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Technology can help restaurant operators face the challenges ahead.

7 Ways the Restaurant Status Quo Is Being Disrupted

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The restaurant industry—specifically restaurant technology—is in store for more disruption in 2018 and beyond.
By David Cantu March 2018 Expert Insights

Restaurant operators and managers had a lot thrown at them last year. New and expanded labor legislation in big cities and across entire states have complicated compliance for some businesses and sowed uncertainty among others. Minimum wage increases continue to drive up labor costs across the restaurant industry. And a new White House administration has already begun influencing the industry with a series of rulings and decisions that impact restaurant operators.

Of course, in the restaurant industry, some things will remain constant. Operators will always strive to deliver the best product and best experience possible to customers, keeping guests satisfied and coming back for more. That stability has rewarded the industry with steady operating profit growthMoody’s Investors Service is projecting the industry to post a 2–4 percent increase in the next 12–18 months as consumers continue to dine out and operators open new locations.

But the restaurant industryspecifically restaurant technologyis in store for more disruption in 2018 and beyond. I’ve outlined seven key hot-button issues that restaurant operators will face in the coming months, and how technology can help.

Increased Demand for Delivery

If you work in the industry, you’ve felt the intensity surrounding delivery. Traditionally, delivery was relegated to restaurant concepts that focused on a few limited types of cuisine, like pizza and Chinese food. Today, consumers expect every restaurant to deliver. On average, off-premise sales make up roughly 10–11 percent of the industry's total sales, Zacks Equity Research reports. That means huge opportunity for those businesses who can crack the delivery code.

Some brands are busy ramping up their delivery strategies, from building delivery-only kitchens to entire stores solely for delivery and to-go orders. Operators are also seeking a piece of the third-party delivery market with services like GrubHub, Seamless, and UberEats.

In order to offer delivery services, operators need to understand how doing so will affect their staffing levels and store traffic. Technology solutions that provide the ability to forecast sales by revenue center can help operators and managers better understand those metrics, optimize their labor costs and increase sales.

Managing Labor Compliance

The labor compliance landscape only grew more complicated in 2017, and so did the risk for penalties to restaurant operators.

Sweeping legislation has passed across multiple states, cities and municipalities supporting a “secure” or “predictive” scheduling model. After passing in New York City and statewide in Oregon, it is becoming more apparent that predictive scheduling laws could creep up in your state as well.

These laws present a challenge and potential financial impact to the bottom line for operators and managers who don’t schedule in advance. Technology will help your business manage these laws, with features like configurable labor rules, manager alerts to potential compliance violations, shift transaction reporting and continuous electronic documentation.

A Firm Belief in Forecasting

Each year, it becomes more important for restaurant managers to accurately predict performance with intelligent forecasting technology. Operators, if you don’t have these capabilities, you need them.

Believe it or not, new forecasting technology tools are easy for managers to use and can actually learn from the ebb and flow of a business. These forecasting engines minimize human error and present managers with the rationale for adjustments — inclement weather, traffic, limited time offers — building trust in the forecast over time. The user-friendly systems can ultimately help good managers become great managers, and make jobs a little easier for everyone.

Private Equity Franchise Fragmentation

In recent years, private equity firms have begun to feast on restaurant chains. Just this past fall, Roark Capital Group purchased Buffalo Wild Wings Inc. for $2.4 billion, while struggling casual dining chain Ruby Tuesday’s was acquired by NRD Capital for more than $330 million. Franchises are appealing because they are, in the words of Forbes Magazine, “a proven business model.”

But private equity groups want visibility into what they’re buying – tech-driven data that tracks labor, inventory, and other processes can enhance that clarity. As the industry tilts toward more consolidation, there will be a focus on how to integrate the data from disparate systems.

Preventing Sexual Harassment

Sexual harassment ignited a national conversation in 2017, first upending Hollywood and then Capitol Hill. The eyes of the nation were also turned to a culture of harassment within the restaurant industry. According to a report from Eater, restaurant workers file more sexual harassment claims than employees of any other industry. Some notable industry heavyweights were revealed to have sordid histories of sexual misconduct, further driving home the need for change within the industry.

Although the headlines may have subsided (for the time being), the #MeToo Movement remains squarely in the national consciousness and there’s added pressure to not only take action to prevent sexual harassment, but to also be open and transparent about it as a company or a brand. Restaurant operators would be wise to bring attention to sexual harassment policies in their places of work through effective training. Online training courses can help restaurant operators provide safe and professional workplaces.

Retaining Restaurant Managers

Did you know it costs a restaurant roughly $15,271 to replace a manager? It’s true. According to TDn2K’s 2017 Recruiting and Turnover Report, manager retention is the key to running a successful restaurant operation. Good managers are the backbone of a business, the people who are on-site collecting institutional knowledge about stores’ performance.

Unfortunately, research finds that 35 percent of unit level managers leave their jobs within a year. This turnover rate creates a costly financial burden for any business and underlines a need for a restaurant to help managers do their jobs. User-friendly systems that are scalable will help good managers become great managers, and make great jobs a little easier.

Cloud Based Point-Of-Sale and Open API

In recent years, the industry has seen a bigger shift toward cloud-based point-of-sale systems. Such technology eliminates the need for the ongoing support and maintenance costs of monolithic back-of-office systems, and provide data security.

Cloud-based systems also open the door for integrations with intelligent restaurant management platforms that help streamline restaurant data, providing visibility and identifying ways to optimize costs and boost sales. Open application programming interface (API) will allow all of that data to flow up and down the organization.

David Cantu is co-founder and chief customer officer of HotSchedules, provider of the first cloud-based intelligent operating platform for restaurants. His 17-plus years of restaurant operations experience helped to drive development of HotSchedules suite of solutions that support restaurant companies, owners and managers solve challenges associated with labor, scheduling, training, inventory, operations, and communications. Last year alone, the company served over 2.8 million users and managed 1.8 billion labor hours.