Sometimes the best way to read the U.S. restaurant industry is from afar. Talking in Dubai this week with restaurateurs from throughout the world, the distance seemed greater than what showed on the map. Although international attendees of the Global Restaurant Leadership Conference aired problems instantly recognizable to most U.S. operators, the particulars of their challenges with labor, regulation and other costs made the American versions of the issues seem like a cinch.
Here are some of the hair-curling aspects.
In many areas of the Middle East, the challenge is twofold: a tight supply of workers per se, given the boom in construction and hospitality; and an echo shortage, perhaps more vexing, of work permits for potential employees from other areas. The cost of getting those work visas for foreign hires is steep, and the regulatory complexities are daunting.
Many restaurant employers turn to contract services instead, which hold thousands of work visas and essentially rent out their human charges for extended periods. They also hold considerable leverage over business employers.
When an American attendee with extensive industry experience asked why restaurateurs in the Middle East don’t recruit locally themselves instead of using such services, he drew a burst of laughter. The locals explained that the logistical realities—the regulatory challenges and labor supply in some areas—make that option nearly impossible.
Restaurateurs in the United States are usually cautious about raising prices because of concerns about customer fallout. In some areas of the world, there’s the less-manageable problem of government rejection. An executive of a Dubai-based sushi chain recounted how a local partner in one area of the Middle East had been waiting for government approval of a price hike for eight years.
Until that okay was delivered, the partner would have to be creative in how they managed the menu. New items can be given a price by the restaurant adding it. So name changes and product reformulations become very important in passing along a spike in the cost of imported goods.
American restaurants’ willingness to help less-fortunate members of their communities seems like an unassailable good—but not necessarily in Turkey and a smattering of other regions. Operators attested that they have to be careful about such common U.S. practices as giving away unused food because it could be illegal; their government views the donation of food to one group as an illegal act of prejudice against others. Ditto for acts of charity that are directed toward some employees.