By Bridget McCrea
Like many industry sectors right now, the foodservice industry is balancing challenges with new opportunities as it navigates its way out of the pandemic and begins to plan for the future. At the macro level, the ongoing labor shortages, supply chain disruptions and rising costs have been keeping operators up at night most of the year. More recently, interest rates, inflation and the possibility of a recession have been added to that list.
Specific to the foodservice sector, organizations are also worried about pending legislation, Congress’ decision not to replenish the Restaurant Revitalization Fund, and other issues that could potentially impact their operations either this year or as we move into 2023. To learn more about the macro and micro trends that foodservice operators – and the distributors that fulfill their equipment, product and supply needs – are concerned about, FEDA invited three prominent foodservice industry leaders to share their views at the group’s upcoming conference.
FEDA is excited to welcome three industry leaders who are working on behalf of foodservice operators: Jot Condie, president and CEO of the California Restaurant Association; Michelle Korsmo, president and CEO of the National Restaurant Association; and David Cantu, newly appointed CEO of Black Box Intelligence, a data and analytics firm specializing in the foodservice industry.
Together, these experts will discuss the trends, challenges and opportunities for a sector that was disproportionately impacted by the COVID-19 pandemic and that’s now squarely in recovery mode as diners return to their favorite eateries. Here’s a preview of what attendees can expect from this power session and some key insights into current trends and future prospects for the foodservice industry.
Helping People Find Success in Foodservice
The effort to replenish the Restaurant Revitalization Fund (RRF) appears dead after running into the Senate filibuster earlier this year. The program was seen as a necessary step toward helping restaurants return to where they were before COVID-19, leaving Korsmo and other foodservice leaders looking for other ways to secure financial assistance for the industry.
“Nearly 177,000 restaurants were devastated when RRF replenishment efforts were ended by the Senate in May 2022,” Korsmo says. “For so many who are still working hard to recover, we are encouraging restaurants to check their eligibility for employee retention tax credits (ERTC).” She says this COVID relief can net a small business up to $26,000 per employee who was kept on during 2020 and three calendar quarters of 2021.
“Our association and many state restaurant associations have dedicated partner organizations ready to support restaurants pursuing ERTC refunds,” she continues. And even though business is normalizing, Korsmo says inflation and a tight labor market both continue to create headwinds for the group’s members. “Restaurants are leading efforts to fight inflation, commending Congress on the bipartisan Ocean Shipping Reform Act,” she says, “which helps control supply chain and seafood shipping rates.”
Recently signed into law, the act addresses skyrocketing international ocean shipping costs and focuses on easing supply chain backlogs that are raising prices for consumers and making it harder for U.S. farmers and exporters to get their goods to the global market. Korsmo says there are other issues where policymakers must press further, such as tariff removal in ongoing U.S. economic competitiveness legislation.
“To ease the labor shortage, restaurants urge Congress to advance the Essential Worker Economic Advancement Act, which makes it easier for employers to hire the employees they need,” she explains. “We are actively engaging our members and lawmakers on these critical issues.”
The National Restaurant Association is also working with the National Restaurant Association Educational Foundation (NRAEF) to identify and implement programs to attract employees. The NRAEF’s programs provide education and training to people from a variety of backgrounds, thus ensuring that job candidates have the skills and opportunities they need for successful careers in restaurants, foodservice and hospitality.
“We want people to understand that no matter what you’ve faced, you can find a great life in this industry,” says Korsmo. The Foundation’s work includes training 145,000 high school students at 1,750 schools through the ProStart program, awarding more than $1 million annually in scholarships and grants to deserving students pursuing careers in the industry. It provides competency-based training and jobs for people who are reentering society through the Restaurant Ready and HOPES programs. The Foundation also offers specialized training and career support to members of the United States military.
With labor shortages still a major issue – the restaurant industry remains 750,000 jobs below pre-pandemic levels – the association is increasing its efforts to lure people into restaurant careers. Recently, the National Restaurant Association launched the Restaurant & Hospitality Leadership Center (RHLC), which partners with restaurant operators to help them train and retain their employees through the association’s nationally accredited apprenticeship programs. RHLC currently offers three training programs in partnership with the U.S. Department of Labor – line cook, kitchen manager and restaurant manager – with the goal of expanding in the future to address ongoing workforce needs.
“Building a strong workforce has always been key to a great hospitality business,” Korsmo points out. “That will not change and we are here to help operators spread the message that people can find success in this business.”
Doing its Part to Help Struggling Restaurants
Just as industry groups are looking for opportunities to enhance the recovery, some policymakers have proposed new laws and regulations that could dampen that return to normalcy. Take California Assembly Bill (AB) 257, which would establish the Fast Food Sector Council (council) within the Department of Industrial Relations to establish sector-wide minimum standards on wages, working hours and other working conditions for fast food restaurant workers. The California Restaurant Association says the bill would harm tens of thousands of counter service restaurants in the state, increase employee costs and introduce onerous new workplace rules – all at a time when many establishments are struggling to get back on their feet.
“We should be helping this vital sector of our state’s economy keep their doors open, not actively pursue measures that would kick them closed,” Condie said in a statement. In the long term, he warned AB 257 would attack restaurants that chose to be part of a franchise model. “The bill strips franchisees of autonomy and reduces them from independent business owners to corporate middle managers,” Condie continued, “seriously restricting new entrepreneurs who want to be in business for themselves and benefit from a brand that is already known to the public.”
Environmental regulations are also on the CRA’s radar. Right now, the association is working to prevent a ban that would eliminate restaurants’ ability to use gas stoves and ovens. Condie said the ban would not only impact both residential and commercial construction but have a truly devastating impact on restaurants.
“We support the laudable goals of reducing greenhouse gas emissions and efforts to address climate change,” Condie said in a statement, noting that Berkeley’s natural gas ban is both illegal and ill-conceived. “Restaurants rely on affordable natural gas for cooking and baking, as well as for heating, hot water and reliable power,” he said. “A natural gas ban won’t just change the way restaurant kitchens do their cooking, it has the potential to harm restaurants financially and fundamentally change their business. The CRA will continue to fight to protect the interests of its members.”
In doing its part to help struggling restaurateurs secure the labor they need to get back on their feet, the CRA recently introduced a certified training program in collaboration with Train 321. The new online Learning Management System (LMS) offers a variety of courses for FOH and BOH instruction and will complement the services the CRA already provides to California’s restaurants.
“Restaurant owners are telling us that post-pandemic realities are bringing a large class of first-time workers and applicants with little to no restaurant experience,” said Condie in a press release. “These new training products are intended to give new restaurant employees basic but critical knowledge, easing the costly and time-consuming training demands on an increasingly stretched restaurant management.”
Trend Tracking
A 30-year restaurant industry veteran, Cantu keeps close tabs on the sector and the outside forces that impact it. By his company’s last count, about 50 percent of all states experienced negative sales growth and just 10 achieved positive traffic in June. That was the 15th consecutive week in which the industry experienced negative traffic growth, with fine dining and fast casual being the best performing segments.
Other key trends Black Box Intelligence has reported on this summer include increased average check size for restaurant operations across the board, which means customers are spending more money per trip. Some of this may be attributed to the price increases brought on by higher supply costs and the ongoing supply chain shortages.
Labor shortages are also impacting restaurant owners, who are dealing with this challenge both on the hourly worker and the management front, where turnover is high. Black Box’s data is also showing a general drop in traffic that began during COVID and that hasn’t let up all of the way. “Although traffic has increased since the beginning of the pandemic,” it points out, “we are still not at normal traffic levels.”