Labor a Top Topic at 2019 ICR Conference
Courtesy of ICR
The annual ICR Conference took place last week, giving restaurant and retail companies public and private a chance to announce their big goals and projections for 2019. Mostly, the big topics of 2018 continue and franchised brands are still trying to figure out everything from delivery to growth in a crowded and evolving restaurant market.
The labor challenge stood out as one of the dominant areas of concern. Almost every presenting company touched on the challenge directly or indirectly. And the franchise space had a lot of new ideas to help franchisees figure it out.
Domino’s pointed to a “fortressing” strategy as one way to keep up location growth, enhance quality and keep drivers happy. Essentially, Domino’s aims to put more locations into existing markets by placing them near the edge of two delivery radii. While the management team said it would drag same-store sales down by about 1 to 1.5 percent, it would spur carryout by being closer to customers and keep drivers on the road and making faster deliveries.
“Our product gets to the customer faster at a higher quality,” said CEO Richard Allison. “And there will be more deliveries per driver per hour.”
Management at the Carrols Corporation, the largest Burger King franchisee, said the first thing it does when acquiring a new restaurant is add employees. That’s a tricky thing to do in this market, but CFO Paul Flanders said it means better economics for acquisitions by about 2 percent. With a projected 5 percent labor inflation for 2019, they’re aiming to get more for the cost.
“You have to pay what you have to pay, so the way we approach it is say, ‘How do we increase productivity and how do we retain people?’ We’re trying to control the cost from that side,” said Flanders.
For Cheryl Henry, COO of Ruth’s Chris, tackling the labor challenge means preparing employees better and charting their career path with them.
“We focus on labor because it’s a very tough labor market. But we have industry-low turnover, that’s a big focus for us,” said Henry, touching on a investment in evolving the brand toward “Ruth’s 2.0.” “Some of the investment we made was related to retention. Part of that was development and training. The more we can invest into training employees the more invested they are and the longer they stay.”
The approach at Wingstop was to simplify the system, cutting hours and unloading some of the under performing menu items.
“While Wingstop is well positioned as a brand to be able to handle the negative impact of wage inflation, we still have a number of initiatives to combat that,” said CEO Charlie Morrison. “We eliminated potato salad and baked beans, replaced them with loaded fries.”
It turned out to be a one-two punch for the brand. The loaded fries are selling four times as much as the prior sides and cut five hours of labor out of each restaurant.
Texas Roadhouse (which only franchises internationally) said just making some employees' duties a little less worse has proven effective.
“We’ve had people in dish, it’s a very difficult position, you’re sweating, you’re getting soaked. Some of our managers shared stories of people hiring multiple-duty employees where they make salads for a few days and then do dishes two days,” said Texas Roadhouse President Scott Colosi.
He said some better aprons helped those dish washers stay a little drier and more flexible schedules have also helped retain employees. He said some restaurants have added more employees, slimming hours for each worker, reducing turnover by way of avoiding burnout.
And one vendor got a lot of attention for some labor efficiencies. Eatsa’s unique digital cubbies to hold completed food cuts the cashier position almost completely, sending customers to one of several kiosks instead. That alone saves 15 hours of labor each day at each Eatsa-enabled restaurant. A “digital backline” behind the wall of digital cubbies helps to, according to by sending orders intelligently to focused workstations behind the scenes.
“Production labor in the digital backline is two times more efficient and up to 50 percent higher peak capacity,” said Jeff Spitulnik, head of products, marketing and design at Eatsa.
Judging by all the focus on labor discussed ICR, expect to see a lot more evolutions and more novel approaches to hiring and retaining workers though 2019.