservice, fast casual, and
casual dining operators say they expect
RECRUITING AND RETAINING EMPLOYEES to
become more difficult in 2014. Fine dining
operators were the least likely to express
concern about competition for labor, but
Elevated FOOD PRICES continued to plague
restaurants in 2013, when average wholesale
food prices rose 2%. In 2014, food prices are expected
to be mixed, but continue to advance overall. “There
could be some relief in certain commodity groups,
is beef prices, which are already elevated and
them say it will likely become more challenging.
As a result, restaurant operators across all
segments intend to focus more on labor issues
this year – roughly half of limited service, fine
dining, and casual dining and more than a third
of family dining operators are planning to devote
more resources to recruiting and retaining employees.
Restaurant operators are also bolstering their
training budgets in an effort to develop employees
and to enhance overall productivity – 69% of
quickservice operators expect to devote more
of their resources to training in 2014, along with
dining, and 44% in family dining.
commodity group in 2014.”
expect to face many of the same CHALLENGES that
they did in 2013. Topping the list among family and
casual dining operators is complying with healthcare
reform; the economy is the most frequently mentioned
operators’ top concern is complying with healthcare
reform, and among fast casual operators, it’s building
and maintaining sales volume. With consumer
spending still constrained, the competition within
the restaurant industry remains intense – almost
90% of tableservice operators say that competition
within the tableservice segment will either become
more challenging or remain the same in 2014.
Tableservice operators are also battling the limited
service segment for customers, with a majority of
competition with the limited service segment will remain
steady or intensify in 2014.
operators expressed much less concern about
competition with tableservice restaurants. (Only
about one of 20 said tableservice competition was
Competition is most intense
for limited service within the segment itself – 90%
expect it to become more intense or remain about
the same. Fast casual operators are more likely to
identify grocery stores as competitors, with 16%
For more information on the 2014 Restaurant
Industry Forecast by the National Restaurant
Association, visit restaurant.org/News-Research/
Research/Forecast-2014.
AROUND THE USA
INDUSTRY INTELLIGENCE
Business Building Ideas
With information from surveys of operators and
consumers, the National Restaurant Association’s
2014 Restaurant Industry Forecast points out
opportunities for operators to build business,
including:
VARIABLE PRICING Roughly 25% of family and
become more popular in that segment in the future.
The demand is certainly there – 72% of consumers say
they would consider dining out more often if menu prices
were lower during off-peak times. “Whether through
video menu boards in quickservice, or tablets and
other electronic mediums in tableservice and other
segments, the capability now exists for operators
to offer additional incentives at different times of
day to get incremental visits from their consumer
base. Going forward variable pricing is going to be
an important point of growing sales for a variety of
restaurant operators,” says Hudson Riehle, SVP,
Research and Knowledge Group.
OFF PREMISE AND ALTERNATIVE LOCATIONS
premise market is growing – 56% of consumers
say they would likely order delivery directly to their
takeout from a tableservice restaurant. About
dining operators say they plan to make additional efforts
to expand the off-premise side of their businesses in
2014 to take advantage of the opportunity. And
food trucks may not have yet run out of gas – 40%
restaurantbriefing.com
of consumers say they have purchased items
from a food truck and nearly 70% said they’d be
interested in visiting if their favorite restaurant
offered one. NRA research found that up to 20% of
operators will consider starting one in the next year
or two, with limited service operators more likely
than tableservice.
TRAVEL AND TOURISM A bright light in the industry
again in 2014 will be the continued growth of
travel and tourism. “We know that about one in every
four industry sales dollars is tourism- and travel-related
and growth rates for this year will continue to advance,”
reports Hudson. International travelers to the
U.S. are expected to spend well over $100 billion
including spending in restaurants.
RESTAURANT RETAIL Restaurants have been
expanding their retail offerings over the past several
food items for retail sale in their operations or
grocery stores, and roughly half say they think selling
food products will become more popular in their segment
in the future.
NUTRITIONALLY CONSCIOUS CONSUMERS A strong
say their customers are paying more attention to
nutrition. In fact, NRA research found that more
than 70% of consumers say they are more likely to visit
a restaurant that offers healthful options. In response,
an average of more than 60% of operators have items
about 75% offer similar options on their children’s menus.
About the same percentage noticed their guests
becoming more interested in locally sourced items
at the end of 2013 compared to two years ago.
SOCIAL MEDIA MARKETING
dining operators and 7% of their family and casual
dining counterparts said that expanding their
social media presence in 2013 was a successful
ways to more effectively reach both new and
repeat customers in the digital world. Nearly 75%
dining operators say they plan to devote more resources
to social media marketing in 2014.
of tableservice operators will also invest more in
email and text message marketing, while reducing
the amount they spend on traditional marketing,
such as direct mail or newspaper ads. Similarly,
a small percentage of quickservice (5%) and fast
casual (6%) operators say they found success with
social media as a loyalty strategy in 2013, and yet
nearly 75% of fast casual and about 70% of quickservice
operators say they plan to invest more in social media
as well as email and text message marketing, and
fewer resources in traditional marketing. Of all the
social media channels operators currently use,
Facebook tops the list with at least 90% participation
). Facebook is
also the top social media tool operators say they
will use in the future. In all but quickservice, the
next likely tool in the social media toolbox will be
online review sites; quickservice favors Twitter,
smartphone apps, and texting over Facebook.
pg 2
Text
INDUSTRY UPDATE
Minimum Wage Momentum
State and Local
2013-2014 Minimum Wage Legislation
As most restaurateurs are aware, bills have
been introduced in the House and Senate to
dramatically increase the federal minimum wage.
The Fair Minimum Wage Act would increase the
federal minimum wage nearly 40% over a period
of slightly more than two years – from the current
$7.25 to $10.10 – and it would automatically index
Seattle
WA
MT
ND
OR
SD
party lines. “The public wants to solve what they
think is a real and growing problem with lack of
opportunities and the ability to advance. They want
the situation to be better.” But Scott encourages
restaurateurs – and legislators – to keep things
in perspective in terms of public sentiment. “The
wage increase, yes, but that’s normal. Go back
doesn’t matter – there has always been support.
It’s important to look at current public opinion
– which we measured recently at about 60% in
support of increases – relatively, compared to
norms. It’s never below 50%. We aren’t working
from a zero point scale.”
VT
NH
MI
MA
Richmond
Berkeley
Oakland
PA
IA
NE
UT
IL
CA
RI
NJ
WV
KS
VA
MO
CT
OH
IN
CO
KY
DE
MD
DC
NC
TN
AZ
Santa Fe
OK
NM
AR
SC
MS
TX
While this federal minimum wage legislation is
“unlikely” to pass this year, advises Scott DeFife,
Executive VP, Policy & Government Affairs,
National Restaurant Association, he warns
news continually for the next year, if not the next
three years.” Partly, he acknowledges, because
it’s a political issue, but also because wage
NY
WI
WY
NV
thereafter, regardless of economic conditions. The
legislation also calls for increasing the minimum
cash wage for tipped employees until it reaches
70% of the federal minimum wage. It would triple,
in stages, from $2.13 to $7.07.
ME
MN
ID
AL
GA
LA
AK
FL
HI
Minimum Wage Momentum
Legislation pending
Ballot initiative
Legislation and ballot initiatives
Legislation enacted in 2013 and 2014
Source: National Restaurant Association (Restaurant.org/Advocacy)
which already devotes about a third of sales to
– enacted bills that were signed into law providing
for minimum wage increases starting in 2014. The
continues. “Discuss the ripple effect that increases
but the measures were vetoed by each state’s
employee is much lower than other industries, and
that sometimes the server serving them is making
more from that transaction than you are. When you
explain things to policymakers who spend the time
to understand, they get it and realize that they need
to look beyond the polls. Sometimes the numbers
For more information about minimum wage
legislation and advocacy, visit restaurant.org/
state constitutional amendment in November 2013
to raise the minimum wage in 2014 and tie future
increases to the cost of living.
One Operator’s Perspective
“To deal with rising labor costs, we are
constantly trying to make the business more
portion sizes and waste to trimming labor
costs by staggering arrival and departure
times for front of the house employees
and eliminating overtime. As it’s not always
possible to trim hours, we are considering
a policy of closing 30 minutes early on
some nights. We cannot change prices too
momentum, notably in states and municipalities.
“We, as an association serving the restaurant
industry, are always more effective if our members
are engaged,” he continues. “In this case, to
advocate for the industry, we need them to be
more involved than usual. Operators need to be
advocacy/All-Issues/Minimum-Wage/Overview
ncsl.org/research/labor-and-employment/
state-minimum-wage-chart.aspx
dramatically right now but expect to have a fairly
congressmen but mayors, governors, city
councilmen, etc. Invite them into your restaurant
and educate them about your business, about the
industry. There’s rampant misinformation out there
and they typically don’t understand a restaurant
business model.” For example, Scott says, many
State MiniMuM Wage LegiSLation in 2013
jump approximately 40% in San Francisco (from
$10.75 to $15), which has been proposed.
For a listing of current minimum wages by state
as well as future scheduled increases, visit
they are, why they work part time – and to talk
introduced legislation regarding minimum wage
issues. (Measures included providing for increases
to the state minimum wage, addressing base
wages for tipped employees, and restricting the
authority of local government to enact or enforce
a local minimum wage, among other issues.) Of
employ and the value of the training they provide.
proposed minimum wage increases.
industry, so he urges restaurateurs to educate
restaurantbriefing.com
The real challenge for small restaurants is
that we don’t have much of a voice. We’re not
very effective at getting our message across.
We need to have people – politicians and
the public – understand the challenges we
out about our business model – they come to
there has to be a way for them to understand
the nature of our business.”
Anjan Mitra
Dosa
pg 3
MANAGEMENT RESOURCES
MANAGEMENT RESOURCES
Recruiting Good Managers
Recruiting good managers is especially important
given the hard cost of replacing a manager (which
the People Report estimates to be approximately
$11,000), as well as the opportunity costs when
restaurants suffer from not having seasoned
managers in place who know the company, its
products, and its customers. The People Report
also measured a strong correlation between
management turnover and same store sales. To
Online Recruiting Resources
in small groups to create their own restaurant
concept which they present at the end of the
summer. Danny says these internships have great
word of mouth and are promoted at midwestern
AZ, also have management training programs.
Grant Halliday, Director of Operations, Harvest
Restaurants, says they have a position called
a “key holder” or “key employee” that allows
interested hourly employees to take on additional
responsibilities (e.g., opening one of the
restaurants by themselves, working on special
followed by recommendations
from employees and networking
within the culinary community
– both locally and via Women
Chefs and Restaurateurs. I
prefer referrals from people I
work with and/or know.”
lead to the management
program. Alain Ané, VP
of HR, Fox Restaurant
of their managers come
from inside the company.
“We recently created a 12LOOK WITHIN “Most of our
week management training
managers
come
from
program because we felt
within the company,” says
formalized training was critical
Marty Shapiro, Founding
to developing managerial
Partner, Myriad Restaurant
candidates. We promote
– Jamie Leeds, Chef/Owner,
the program throughout
Hank’s Oyster Bar, Washington, D.C
“Existing employees
the company and have a
naturally have a better feel
dedicated manager who is
for our systems and expectations, plus our staff has in charge. She ensures that necessary resources
acclimated to them and a mutual respect already exists.” are available to candidates and follows them
Myriad’s MIT (Management in Training) Program through the program to make sure they are hitting
typically takes a year to complete and gives their marks.” Alain adds that there is a tuition
trainees the opportunity to work closely with senior
management in purchasing, private events, wine,
as well as all in service positions. “Watching people and skills that can help them to become managers.
grow up in our organization allows us to evaluate their
strengths and weaknesses in a variety of areas, as well
as their leadership qualities.
individuals as MITs rather then hiring them from the a tremendous amount of time and effort grooming
outside is advantageous as it enables us to work employees for management positions. “If we believe
someone will make a good manager but he or she has
a gap in education or skill set, we create a customized
program.” He adds that B&B is creating an internal
made that commitment and investment in them.”
including management, for its 2,300 employees to
Bowl. “Because they know the company and
we’ve seen them in action, they end up being on
a fast track when moving into management.” He
propose management candidates from all the
college summer internship program also provides
excellent managerial applicants. “If you’ve got a great
intern, it’s like having a long working interview,” says
restaurantbriefing.com
VP, Product Management, PeopleMatter. And
GENERAL
focus primarily on developing and promoting
current staff – supplementing with employee
referrals and networking
with culinary organizations
and vendors. Most also
conduct a broader outreach
on their websites’ career First and foremost, I like to
pages and via social media recruit managers from within,
along with working with
industry recruiters.
While the landscape is constantly changing,
TURN TO THOSE YOU KNOW Alain says Fox
has been very effective. “Employees feel a great
sense of responsibility when recommending someone,
and we’ve found that they only endorse people who will
make them look good.”
build industry contacts for managerial candidates
and referrals. And Grant advises talking to
vendors. “They know the competition and know
who’s not happy.”
JOB
BOARDS
Monster
and
with postings across industries.
typical search engines, aggregator sites
such as Indeed, Glassdoor, SimplyHired,
corporate and employer websites.) “While
aggregators only recycle content from other
sites, they have been successful because
through Indeed,” reports Kay.
NICHE JOB BOARDS While aggregators
engines use more specialized criteria such
but captive audiences,” says Kay. Some
examples targeted at the hospitality industry
a
partnership
between
the
NRA and
to resumes, ads or prominent placement,
SOCIAL NETWORKING “Social platforms are
getting an increasing share of recruiting
dollars because they are able to make
connections in candidates’ natural habitats,”
have immediate connections with high
relevance, in part because these networks
often know a lot about applicants from their
most popular social networking sites used for
recruiting – professional networks (that can be
used for references and recommendations)
are strong, and thousands of people post
their resumes. However, due to the number
of users and the possibility of creating a
strong company brand presence, many
make a case for using Facebook.
pg 4
MAKE
AROUND THE USA
PARTNERSHIP
Kids Dine Out
REWARDING
SM
with American Express
ways to appeal to families in early evening hours:
Brooklyn, NY, “parents are grateful for a
friendly atmosphere where they can relax with their
price, and where there are other families, so
they don’t have to be too vigilant about their kids’
includes a drink, entrée, a vegetable or noodle
side, followed by a vanilla or chocolate sundae. He
says parents are concerned about what their kids
are eating and appreciate that the restaurant takes
says a lot of places offer discounts, but offering
free meals for kids sets Stage House Tavern apart.
“We’re seeing familiar faces and new ones, plus
some families come back on other nights, too.”
night business is up, but Donald adds, “As with all
of our promotions, we will continue to review sales
monthly to determine whether to continue.”
This year, American Express and Share
Our Strength’s No Kid Hungry® campaign
will celebrate the 23rd anniversary of their
partnership. Over this time, American Express
has contributed over $30 million through its
partnership. Most recently, American Express
wrapped up a 2013 holiday campaign, Dine For
Los
Angeles, CA, says, “We were once tagged by a local
campaign and raised enough to provide
millions of meals to children in need.
kids, which is something we really didn’t anticipate
– we wanted to become part of the community, but
the fact that we attracted families was a surprise.”
He says parents are delighted that they can have
good food with a glass of wine or craft beer and
In 2014, American Express is proud to
continue its commitment to the No Kid Hungry
campaign and to help support the vast number
of chefs and variety of restaurants who share
their own strengths, talents, and resources to
make the end of childhood hunger in the U.S.
they don’t make a lot of money on the kids’ menu,
turkey meatballs, organic soft serve, etc. “Our
when it might otherwise be pretty quiet. “We’re
in a neighborhood with lots of families and I’m a
like kids. We want kids to be comfortable and by
making kids happy we develop good relationships
with their parents, who often come in at other
times by themselves” . . . At Stage House Tavern,
Somerset, NJ, kids under 12 (a limit of two per adult)
eat free every Wednesday from 4pm to closing.
“Family business is very important for us and this
promotion gives those who don’t know us a good
reason to check us out and it also rewards those
who
regularly bring
families in,” says Donald
AROUND
THEtheir
USA
the counter and a server brings the food and drinks
to the table – is appealing to parents who don’t
have to wait for the check.” To keep the kids (and,
as it turns out, parents) busy, instead of crayons,
Paul found “sculpey” (a polymer clay that is soft,
pliable, doesn’t dry out, and doesn’t make a mess
in the restaurant) at an educational supply store.
It’s now so popular that he buys it by the palette.
He adds, “From 4:30pm – 7pm we’re focused on
families and then at 7pm we lower the lights, the
TASTE OF THE NATION Since it began in 1988,
Share Our Strength’s Taste of the Nation®
event series has raised more than $85 million
to support the No Kid Hungry campaign’s
work to end childhood hunger in America, and
the nationwide events – 32 this year – have
more, visit
DINE OUT FOR NO KID HUNGRY Every year in
every state, September has become the
month to dine out for No Kid Hungry. Since
its launch in 2008, thousands of restaurants
of all sizes and from all segments have raised
more than $18 million. Restaurants participate
through a variety of pledges and promotions,
and consumers support those restaurants
with their dining dollars and donations. Help
your colleagues across the country raise the
critical funds necessary to end childrehood
hunger in America. For more information, visit
nokidhungry.org
.
)
TODAY’S CONSUMER
Family Business
TREND
accomplishment. The sentiment is consistent
home (66% of Millennials think spending time with
family is a sign of success) and is stronger among
OPPORTUNITY What’s behind this is a heightened
appreciation of meaningful moments and
experiences – consumers focusing on what they
have and what’s important – and restaurants
are well positioned to provide the setting. The
opportunities extend beyond what are considered
“family” in America is shifting and broad. According
households (those with three or more generations)
in the U.S., up more than a million since 2000.
Single parent families are also on the rise, as
are the number of older children living at home
parents’ homes in 2012. There is also an increase
not related but who consider themselves family)
identify and understand your “family” audience
and their particular needs, and to remember the
common sentiment behind the desire to gather.
sure their experiences are welcoming and easy to
allow them to focus on each other.
CAUTION The opportunity to be a part of family
(those comprising a husband, wife, and one or
more children) make up less than half of American
households today. They also report that there
are now more than 5 million multigenerational
restaurantbriefing.com
Events begin in March and will be held through
October. For more information and for tickets,
visit TasteOfTheNation.org.
style options (targeted to your family demographic)
Trend Source: The Futures Company, U.S. Yankelovich MONITOR
RESTAURANT BRIEFING
AVAILABLE EXCLUSIVELY ONLINE
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Published exclusively for American Express Travel Related
Services Company, Inc. by Davidson/Freundlich Co., Inc.
All suggestions become the property of American Express
without cost or obligation to American Express.
© 2014 American Express Travel Related Services Company, Inc.
email: editors@restaurantbriefing.com
pg 5