Sullivision.com chief executive Jim Sullivan
The restaurant industry is like an escalator; you can move up or you can move down. But if you’re standing still, you’re walking backwards. And while we have yet to witness the calendar end of 2015, I think it’s prudent now to scan the horizon to get both a grip and a jump on the key issues we’re likely to face in 2016. A reasonable approach is to zoom out to assess and identify the critical issues, then zoom in and focus on the granular tactics necessary to help us successfully perform in the storm. First, some good news and bad news.
The good news is that 2016 appears to be a promising year for foodservice operators relative to the U.S. economy and consumer dining habits, both of which are projected to improve. The bad news is that the business isn’t going to get any easier. Not only will our razor-thin margins be challenged further by rising wages, commodity prices, competition and government regulations, but safety and security has now ratcheted upwards from data breach concerns to terrorist attacks, as we sadly witnessed at a Paris bistro last month. But single-mindedness is critical in a challenging marketplace, and so I’d like to share my list of the eight mission-critical issues you should be focusing on now to insure a successful 2016.
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1. Rising wages. The combination of government mandates and union protests have all but guaranteed that this issue will bedevil every operator in 2016 and beyond. And simply raising menu prices unilaterally is not the right response. Take a close look at all your prime cost line items and transactions to assess where strategic price increases make sense. This means finding new ways to improve purchasing, scheduling, productivity and throughput so that the overall cost of meal production is lower. Maybe the first quarter of 2016 is time to re-invest in some menu merchandising training too?
2. Staffing and turnover. Although I’ve yet to see any hard, empirical data to support the “fact” that fewer people are applying for foodservice jobs than five years ago, a shrinking labor pool is a reality in many markets. So if fewer qualified people are applying for open kitchen and front-of-the-house positions, then your twin 2016 HR priorities are clear: employee development and employee retention.
In effect, we have to become experts at grooming a “farm team” of internal performers and treating them with dignity, care and respect to prevent voluntary migration to a competitor’s employ. Remember that labor is not your primary controllable expense, turnover is. Do the math: if you employ 40 people and your hourly turnover rate is 50 percent, you’re churning 20 people per year, which dings you $40,000 in replacement costs ($2,000 per employee), according to the Bureau of Labor Standards. Assuming a 10-percent pre-tax profit, this means you must generate $400,000 in gross sales to pay for your annual turnover costs. A 25-percent reduction in turnover saves $200,000 in sales and improves service, teamwork and productivity.  
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3. Training and development. If you want to build a stronger culture and climate, hold every manager responsible for the culture and climate that he or she builds. Strong team cultures are synonymous with strong team development. Assess talent and training gaps quarterly and re-design succession planning to be developmentally-oriented (talent) as opposed to simply replacement-oriented (tenure). Training is a process with a beginning but no end.
4. Unrelenting data. Instead of managers chasing information, technology can now send information directly to managers. But if our managers are drowning in information and starving for knowledge, filters are needed to control volume, frequency and relevance of all that data. Identify data most relevant for planning purposes and data that applies best to shift leadership so that you don’t inhibit the effort of your unit-level managers and above-restaurant managers. Data is power — when you know how to use it — but we still manage with people and not through information. The most overlooked use of data is identifying the hard facts behind the soft stuff like leadership development; have your data vendors work on that for a change.
5. The end of the casual customer. Nothing costs as much as caring, except, maybe, not caring. Customers have expectations of foodservice operators today that far exceed serving hot food hot and cold food cold. Make sure you’re aligned to how your customers use technology and prefer to stay connected with your brand. Customers also have long memories, and, as I mentioned last month, the mindful customer is the enemy of the thoughtless business. Be brilliant at the basics and sharpen the saw of service and heighten hospitality in 2016. And obsess about the next customer, too. In other words: Always Be Marketing.
6. Technology. Stay current on tech that moves your business forward and keep your data safe. Make technology a perpetual line item on every manager meeting agenda.
7. Continuous improvement. Trace recent improvements in your systems, processes, procedures or people back to both the major decisions you made and the key contributors who drove those decisions’ success. This is called “network charting” in Silicon Valley and “after action reviews” in the U.S. Military. This yields not only insight about linchpin roles but also identifies innovative people and scalable behaviors that can drive future success as well.
8. Strategic clarity and relentless repeatability. Selling the team on your targets to obtain their buy-in is the key to progress. Goals set from above can become a barrier to success, and satisfaction at work, when they’re not really yours. So answer the following questions: “Does everyone on our team know and understand the goals and targets for 2016? Do they know and understand their role in achieving those goals?”
It’s impossible to align all the uncertainties of the future into a set of certainties, but these mission-critical issues are a smart place to start. No one can predict the future, but together, great teams can create it.