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MRA Report: Change Is Only Constant

The foodservice industry in Minnesota has more than 10,000 locations, employs more than 150,000 people and offers an amazing number of different cuisines. One of the many aspects of the restaurant business that I find fascinating is the wide range of skills that are required to be successful. Those skills include the ability to provide great food and good service, of course. But also included are the business skills to run the enterprise at a profit, market the restaurant, keep the food safe and the employees happy and productive. The ability to recruit, train and hire talented people has always been a core competency for a good restaurant and is growing in importance in the current tight labor market. It is also clear to me that the ability to adapt to change in the industry, the economy, the labor market and the community is also a key to
success … now more than ever.

Heraclitus, the pre-Socratic Greek philosopher, wrote “Change is the only constant in life” to highlight the need to always plan for and be ready for change in every aspect of our businesses and our lives. Although evolutionist Charles Darwin probably isn’t the originator this idea, it has often been attributed to him: “It is neither the strongest nor the smartest species that survive, but those best able to adapt to change.”  

We certainly have many opportunities to experience and adapt to change in the restaurant business. What’s changing? Just in the few years I’ve worked for the Minnesota Restaurant Association there have been enough examples to make quite a list:

Growth in the labor force has slowed from 2 percent a year in the ‘90s to near zero today. The outlook for labor market growth doesn’t get better for a long time.

Total volume in the industry has grown, with fast casual growing faster than traditional full-service concepts. Full service had 50 percent of the volume less than 10 years ago and has about 30 percent today.

Social media barely existed a decade ago and is everywhere today. One of my friends describes social media as “word of mouth at the speed of light.” Instagram has taken the snapshot to the space age.

The cost of labor has gone up, both because of increases in the minimum wage and a very tight labor market. The Minnesota minimum has gone up from $7.25 to $9.50 since 2014 and in many parts of the state the market wage has gone up even more. The wage in Minneapolis will more than double over the next seven years.

The Affordable Care Act increased the cost of health care and required more businesses to offer coverage. Minneapolis and St. Paul have added mandates for paid time off that also increase the cost of labor.

Convenience stores have more ready-to-eat food each year and are more aggressive about promoting it. Most gas stations are now competitors for restaurants.

Grocery stores are adding whole sections for ready-to-eat foods and carry-out meals that compete with traditional restaurants.

Food trucks have blossomed as an option and now appear in brewers’ parking lots, on city streets and at events of all kinds. Food carts have been around longer and are still often seen in many types of locations.

Delivery was mostly limited to pizza until the last few years. Now a guest can choose everything from artichoke dip to zucchini casserole to be ordered on an app and have it delivered to their home or office. From Bite Squad and Grubhub to Amazon and Uber, the choices appear almost endless.

Carry-out and curbside pick-up have grown in popularity and in volume.

Online ordering was a niche limited to pizza and coffee but is expanding across the industry.

New equipment has opened the door to frozen sandwiches or desserts that can be ready-to-serve, hot and appetizing, in a matter of minutes. Other innovations in the kitchen have the potential to reduce costs, streamline training and improve quality.

To paraphrase Darwin, it may be the business that is best at adapting to change (while maintaining the things guests love) that is most likely to succeed for the long haul.  So, what can you do to get better at dealing with change?

Some ideas:

Attend education sessions like the MRA Hot Topics and our annual Minnesota Hospitality Conference & Expo.

Take advantage of networking opportunities to discuss the industry and ideas for change with your colleagues and even your competitors.

Ask your vendors for their ideas about options and best practices.

Read everything you can. The bi-weekly MRA Update includes announcements of our education sessions and other resources.

Belong to your state restaurant association and use all of its resources to get better at adapting. Membership in the MRA also provides access to the research, events and information offered by the National Restaurant Association.

The pace of change isn’t likely to slow down any time soon. Getting really good at adapting to change and trying innovative ideas is going to be an important business (and life) skill for a long time. 

Dan McElroy is executive vice president of the Minnesota Restaurant Association and president and CEO of Hospitality Minnesota, which also includes the Lodging and Resort & Campground associations.

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