Restaurant news | KRG Hospitality

December 9, 2022by David Klemt David Klemt No Comments

Starting a Business? Consider These States

Want to Open a Business in 2023? Consider These States

by David Klemt

If you’re considering opening a restaurant, bar, nightclub, eatertainment venue, or hotel in 2023, you should consider these states.

As it turns out, according to Forbes, one state is the home to a major KRG Hospitality market: Philadelphia.

Per Forbes Advisor, Pennsylvania is among the top five states for starting a new business next year. In fact, the Keystone State ranks number four.

To make their list, Forbes analyzed all 50 states through the lens of five categories:

Business costs
Business climate
Economy
Financial accessibility
Workforce

Within those categories, Forbes examined 18 metrics. The result, as already stated, is that just three states rank ahead of Pennsylvania for this Forbes list.

Top 25 States to Start a Business in 2023

Below you’ll find how the top half of the list shakes out. Indiana, Colorado, and North Dakota claim the top positions. A low cost of living and “a business-friendly climate” put Indiana in the number-one spot.

One interesting reason that Pennsylvania ranks comes down to funding for entrepreneurs. Per Forbes, “total small business loan funding in Pennsylvania is double that of the national average.”

Washington
West Virginia
Rhode Island
Idaho
Utah
Wisconsin
South Carolina
Virginia
Hawaii
Mississippi
Missouri
New Hampshire
Massachusetts
California
Connecticut
Delaware
Ohio
Illinois
Montana
North Carolina
South Dakota
Pennsylvania
North Dakota
Colorado
Indiana

However, the list above is interesting for another reason: the recent addition of consultant Kim Richardson to the KRG Hospitality team. Not only is Kim representing our Philadelphia, Pennsylvania, office, she’s our rep for the Northeastern region of the United States.

That means she’s serving Connecticut, Delaware, Maine, Massachusetts, New Hampshire, Maryland, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont. Or, put another way, Kim is representing KRG in six states on the list above. (Pennsylvania is in bold above, while the other Northeastern states on the list she’s representing are in italics).

Proceed with Caution

Now, a word of reason and caution. Just because someone tells you that a particular state or city is the best place for your business doesn’t mean success will follow automatically.

It really doesn’t matter how great the idea for your concept happens to be—long-term success in this industry takes hard work. And that work starts with the planning phase.

So, no, you can’t just throw a dart at the Northeastern states or a map of one of the states on this list and open your restaurant, bar, or hotel there. Site selection involves more than contacting a commercial real estate agent, viewing a few locations, and signing a lease.

There’s a long list of tasks that you must complete in the planning stage before you ever open your doors. An in-depth feasibility study, a KRG Hospitality specialty, identifies the best location for a specific concept. In actuality, the feasibility study includes several smaller tasks that must be completed.

Again, this is simply to determine the best place for a particular concept. There are many other tasks you must complete, each of which KRG is here to help you accomplish.

So, while this list is interesting, there’s much more for your consideration.

The Bottom 10

Since I know you’re curious, below you’ll find the ten states that represent the tail end of the Forbes list:

New York
New Mexico
Vermont
Michigan
Oregon
Florida
Nevada
Kentucky
Oklahoma
Kansas

Now, another word of caution. These states rounding out the list of 50 doesn’t mean they’re “the worst” for starting a business.

In fact, we’ve had great success in Florida, as one example. So, take this list with a grain of salt: there’s much more to consider for a hospitality concept to give it the best odds of success in any market.

Image: Dan Mall on Unsplash

December 6, 2022by David Klemt David Klemt No Comments

SevenRooms and CSV form Partnership

SevenRooms and Competitive Social Ventures form Partnership

by David Klemt

Guest experience and retention platform SevenRooms will kick off 2023 with a partnership with Competitive Social Ventures.

This new partnership is yet another example of SevenRooms’ continuous growth. For technology in general and our industry in particular, this is excellent news.

Consider how long it has taken, up until recently, for hospitality to embrace tech innovations. Navigating tech solutions can be daunting. Equally intimidating can be the cost of implementing new tech in a restaurant, bar, or hotel.

Watching a tech platform continue to innovate and grow, therefore, is good news for operators and their teams.

SevenRooms traces their founding to 2011. In comparison, many “solutions” never escape the vaporware stage, existing only on paper. With more than a decade of operation under its belt, SevenRooms is established and positioned for longevity.

In other words, the platform is worthy of operator consideration and investment. We make no secret of our preference for SevenRooms at KRG Hospitality. Unless they prove we should think otherwise, the platform is our favorite tech-based guest retention solution.

Beyond functionality, ease of use, and effectiveness, the company’s continuous growth motivates our support. Look at how SevenRooms grew in 2021 alone:

The platform also started 2022 with the hiring of a chief revenue officer, Brent-Stig Kraus.

Social Entertainment

With its headquarters in Alpharetta, Georgia, Competitive Social Ventures blends sports, socializing, and entertainment.

In fact, the company refers to the brands it has brought to market as “competitive socializing entertainment concepts.”

Last year, CSV brought Fairway Social Alpharetta and Roaring Social Alpharetta to market. The former focuses on sports simulators. Roaring Social, on the other hand, delivers a speakeasy experience combined with bowling.

Arriving in 2023, the real estate holding company plans to launch Pickle & Social concepts throughout the Metro Atlanta. As the name suggests, the concept features indoor and outdoor pickleball courts. Guests will also have access to table tennis. And like Fairway Social and Roaring Social, Pickle & Social will feature live music and an elevated F&B experience.

CSV already makes use of SevenRooms’ reservation and guest data management tools. Going into 2023, this partnership will evolve into review aggregation, marketing automation, and table waitlist management. The latter makes it easier for any concept to handle walk-ins as painlessly as possible.

Most importantly, the partnership with SevenRooms empowers CSV to pursue their growth plans. While the growth of SevenRooms is impressive and confidence-inspiring, their commitment to client growth is the real story here.

When choosing their tech stack, operators need to know the relationship is mutually beneficial. In fact, they need to be confident that each platform is here for long-term success.

In fact, operators should look at every relationship through this lens: Is every partner working to help you grow?

Image: Ben Hershey on Unsplash

December 1, 2022by krghospitality krghospitality No Comments

KRG Hospitality Adds to Team

KRG Hospitality Enters New Era of Growth with Addition to Team

by David Klemt

Kim Richardson joins the KRG Hospitality team, representing Philadelphia and the Northeastern US region via the agency’s new license program.

PHILADELPHIA, PA—KRG Hospitality today announces an exciting new addition to the consulting agency’s team. Following several years of success, KRG is now entering a new phase of growth.

Kim Richardson, who has more than 23 years of experience in the hotel and restaurant industry, will represent KRG at the agency’s Philadelphia office. Further, Richardson will be KRG’s representative for the Northeastern region of the United States, serving Connecticut, Delaware, Maine, Massachusetts, New Hampshire, Maryland, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.

As the newest member of the KRG team, Richardson is excited to bring all her hospitality industry knowledge and experience to the Philadelphia area. From Five Diamond Hotels to brick-and-mortar restaurants, she has had her hands in the Philadelphia hospitality scene since moving to the city in 2003. With an admiration for the industry since a very young age, she has a passion for all things hospitality. Most importantly, Richardson brings with her a passion and eagerness to help grow the industry and lead others to success.

“There’s nothing more rewarding than understanding a client’s dream, perfecting it, and bringing that vision to life,” says Richardson.

This exciting new addition to the KRG team represents the launch of the agency’s new licensed consultant program. KRG operates in several key markets—Toronto, Las Vegas, Calgary, Vancouver, Philadelphia, Nashville, Orlando, and the Caribbean—and is planning to add more partners as regional representatives throughout 2023.

“As we move forward from the pandemic era, we look forward to positioning the brand for continued and further success,” says KRG Hospitality president Doug Radkey. “Creating a licensed consultant program provides us the opportunity to reach a wider audience, provide additional value and support for our clients, and help push this exciting industry forward.”

About KRG Hospitality

KRG Hospitality is a storied and respected agency with proven success over the past decade, delivering exceptional and award-winning concepts throughout a variety of markets found within Canada, the United States, and abroad since 2009. Specializing in startups, KRG is known for originality and innovation, rejecting cookie-cutter approaches to client projects. The agency provides clients with a clear framework tailored to their specific projects, helping to realize their vision for a scalable, sustainable, profitable, memorable, and consistent business. Learn more at KRGHospitality.com. Connect with KRG Hospitality and the Bar Hacks podcast on social: KRG Twitter, Bar Hacks Twitter, KRG Media Twitter, KRG LinkedIn.

Image: KRG Hospitality

Cheesy chicken sandwich on paper wrapper

November 30, 2022by David Klemt David Klemt No Comments

The NRA’s 2023 Culinary Trend Forecast

The National Restaurant Association’s 2023 Culinary Trend Forecast

by David Klemt

Ahead of the beginning of a new year, the National Restaurant Association unveils their culinary trend predictions for 2023.

The report is the result of a collaboration between the NRA, Technomic, and the American Culinary Federation (ACF).

For those unfamiliar, Technomic is at the forefront of foodservice trend tracking, industry research, and analysis. Likewise, the ACF is a premier industry organization. Tracing its founding to 1929, the ACF promotes “the professional image of American chefs worldwide through education of culinarians at all levels.”

To predict what will be “hot” next year, the NRA, Technomic, and ACF sent the 17th annual What’s Hot survey to thought leaders and chefs. In direct partnership with the Technomic Menu Research & Insights Division, the NRA predicted the top menu trends from 110 items spanning 11 categories.

Now, this isn’t a full dive into the report in its entirety. Rather, we strongly encourage our readers to download a copy of What’s Hot 2023 Culinary Forecast for themselves and their teams.

What readers will find below are the top 10 trends for 2023. Additionally, we’ll share the top three macro trends for next year, as forecast by the NRA and their partners.

More than Food

Somewhat surprisingly, the NRA’s top-ten list of culinary trends isn’t just a list of food items. Instead, this forecast paints a picture of where restaurants are heading in 2023.

While there are some specific cuisine predictions, the NRA’s top culinary predictions show us, in part, how consumers want to experience the restaurants they visit.

Southeast Asian cuisines (examples: Vietnamese, Singaporean)
Zero waste/Sustainability/Upcycled foods
Globally inspired salads
Sriracha variations
Menu streamlining
Flatbread sandwiches/Healthier wraps
Comfort fare
Charcuterie boards
Fried chicken sandwiches and Chicken sandwiches “3.0” (example: fusion of flavors)
Experiences/Local culture and community

As we can see, operators and consumers expect tighter, more concept-specific menus. Also, comfort foods; shareable (and “Instagrammable”) items like charcuterie boards; and items that show local and global influences may be hot in 2023.

One can consider, then, streamlining their menu to include their top sellers along with local and/or global flavors authentic to their brand.

Below, readers will see that three of the trends above make up the NRA’s top-three 2023 macro trends:

Menu streamlining
Comfort fare
Experiences/Local culture and community

Operator and Consumer Behavioral Shifts

Looking at the macro trends, it’s reasonable to believe the past few years will influence 2023 heavily.

Operators are dealing with inflation, higher costs for everything, labor shortages. Further, according to Datassential, more than a third of American operators are experiencing low traffic and sales levels.

We can expect these issues to follow us into 2023, at least for Q1 and Q2. Therefore, the NRA’s macro trends forecast makes sense. Streamlining menus often leads to streamlining the back and front of house. In turn, doing so can lower costs and boost staff retention.

On the consumer side, it appears comfort foods, chicken sandwiches, and experiences are driving visits and online orders. These are, as we all know, behavioral shifts we can trace back to the start of the pandemic.

We always suggest proceeding with caution, logic, and data when considering embracing trends. Missing out on trends can be just as costly as latching onto a trend too late.

That said, the macro trends certainly seem reasonable. Only time will tell, but the NRA’s 2023 forecast certainly contains several items operators and their teams should give serious consideration.

Image: Arabi Ishaque on Unsplash

November 29, 2022by David Klemt David Klemt No Comments

169 Grants May be the End of the RRF

169 Grants May be the End of the RRF

by David Klemt

UPDATE: According to some sources, the report of $180 million in “leftover” RRF money are inaccurate. The disbursement of $83 million represents the final release of RRF funds.

The $83 million in grants going out this week to 169 recipients may be the end of the Restaurant Revitalization Fund in its entirety.

Unfortunately, it’s possible last week’s awards represent the final grants. This, despite the Government Accountability Office (GAO) finding $180 million in funds in July.

As far as the sources of these funds, that topic remains a bit vague.

However, the story is that more than $150 million are the result of clawbacks. More than a third, if reporting is accurate, is the result of recipients or financial institutions returning grants. Reports indicate another $24 million come from the SBA setting aside $24 million for litigation.

Per the National Restaurant Association months ago, the American Rescue Plan Act of 2021 does not include a provision for a litigation fund. Therefore, the NRA called for the SBA to disburse that money to RRF applicants.

What we do know is that last week’s RRF grant recipients should be receiving their funds this week. According to the SBA, 169 recipients were awarded a portion of $83 million in RRF money.

Again, that’s money the GAO found back in July. It’s also less than half of the reported $180 million the government agency found this summer.

Given the fact that the SBA announced a disbursement of just 46 percent of the “leftover” funds, many believed another round was in the works. Sadly, that may not be the case. It’s possible—and increasingly likely, regrettably—that the rest of the $180 million in funds won’t go to grant applicants.

Now, I want to be clear on one important point: I’m relieved for the 169 grant recipients. I truly hope the funds arrive in time to help them and their teams.

While I’ll feel disappointment if a second round of the $180 million never materializes, I’m happy for those who received a portion of the $83 million awarded last week.

Frustration

So, where does the industry go from here? The failure of Congress to replenish the RRF left a reported 150,166 applicants with zero assistance. According to Nation’s Restaurant News, it would have taken $41 billion to award each applicant a grant. Obviously, $180 million was never going to serve to help that many applicants.

Frustratingly, the answer to the question above appears to be: Move forward on our own. And that unsatisfactory answer has flooded with me opinions.

One opinion? Our industry, it seems, is always left to fend for itself. Despite the millions of people hospitality employs, lawmakers and politicians don’t seem willing to assist us—and therefore their constituents—in meaningful ways.

Another opinion? Perhaps we need to build a more powerful lobby to have our voices heard. Such an effort began in earnest to support the RRF. However, too many elected officials were comfortable refusing to replenish the fund.

A third opinion was shaped by Eileen Wayner, CEO of Tales of the Cocktail. As a guest on the Bar Hacks podcast she addressed the perception of operators and hospitality workers as being adaptable and resilient.

While those characteristics can be admirable, Wayner expressed something I think we all feel: Sometimes, we’re tired of being resilient. Sometimes, we’re tired of being expected to adapt. There are times our industry needs help.

When you’re constantly seen as resilient, people believe you don’t need assistance. What we’ve seen with the RRF and its failed replenishment is that too many people with the power to help can write us off. “They’re resilient,” they say. “They’ll figure it out. They’ll be fine.”

Well, we’re not all “fine.” We needed help, and we deserved it.

Image: CHUTTERSNAP on Unsplash

Delivery worker on bicycle on city street

November 28, 2022by David Klemt David Klemt No Comments

$28.82 per Hour for NYC Delivery Workers?

$28.82 per Hour for NYC Delivery Workers?

by David Klemt

In response to the New York City Council’s proposal of $23.82 per hour for delivery workers, some “deliveristas” are asking for more.

Now, before we proceed, no, this isn’t a re-run of an article from last week. This isn’t a case of déjà vu—it’s the evolution of a news story that’s developing rapidly.

So, how much more do delivery workers in NYC want? Well, they’re after a significant bump over the council’s minimum hourly wage proposal.

Requesting that the NYC Council more accurately account for deliverista expenses, some delivery workers are asking for $28.82 per hour.

Early last week, a group consisting of Los Deliveristas Unidos and the Worker’s Justice Project members came together. They gathered at New York City Hall to make their stance on the NYC Council’s minimum wage proposal.

As the deliveristas see it, an increase from $23.82 to $28.82 more accurately reflects their operating expenses. The argument is compelling when one considers costs beyond fuel.

Asking for More

After all, not every delivery worker in NYC (and other markets) uses a car, truck or SUV to make deliveries. That should explain the use of the term “delivery worker,” not “delivery driver.” Some deliveristas ride motorcycles, mopeds, or bicycles. I’m willing to bet some even use scooters, rollerblades, or skateboards.

Using any mode of transportation as a delivery worker comes with requirements, both legal and practical. For example, deliveristas must maintain insurance, maintain their transportation, and purchase and maintain safety equipment.

And yes, that safety equipment is crucial. According to some reports, around a third of NYC those who deliver on two wheels have been injured on the job. Tragically, 33 delivery workers have been killed since 2020. In fact, NYC says delivery workers have the highest injury rate.

Another interesting development may seem semantic. However, when one takes time to truly consider the point it’s rather poignant.

In asking for the proposal of $23.82 to rise by $5 by 2025, are asking for a living wage. Not minimum wage, as the proposal frames the hike, but a living wage.

One worker, Antonio Solís, as quoted by The City, a non-profit NYC news publication, explained: “We are asking the city to make a $5 adjustment, to go that extra mile to ensure we get to a living wage.”

A Request, not a Rejection

It’s also important to note that NYC’s delivery workers aren’t rejecting the council’s minimum wage proposal. Rather, the request is that the council considers updating their proposal ahead of a December 16 public hearing on the matter.

So far, companies like DoorDash, Grubhub, and Uber Eats haven’t released much in the way of statements. However, there have been reports quoting a handful of representatives. In pushing back against the proposal, they’ve mentioned increased costs; reduced deliveries; and the possibility of “locking out” deliveristas if delivery demand is low at a given time.

Should legislation go into effect after the public hearing, it’s likely we’ll see lawsuits from the delivery companies.

Image: Patrick Connor Klopf on Unsplash

November 25, 2022by David Klemt David Klemt No Comments

SBA Releases 46% of Held RRF Funds

SBA Releases 46% of Held RRF Funds

by David Klemt

After receiving pressure from members of Congress and scrutiny from the industry and media, the SBA has released some RRF funds.

This comes after several months of inaction from the Small Business Administration.

The amount released on Wednesday, November 23 isn’t insignificant. However, the SBA disbursed less than half of the RRF money they’re sitting on.

Still, the news is welcome, particularly to the RRF applicants who finally received a grant.

$180 Million in RRF Funds

Several months ago, the Government Accountability Office (GAO) investigated the handling of the Restaurant Revitalization Fund. Back in July, the fruits of that investigation came to light: $180 million of the $28.6 billion in RRF funding had not been disbursed.

Further, it was reported in back August that the SBA was partnering with the Department of Justice to “formulate a plan on how to distribute” the money.

Now, nearing the end of November, it appears the SBA and DoJ have finalized a plan. Two days ago, on the eve of Thanksgiving, the SBA released $83 million of the $180 million that was discovered in July of this year. If every applicant received the same amount, that works out to $491,124 per grant.

With any hope, this means the remaining $97 million will go to deserving grant applicants very soon.

Where did the Money Go?

We don’t yet know which RRF grant recipients received a portion of the $83 million released this week.

What we do know is:

169 applicants received this week’s grants;
applicants were selected by the order in which they applied for grants in 2021;
each recipient was alerted about their grant award this week;
the recipients are expected to actually receive the money some time next week;
grant recipients have until March 2023 to spend the funds; and
the recipients won’t have to repay the money if they spend it on “approved purchases.”

It’s logical that the disbursement of the $97 million in remaining RRF grants will follow the same procedure.

Statements on this Week’s Developments

This week, both the Small Business Administration and National Restaurant Association made statements about the release of $83 million in RRF funds.

“This week, the U.S. Small Business Administration (SBA) began distribution of returned funding in the Restaurant Revitalization Fund (RRF) program, following the program’s closure in June 2021. In doing so, the SBA worked with the advice of the Department of Justice on a plan to distribute the remaining funds, approximately $83 million,” reads a press release from the SBA.

“In addition to other SBA assistance programs, the RRF has helped more than 100,000 restaurants and other food and beverage business owners survive the pandemic,” continues the administration’s statement.

Sean Kennedy, executive vice president of public affairs for the NRA, said the following about this week’s disbursement:

“The SBA’s action represents the final chapter of our nearly three-year effort to secure dedicated federal pandemic relief dollars for local restaurants. Today’s announcement is great news for those 169 operators fortunate enough to receive an RRF grant, but hundreds of thousands more are struggling with uncertainty.

“We must continue to look forward because the enormous challenges of the industry will continue beyond today. From the recruitment of employees to the constantly rising costs for food, running a restaurant right now is a daily struggle. There are steps the government can take to support restaurants in every community, and we will continue to press for solutions at the federal, state, and local level.”

Image: AR on Unsplash

November 23, 2022by David Klemt David Klemt No Comments

Merchants Support Credit Card Act

100s of Merchants Support Credit Card Competition Act

by David Klemt

Perhaps at least somewhat unsurprisingly, support for the Credit Card Competition Act is growing rapidly among merchants.

In fact, 1,802 merchants are making their position on the bill clear. Those hundreds of merchants drafted, signed, and sent a letter to the House and Senate.

The crux of that letter? To tell our lawmakers to support and pass the Credit Card Competition Act.

To view the letter, sent by the Merchants Payments Coalition (MPC), please click here. For the bill and its status, follow this link.

The Credit Card Competition Act: A Quick Summary

According to the MPC, credit and debit card transactions just in the US reached $3.49 trillion in 2021. Along with those transactions came $77.48 billion in merchant fees—just for Visa and MasterCard.

Why call those out those two processors in particular? Well, it’s because they’re behind about 576 million credit cards. Oh, and they also control 87 percent of the processing market.

In the span of just one decade, Visa and MasterCard swipe fees have risen 137 percent. So, it’s not surprising that merchants are supportive of the Credit Card Competition Act.

There are, indeed, restaurant and hospitality groups attached to the MPC’s letter to Congress. Taking a quick glance, Denny’s franchisees, Dutchman Hospitality Group, and Mandalay Hospitality Group are among the signees.

Obviously, this makes sense—swipe fees are among the highest costs operators face every day.

Where’s this Bill Currently?

It shouldn’t be too shocking to find that this has yet to make much progress. The bill’s sponsors, Sens. Richard Durbin (D-IL) and Richard Marshall (R-KS), introduced it in the senate at the end of July.

Three months later, October 28, an attempt was made to include the bill in the National Defense Authorization Act (NDAA). For those who are unfamiliar, the NDAA is known as a “must-pass” bill. After all, it specifies the US Department of Defense’s (DoD) budget and expenditures each year.

Along with a reported 900 other “riders,” Sens. Durbin and Marshall tried to get their bill passed within the NDAA. Unfortunately for the senators and supporters of the bill, the NDAA vote was pushed until the middle of November…which we’re now past.

Of course, the US did just undergo a mid-term election cycle. So, I suppose it’s reasonable to be a bit more patient with the Senate and the progress of this bill.

Those who work in or support our industry can make their opinion of this bill known. Just follow this link to the National Restaurant Association Credit Card Competition Act portal.

Image: Clay Banks on Unsplash

November 22, 2022by David Klemt David Klemt No Comments

$23.82 Minimum Wage for Delivery Workers?

$23.82 Minimum Wage for Delivery Workers in NYC?

by David Klemt

With a public hearing on the docket for December 16, the New York City Council is proposing “fairer pay for delivery workers.”

The move is a year in the making. Last year, the NYC Council approved legislation with the goal of improving delivery worker pay and working conditions.

Now, the council is moving to increase minimum wage for the 60,000-plus delivery workers in the city.

At the risk of coming across as pessimistic, the legislation is likely to be unpopular with third-party delivery services. After all, when NYC and San Francisco passed laws to cap third-party delivery commissions, the big services filed lawsuits.

So, again, increasing the minimum wage for delivery workers in NYC will probably not go down well with companies like Uber, DoorDash, and Grubhub.

It’s possible we’ll find out before the end of this year. After the public hearing, the NYC Council will consider public comments. Then, the council could move forward and enact the legislation.

What’s in the Proposal?

Should the rule go into effect after the public hearing on December 16, minimum wage would rise to $17.87 per hour for third-party delivery workers. By April 1, 2025, that rate would increase to $23.82.

“This new proposed minimum pay rate would help ensure a fairer pay for delivery workers for third-party apps, providing more stability for 60,000 workers across our city,” says New York City Mayor Eric Adams.

According to reports, Brooklyn Borough President Antonio Reynoso is in favor of the legislation as well.

“It’s absolutely unacceptable that the restaurant delivery workers who provide for so many in this city are not justly compensated for their time, reimbursed for their expenses or provided essential benefits,” says Reynoso.

So, how did the council arrive at the $23.82 per hour figure? Well, we actually have that information:

$19.86, which matches standards set by the New York City Taxi and Limousine Commission for ride-hail drivers;
$2.26 for expenses delivery workers incur; and
$1.70 for worker’s compensation.

Why Legislate Delivery Worker Pay?

It appears the main reason is an incredibly simple one. In short, third-party delivery workers aren’t making minimum wage in NYC.

Per the Department of Consumer and Worker Protection (DCWP), delivery workers average less than the city’s $15 minimum wage. With tips, they’re averaging $14.18. And without tips? As one can imagine, the hourly rate plummets: $7.09 per hour.

According to the DCWP, the average hourly expense a delivery worker incurs is $3.06. So, that drives their hourly pay to $11.12 with tips, $4.03 without.

In an argument likely to be cited in any lawsuit filed by DoorDash (or at least shared in a public statement), the company claims its delivery workers make almost $29 per hour.

Clearly, there’s a discrepancy somewhere. Either delivery drivers are woefully underpaid for the service they provide or multiple researchers are misinterpreting hourly pay data.

Several sources have cited a statement made by a DoorDash representative about the NYC Council’s proposal:

“Dashing allows so many across New York City to earn when, where and how often they choose,” says the rep. “Unfortunately, the proposed rule does not appropriately account for this flexibility or that Dashers are able to choose which deliveries they accept or reject.”

Their statement continues, addressing a possible rise in costs and drop in orders:

“Failing to address this could significantly increase the costs of delivery, reducing orders for local businesses and harming the very delivery workers it intends to support.”

Why Should I Care if I Don’t Operate in New York City?

We’ll see—quickly, apparently—if this proposal becomes law. Should that happen, there’s reason to assume similar proposals will pop up in other cities and states.

We’ll also see whether or not third-party delivery companies file lawsuits in response. They’ve done so for commission caps, after all.

At any rate, this is one to watch. Similar legislation could be coming to your market.

Image: Nik Shuliahin 💛💙 on Unsplash

November 21, 2022by David Klemt David Klemt No Comments

Traffic Up but Margins Thinner

Traffic Up but Margins Thinner

by David Klemt

The One Table 2022 report from Datassential focuses on the state of the operator and what the industry can expect moving forward.

This informative report shares survey results from 801 operators across America. While some of the findings are positive, it’s clear many operators are enduring significant challenges.

For some, traffic and sales are up. However, that’s not the situation others find themselves in.

To download and review the Datassential One Table 2022, please click here.

The Respondents

For this report, Datassential shares the survey answers from 801 respondents.

Most survey respondents are independent operators. In fact, they account for 71 percent of the participants. Making up the rest of the field are chain operators (15 percent) and franchise operators (14 percent).

As far as segment types, the majority of survey participants operate in the fast-casual space (18 percent). Unsurprisingly, fine dining is the smallest group of respondents at six percent. Thirteen percent operate midscale restaurants, and 12 percent are at the helm of casual-dining concepts. Somewhat surprisingly, just ten percent of participants operate QSRs.

Interestingly, the service format is fairly even among survey participants. Fifty-three percent of operators are full-service and 47 percent are limited-service.

Similarly, survey respondents represent the country’s regions pretty evenly:

South: 30 percent
Midwest: 29 percent
Northeast: 21 percent
West: 20 percent

In terms of market type, most respondents operate in the suburbs (49 percent). Following somewhat closely are urban-market operators, at 31 percent. Just 20 percent of survey participants operate in rural markets.

Traffic, Sales and Margins

At first glance, Datassential’s survey reveals positive news.

Now, I’m sure people find the terms “pandemic, “pre-pandemic,” and “post-pandemic” exhausting at this point. However, there’s no denying we continue to feel the aftershocks sent through the industry by the pandemic.

So, how do things look now in comparison to pre-pandemic traffic and sales levels?

First, the positives. Nearly half of survey respondents—47 percent—say their traffic is up in comparison to where it was pre-pandemic. Add to that the 14 percent who say their traffic is the same and 61 percent of operators appear to be in good shape.

In terms of sales, 51 percent of survey participants have good news. That news is that their sales are higher in comparison to pre-pandemic levels. Again, add the 14 percent who don’t see any change. So, that’s 65 percent of operators who appear to be performing well.

But with the good there’s bad. Unfortunately, 39 percent of respondents report lower traffic than pre-pandemic levels. And sales are lower than they were before the pandemic for 35 percent of survey participants.

Operator margins are lower for all respondents. Generally speaking, the profit margin for operators before the pandemic sat at 21 percent. Now, the average is 13 percent. QSRs and fast-casual restaurants are a bit higher among survey respondents: 17 percent and 15 percent, respectively.

On paper things do look up for many operators. However, the industry is still suffering, with a third struggling to rise to even pre-pandemic levels of traffic and sales.

Image: Daniel Bradley on Unsplash