Change What You Think to Change What You Get:
A Look at the State of the Restaurant Industry

The restaurant industry is a fast-moving mash-up of more and better competitors, increasingly compelling alternatives to restaurant dining (whether in-restaurant, takeaway, or delivery), a shrinking labor pool, mounting government regulation, growing pressure for wage increases, and changing consumer and workforce demo- and psychographics. No wonder industry insiders feel under attack. The forces acting on the industry are changing it from what was seen as “hospitality” to something larger that puts it in a basket with other related industries and competitors that could be called the “eating” industry. If so, the new competitive base is any entity that sells food not wholly prepared at home.

Not surprisingly, the effect of a growing competitive base is to intensify the linked challenges faced by restaurant operators:

  • Hiring, developing, and retaining quality management and hourly employees
  • Ensuring the defining characteristics of a strong brand; namely, a consistently predictable customer experience
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Portrait of a female restaurant manager crossing her arms

A larger competitive base is good for employees as it increases employment opportunities at all levels, making it more difficult to harness the force of Stable Quality Management at the unit-level (SQM). Stable Quality Management at the unit-level is the key to a consistently predictable customer experience as it is the cornerstone of a restaurant that is Fully Staffed with Fully Trained employees (FSFT). It is the restaurant-level energy generated by these two factors that builds a strong brand and real growth in sales and profit. Virtually any experienced operator who reads this paragraph would agree with the success factors described and recognize that they have always been true.

In light of these truths, it’s amazing that for the 40+ years I have worked in the industry, high turnover has largely been accepted by operators as a fact of life and something they simply had to work around. Unfortunately, these workarounds often compromise the customer’s experience by reducing food quality, being short-staffed, putting undertrained staff on the floor, asking employees to work double shifts, and hiring “warm bodies.” I thought the acceptance of high turnover was wacko when I first encountered it and still do: If you believe that a compelling restaurant experience is about great food on the one hand and great service on the other, why compromise success by allowing high staff turnover?

The Staffing Numbers Game

Hopefully, a picture is worth more than a few words; if so, then my bucket metaphor for restaurant staffing will ring a bell with you.

Leaky buckets filling with water

The bucket represents the ebb and flow of a typical restaurant staff – your staff is in the bucket. Typically, the bucket is filled through activities such as recruiting and hiring. The holes in the bucket represents staff turnover, and the more holes, the higher the turnover rate. For much of my time in the industry, staffing a restaurant has been a numbers game where operators focus their attention on the opening, trying to fill it faster than it is drained through turnover. Despite the fact that almost no one would argue with the importance of being fully staffed with a fully trained crew, this is pretty much how the restaurant industry has functioned for a long, long time, resulting in being FSFT with management and hourly employees an illusory target. It’s hard to reconcile this willingness to operate understaffed with the often heard call to “exceed guest expectations!” as it simply cannot happen without being FSFT. My guess is that doing so absent FSFT results in frustrated rather than motivated employees.

Along with other factors, the result of this situation is obvious: Great restaurants are a small part of a very large industry. Inevitably, these also happen to be restaurants that are FSFT. While I’m happy for those operators in the minority, the future of those in the majority is concerning given the consumers growing options. In the bright light of the state of the industry described above – even with all of the labor saving technology on the table or in the works – the prospects for sustained success in a reformed industry are dim unless restaurant operators take action to turn the imperative of SQM and being FSFT into the reality of the customer’s experience.

The Roots of the Problem

I’ve never met a successful restaurant operator who is short on mental horsepower. The restaurant business is way too complex for that. So why is it that smart people can believe it is possible to operate a successful restaurant or chain of restaurants in the face of chronic understaffing when you know that SQM and FSFT are key to the ingredients of a restaurant – great food, great service, and a fair price? Everything else – décor, location, clientele – is an add-on to a restaurant that already works.

A Comment on Quality and Value
While some restaurant leaders may think so, there is no research to support that consumers expect to pay less than full price for what they receive, but they can be trained to be that way as a mediocre experience – one where the consumer always feels he or she has received less than what has been paid for – may demand the motivational force of a deep discount to bring the real price of the experience in line with its perceived value. If I am correct, the upshot of this observation, combined with the increasing quality of the alternatives to restaurant dining, will be another change in the industry: Only the best-in-segment restaurants will prosper. Being a preferred choice demands an experience that commands full price. If I am correct, in the very near future, there will be fewer, better, and busier restaurants built on a foundation of Stable Quality Management and being Fully Staffed with Fully Trained employees.

To learn more about the roots of the problem, as well as 4 things to do to change it – please download the whitepaper below.  Enjoy!

Download: A Look at the State of the Restaurant Industry

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