by Kevin Stockslager, Senior Vice President, Wray Executive Search
Restaurant industry sales continued to cool down towards the latter part of 2019, with same-store sales dropping -2.1% during he month of December, the lowest mark in two plus years. Traffic also took a hit in December 2019, dropping -5.7%. The continued decline in traffic over the past few years has been of great concern and not likely a trend that will be reversing course anytime soon. The restaurant industry is changing and must continue to be nimble to meet the needs of its various consumer base. Several of the trends in 2019 will stay true in 2020, including the increased focus on hiring and retaining talented employees, implementation of technology, and building off-premise sales.
Looking ahead to 2020, several trends will continue to be major topics of discussion and debate within the industry. For several years, attracting and retaining staff has been one of the leading concerns of restaurant operators. Many restaurant companies have announced plans to increase compensation, as well as introduce bonus programs and creative benefits. Last year, Chipotle introduced a bonus program for their hourly workers and Taco Bell announced plans to begin a $100,000K salary pilot project for managers in late 2020. Unit-level turnover remains at some of the highest rates seen in recent years and this is likely to stay true through 2020. Research in this area indicates that higher base pay, generous bonus structures, and strong training and development programs have reduced turnover, so look for companies to address these areas within their workforce.
The implementation and investment in technology and off-premise also looks to be a continued trend for the industry. As the world of technology advances, restaurant companies will need to follow suite and identify the appropriate mechanisms for increasing consumer satisfaction, convenience, and ultimately, sales. Keep an eye on companies that have been at the forefront of embracing and implementing tech, like Domino’s, for an early look on upcoming tech trends within the industry. At ICR this week, Domino’s CFO Jeff Lawrence discussed recently completed autonomous vehicle tests with Ford and upcoming tests with unmanned autonomous rovers. Off-premise sales, and delivery in particular, will continue to be a major disruptor to the industry in coming years. However, just how to go about delivery has sparked some debate, including at the recent ICR Conference where several restaurant leaders discussed the challenges associated with the movement towards delivery. Of note, leaders cited the potential need for new technology infrastructure, diminished food quality control, and high third-party delivery fees as issues that restaurant brands are wrestling with as they implement and expand delivery options.
While 2019 ended with negative same store sales in the final two months of the year, sales were slightly up for the year, making that two consecutive years of increases for the industry. Look for restaurant companies to continue to focus on technology, off-premise sales, and talent retention to drive sales in 2020.
All the best in 2020!
Kevin Stockslager, Ph.D., Senior Vice President
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