The New York restaurant industry is undergoing changes that affect workers and restaurant owners. Recent reports by the Ford Foundation and McKinsey & Company document long-standing challenges and opportunities in the industry. The following are some of the key findings and implications of these studies. For your information, the Ford Foundation commissioned a study of the industry in New York, and McKinsey & Company conducted a full analysis of the results.
COVID-19 pandemic
Occupational stress was one of the primary drivers of the COVID-19 pandemic, and it was particularly prominent in the restaurant industry, where employees were subjected to financial and emotional strain. These workers suffered from insecurity in their jobs, inconsistent pay, lack of health benefits and paid time off, and uncertainty about their futures. In addition, they were also worried about losing their jobs as a result of the disease, which had hit their community hard.
Regardless of the reason, COVID-19 has caused severe damage to the restaurant industry. It has not only affected people, but the hospitality and tourism industry as a whole. The extant literature reflects the need for further research. In this context, the COVID-19 pandemic has been studied in the restaurant industry, a major subsector of the tourism industry. The researchers sought to identify factors that directly impact restaurant owners.
Labor shortages in restaurants due to pandemic
While the prevailing wisdom is that fast-food franchises will be fine if their locations are understaffed, independent restaurant owners are finding themselves facing a difficult situation. While one in four Cracker Barrel locations are experiencing staffing issues, one in ten franchisees are reporting the same problem. According to the National Restaurant Association, which represents restaurants from fast-casual to upscale dining, 72% of operators ranked recruitment and retention as their biggest challenges.
Despite a growing economy and rising wages, restaurants are having trouble finding enough workers to staff their establishments. The National Restaurant Association reports that teen participation in the industry has reached pre-financial crash levels. However, the U.S. Bureau of Labor Statistics projects a 660,000 decrease in the teen labor force over the next decade. Moreover, a growing number of Gen Z workers are forgoing shift work in their early twenties in order to pursue a college degree.
Impact of delivery aggregators on restaurant operations
There are both benefits and drawbacks to using delivery aggregators for restaurant operations. These services provide an additional channel to reach customers while eroding the competitive advantage of restaurants and their ability to capture data and customize the customer experience. On the one hand, they pass on significant costs, with the marginal profit from an order placed through an aggregator being approximately 50% lower than the same margin from a delivery platform run by the brand. On the other hand, these services place pressure on restaurants because digitally-centric consumers place a higher priority on menu variety, late night hours, and a mobile experience.
The downside of aggregators is that their advocacy rates are low, indicating little enthusiasm from consumers. The brand advocacy index of aggregators is just 9%, compared with 23% for FCs and 23% for QSRs. This suggests that there are plenty of ways to disappoint customers, but few ways to delight them. But while aggregators have a lower advocacy rate than restaurant brands, the rise of aggregators will likely continue to impact restaurant operations in the long run.
Strategies to improve restaurant operations
Restaurants are often criticized for slow service and inattentive servers, but the truth is that there are a variety of ways to increase your restaurant’s efficiency and profitability. Whether it’s making ingredients ahead of time or catering for allergies and special requests, a more organized, efficient operation will benefit your customers. There will never be a perfect customer experience, but your restaurant can strive to provide a pleasant environment for its patrons.
One way to make your restaurant more efficient is to use technology. Implementing a POS system will enable you to create a mini roadmap of the restaurant’s operations, and will make it easier for you to adapt during meal service. This can help you manage your labor costs and maximize profitability. With POS, you can also set up multiple departments for different departments, which helps to streamline your operations. However, you must ensure that all employees are trained to use the software.
