Foodservice news | KRG Hospitality

December 27, 2022by David Klemt David Klemt No Comments

FAST Act Dealt Knockdown Blow

FAST Act Dealt Knockdown Blow

by David Klemt

A bill we think is one to watch, California’s Fast Food Accountability and Standards Recovery Act, may be on the ropes already.

Assembly Bill 257, known as the FAST Act, is “on hold” until 2024. So, while the Save Local Restaurants coalition and voters have yet to kill the bill, it may be out on its feet.

We reported two months ago that fast food chains were moving quickly to kill the FAST Act. It appears that the initial attack on AB-257 was successful.

That is, the chains and coalition got what they want: the ballot initiative vote has knocked down AB-257.

For those unfamiliar with the Save Local Restaurants Coalition, the following organizations are members: The National Restaurant Association (NRA), US Chamber of Commerce (USCC), and International Franchise Association (IFA). Further, fast-casual and QSR chain coalition members—including Starbucks, In N Out, McDonald’s, and Chipotle—threw nearly $13 million at the ballot measure that halted FAST.

What’s FAST?

To read AB-257, the FAST Act, in its entirety, click here.

In summary, FAST:

FAST does the following:

establishes the Fast Food Council, ten members appointed by the Governor, the Speaker of the Assembly, and the Senate Rules Committee. The council will operate until January 1, 2029;
defines “the characteristics of a fast food restaurant“;
gives the Fast Food Council the authority to set “minimum fast food restaurant employment standards, including standards on wages, working conditions, and training“;
provides the council the power to “issue, amend, and repeal any other rules and regulations, as necessary”; and
allows the formation of a Local Fast Food Council by a county, or a city that has a population of more than 200,000.

Voters effectively stopped California from implementing FAST until November 2024 at the earliest. (That is, if the California Secretary of State verifies that the referendum effort did indeed secure the required amount of signatures.)

Opposition

A statement from Save Local Restaurants reads, in part:

The quick-service restaurants targeted by the law – which include coffee shops, juice bars, pizzerias, delis, and salad shops – already operate on small, single-digit profit margins. These include more than 10,000 small businesses, including thousands of women- and minority-owned businesses.

If these restaurants are forced to absorb the costs, the result will be bad for workers and local communities. To survive, many restaurant owners will have no choice but to reduce worker hours or introduce automation. Some may choose to leave their communities entirely or go out of business.

As is often the case with overreaching California policies, this is likely only the beginning.

Additionally, the National Restaurant Association, a member of the coalition, has said the following:

The impacts of the FAST Act won’t be limited to quick service restaurants in California. The law allows the new regulating council to set a higher minimum wage for quick service restaurants. Independent restaurants will, however, be forced to increase their pay to match, so they can remain competitive when recruiting and retaining workforce.

Takeaway

We believe this bill is one to watch because similar efforts could spring up in other states. Also, just because the bill is on hold until 2024 in California doesn’t mean other states aren’t working on similar legislation right now.

Now, there are obviously two sides to consider. Opponents, as we see above, say FAST will raise prices, eliminate jobs, and hurt families.

Proponents believe FAST will protect the health, safety, and welfare of fast-food workers. Additionally, the Fast Food Council could increase the minimum wage for fast food workers above California’s $15.50 minimum (effective January 1, 2023).

We’ll keep an eye on FAST over the next couple of years. Perhaps the coalition can work with California on a bill that protects fast food workers and doesn’t hurt operators and the communities they serve.

At any rate, FAST is down but certainly not yet out.

Image: Johann Walter Bantz on Unsplash

December 12, 2022by David Klemt David Klemt No Comments

Is Restaurant Revitalization Back?

Restaurant Revitalization Back on the Table?

by David Klemt

After watching the Restaurant Revitalization Fund die a slow, painful death earlier this year, three senators are trying to help the industry again.

Three Democratic senators seem to think that the RRF battle isn’t over. Senators Ben Cardin (D-MD), Sherrod Brown (D-OH), and Patty Murray (D-WA) are trying once again to help RRF applicants. As a refresher, Sen. Cardin is among the original RRF legislation authors.

Last Thursday, the senators introduced the Restaurant Revitalization Tax Credit Act. Now, before we get into the details, it appears this bill is a stop-gap of sorts. A statement from Sen. Murray suggests as much.

Per a statement from Sen. Muray, the “Restaurant Revitalization Fund left too many behind. I believe we need to replenish the Fund and will keep pressing to do so. Until that happens, bills like the Restaurant Revitalization Tax Credit Act will help keep restaurants afloat.”

It’s safe to say a significant number of operators prefer replenishment of the RRF to a tax credit. However, this could represent a step in the right direction.

The Restaurant Revitalization Tax Credit Act

For those with an interest in dissecting the bill, the text in its entirety is here.

In summary, here’s what Sens. Cardin, Brown, and Murray want to see become law: a payroll offset of $25,000. Of course, it’s not that simple—there are requirements and nuances.

First, the only eligible restaurants are RRF applicants who didn’t receive a grant. Second, the restaurant must prove:

operating losses of at least 30 percent in 2020 and 2021 in comparison to 2019; or
losses of at least 50 percent in either 2020 or 2021 in comparison to 2019.

Additionally, applicants must have been operating at least as far back as March 14, 2020. There’s also a payroll tax requirement: the applicant restaurant must have paid the taxes in at least two quarters in 2021. But wait—it doesn’t end there.

Restaurants with ten or fewer employees could offset a maximum of $25,000 in payroll taxes for the entirety of 2023. However, for every employee over ten, the refund cap drops by $2,500.

So, this bill appears to target very small operations for assistance. Assistance, we can only hope, that’s meant to help until the Senate and House replenish the RRF.

After all, Sen. Murray did say this bill—”bills like,” to be precise—is meant to “help keep restaurants afloat.”

It’s difficult to view this effort through anything but a skeptical lens given what happened earlier this year. And hope, as the saying goes, isn’t a strategy. But I suppose this bill represents a glimmer of hope that the estimated 175,000-plus RRF applicants who never received a grant may still get the help they deserve.

Image: J. Amill Santiago on Unsplash

November 9, 2022by krghospitality krghospitality No Comments

2023: Year of the POS Systems?

2023: Year of the POS Systems?

by David Klemt

Image from SpotOn press release

According to SpotOn, the industry could be in for a tech revolution next year as independent operators pursue more powerful POS solutions.

The results of a survey conducted by the cloud-based POS platform are rather revealing. In an effort to better understand where the industry is heading, SpotOn surveyed 300 independent and small-chain restaurant operators.

Both full-service and limited-service (LSR) concept operators participated in this SpotOn survey. Intended to identify the challenges operators face currently, the results reveal much more.

Below, the picture these survey results paint for the industry.

Legacy vs. Innovation

This isn’t the first time I’ve stated the following: Our industry hasn’t been the fastest to implement new technology.

However, we did appear to turn that around in 2021. Now, heading into 2023, our industry may be pursuing cutting-edge tech solutions even more fervently. Today’s guest expects more tech, and your team likely wants access to more modern tech that makes their jobs easier.

Per SpotOn’s survey, 81 percent of independent operators still use so-called “legacy” POS systems. These are “traditional” systems from companies that have been around for quite some time.

It’s not difficult to understand why the vast majority of independent operators continue using legacy systems:

Investing in a new platform requires expenditures of money and time.
Introducing a new POS platform requires staff training.
Staff need to grow adept at using the new system.
It can be daunting to research the available platforms and implementing change.

So, independent and small-chain operators have a choice to make: Stick with the familiar or invest in the future. Change can not only be intimidating, it can be expensive.

However, it seems that most operators are ready to throw comfort to the wayside and embrace innovation.

State-of-the-art Benefits

Should the SpotOn survey prove to be accurate snapshot of the industry, 75 percent of operators will implement new tech next year. According to SpotOn, this is largely in response to growing labor challenges, such as scheduling and retention.

The restaurant, bar, nightclub, and food truck platform found that operators are spending as much as 20 hours per week on administrative tasks. State-of-the-art POS systems can slash those hours by:

streamlining operations;
making scheduling simpler;
calculating tips and payout for payroll; and
managing overtime, an increasingly common task.

More modern POS platforms can automate labor management tasks, saving operators time, money, and frustration. Automation and streamlining give operators something invaluable: time.

In particular, innovative and helpful tech solutions provide an operator with time to focus on growing their business. When weighing whether to keep a familiar but less feature-rich POS system or invest in a modern platform that seamlessly integrates many solutions, ask yourself a couple important questions:

What’s my time worth?
What am I focusing on every day?
Am I growing my business or stagnating?
Is my current POS system helping or hindering my team?
Does my POS system streamline and automate any tasks?

Image: SpotOn

September 30, 2022by David Klemt David Klemt No Comments

Operators & Guests Respond to Rising Costs

Operators & Guests Respond to Rising Costs

by David Klemt

Everything is more expensive these days and both operators and consumers have their own ideas for addressing rising costs.

To gather and share insight into people’s mindsets, Restaurants Canada conducted and commissioned two surveys.

For one, the industry research and advocacy organization surveyed operators. The focus was on how much operators anticipated increasing their prices.

On the other side, Restaurants Canada commissioned Angus Reid for a survey focusing on consumers. This survey revealed potential traffic slowdowns and perceived value for money.

For your own copy of Restaurant Canada’s 2022 Foodservice Facts report, click here.

QSR vs. FSR: Consumers

As an operator, converting first-time visitors into repeat guests is paramount. Equally as important: increasing visit frequency per guest.

Of course, an immediate byproduct of rising costs is consumers pulling back and reevaluating their spending. Oftentimes, dining out is one of the first costs consumers slash in order to save money.

Therefore, operators always face the risk of reduced traffic and even losing some guests permanently when they raise prices. However, this is often a necessary risk to take to combat rising costs.

So, how dire is the situation among Canadian consumers currently? Or at least, how did they feel in Q2 of this year? Angus Reid conducted a survey of consumers to find out, and the results can be found within the 2022 Foodservice Facts report.

First, let’s look at visit frequency for QSRs and FSRs. Before we begin, 12 percent of survey respondents answer that they “don’t know for sure” if rising prices will affect their visit frequency for either QSRs or FSRs. Not helpful.

For QSRs, 19 percent of respondents say an increase in prices won’t impact their visit frequency. Thirty-six percent anticipate visiting “a little less often,” while 32 percent will visit much frequently.

As for FSRs, 16 percent of survey respondents won’t change their visit frequency. However, 37 percent anticipate visiting FSRs much less often. Nearly as many, 36 percent, will visit a bit less frequently.

Interestingly, however, is perceived value. More FSR guests believe they receive excellent or good value for their money than they do from QSRs. More QSR guests believe they receive fair, poor, or very poor value for their money.

Overall, though, 90 percent of Canadian consumers feel positive toward the value they receive from QSRs and FSRs.

QSR vs. FSR: Operators

Clearly, it’s good news that the vast majority of Canadians believe they receive good value for their money when dining out.

Nobody enjoys paying more but it appears that both QSRs and FSRs in Canada can increase their prices. At least, they can do so for now while consumers are mostly understanding about inflation.

Restaurants Canada asked QSR and FSR operators a simple but revealing question for their 2022 Foodservice Facts report. The question? How much higher do operators expect to increase their prices by the end of Q4 of this year in comparison to last year?

The majority of operators in both categories anticipate they’ll increase menu prices by more than seven percent. Twenty-seven percent of QSR operators have that expectation. That number rises to 35 percent for FSR operators.

Twenty-two percent of QSR operators anticipate raising prices five to seven percent before the end of 2022. In comparison, 32 percent of FSR operators expect to raise prices in the same range.

At the moment, Canadian consumers appear to be willing to endure these increases. However, it’s likely they expect prices to drop back to “normal” (pre-pandemic prices) or close to it sometime in 2023. That is, unless Canada slides into recession.

Image: PiggyBank on Unsplash

September 26, 2022by David Klemt David Klemt No Comments

Canada’s Restaurant Labor by the Numbers

Canada’s Restaurant Labor by the Numbers

by David Klemt

While there are positive signs for Canada’s foodservice industry, recruiting and retaining labor continues to be a challenge.

Unfortunately, this isn’t a challenge unique to Canada. Operators throughout North America and indeed across the globe are facing labor shortages.

Restaurants Canada addresses this topic in their 2022 Foodservice Facts report. The non-profit research and advocacy group predicts sales will reach pre-pandemic levels by Q4 of this year.

However, restaurants, bars, and nightclubs may have to achieve traffic and revenue growth despite a significant labor deficit.

Please click here to access the 2022 Foodservice Facts report yourself.

Labor Shortage by Category

In their latest report, Restaurants Canada crunches the numbers for three distinct venue categories. These are quick-serve restaurants, full-service restaurants, and bars and nightclubs.

The organization finds that QSRs and FSRs are facing the greatest shortages. In fact, in response to a survey from May of this year, at least half of QSRs and FSRs aren’t operating with fulls staffs.

For QSRs, 52 percent of respondents say they perceive restaurants and bars they’ve visited to be understaffed. A bit over a third (36 percent) think staffing is “about right.” Unhelpfully, 12 percent “don’t know” if restaurants and bars have enough staff.

So, let’s switch gears to FSRs. Precisely half of survey respondends say restaurants and bars don’t have enough staff. Just like their QSR counterparts, 36 percent say that staffing seems to be at the ideal level. Fourteen percent respond that they “don’t know,” which doesn’t tell us much.

Per Canadians who responded to Restaurants Canada’s survey, bars and nightclubs are fairing better…at first. Frustratingly, a staggering 37 percent of respondents “don’t know” if bars or nightclubs have appropriate levels of staffing. Thirty-two percent think they’re understaffed, 31 percent think staffing levels are “about right.”

Industry professionals are probably already putting two and two together here. As long as guests receive the level of service they expect, from greeting to speed of service, to closing out their check, they think things are fine. If they’re made to wait longer than they want, they’ll likely say a restaurant, bar or nightclub doesn’t have enough people on shift.

Labor Shortage by Role

Okay, so the May 2022 Restaurants Canada wasn’t entirely helpful. It still provides interesting insight. That is, we know how guests perceive staffing in at least most instances.

So, let’s get down to hard numbers: shortages in specific roles throughout the industry.

Here, Restaurants Canada provides compelling information, even if it’s not what we want to see. In comparison to 2019, every role is down by thousands of people. In some cases, tens of thousands.

Below you’ll find the deficits by role:

Foodservice supervisors: -3,100
Chefs: -10,900
Bartenders: -17,600
Maîtres d’hôtel and hosts/hostesses: -21,100
Restaurant and foodservice managers: -22,400
Food counter attendants, kitchen helpers, and related support occupations: -43,200
Cooks: -44,400
F&B servers: -89,500
Other: -18,800

Add that up and that’s a shortage of 271,000 people throughout Canada’s foodservice industry. For further context, the industry boasted 1,265,700 workers. In 2021, the industry was down to 994,700.

Unfortunately, from 2020 to 2021, just 4,100 jobs were recovered, according to Restaurants Canada. This situation clearly shows that operators need to change their approach to staffing.

Now, more than ever, operators must focus on effective recruitment, onboarding, and retention. For tips on making improvements, click here. To learn how to implement employee surveys to boost retention and avoid costly turnover, click here.

Image: Brian Tromp on Unsplash

September 23, 2022by David Klemt David Klemt No Comments

Restaurants Canada Reveals Pandemic Impact

Two Years On, Restaurants Canada Reveals Pandemic Impact

by David Klemt

Restaurants Canada looks at the impact of the pandemic on the foodservice industry in their latest Foodservice Facts report.

Canada’s foodservice industry research and advocacy non-profit sees a return to pre-pandemic operations. However, the path forward toward pre-pandemic traffic and sales levels won’t be without its challenges.

“While nominal sales are expected to return to pre-pandemic levels before the end of the year, traffic still remains below what it was before,” says Restaurants Canada president and CEO Christian Buhagiar.

To access your own copy of 2022 Foodservice Facts, click here.

Industry Still Struggling

As an owner, operator, or foodservice professional, you probably have the answer to a specific question in mind.

When will we be “back to normal?” And, of course, the natural followup to that question. Will the industry surpass 2019 traffic and sales?

Restaurants and bars throughout Canada have survived six waves of Covid-19 over the course of two-plus years. There have been an inordinate amount of lockdowns that inarguably forced the permanent closure of far too many businesses.

As Restaurants Canada states (and the rest of us know all too well), there’s no telling if another Covid-19 variant will rear its ugly head. It’s conceivable (but with any luck unlikely) that Canada could face future lockdowns.

At the moment, according to Restaurants Canada, foodservice sales are currently 11 percent below 2019 levels. And yes, that’s after adjustment for inflation. Speaking of which, one reason traffic and sales remain below those of 2019 is consumer confidence. Many Canadians are concerned about a possible recession.

In addition, operators in Canada continue to face a labor shortage.

News Not All Bad

Now, anyone who read the previous section would be justified in lacking confidence in the industry. However, there is good news.

First, let’s compare Q1 of 2022 to Q2. Per Restaurants Canada, just 15 percent of restaurants were able to seat guests with zero restrictions. By April, though, approximately 90 percent of restaurants in Canada could serve in-person guests restriction-free.

Second, Q2 had more positivity in store for operators. According to Restaurants Canada, the FSR segment endured an 18-month decline in traffic when Covid-19 took hold. When restrictions were lifted, the floodgates of consumer demand burst. By Q2, traffic was a mere one percent lower in comparison to 2019.

Going a bit granular, QSR performance also improved in Q2. Per Restaurants Canada, QSR traffic lagged eight percent behind pre-pandemic levels. However, that number improved to just two percent under pre-pandemic levels by Q2.

Compellingly, Q2 still wasn’t done with foodservice industry positivity. While QSRs outpaced FSRs three-fold in terms of traffic, their numbers combined bring the industry back to 2019 Q2 levels.

Restaurant Canada’s positive outlook predicts that the industry will return to pre-pandemic levels by Q4.

Image: StellrWeb on Unsplash