A major labor complication and 4 other head-spinning moments

headspinners shocked

As if the perennial issues of labor and food costs weren’t thorny enough, several aggravating new twists came to light this week. And those weren’t the only times the restaurant industry was shown fresh complications of familiar problems.

A security breach, relatively small and contained by industry standards, showed how difficult the cleanup process has become. And a flurry of legislative activity suggests the next major battleground for chains could be what they’re allowed to offer on their kids menus.

If all that makes you crave a drink, there is some good news.

Here’s the deeper dive.

1. Another serious drain on the diminished labor pool

Restaurants’ fundamental labor problem is a shallow pool of prospects. Foodservice executives in the on-site sector of the business learned of another significant drain on that already limited supply of potential recruits.

During a session on macroeconomic trends, attendees of an event called MenuDirections learned that a big percentage of the jobless who account for the 4.1% unemployment rate should be backed out of that gauge because they really aren’t employable. They may be looking for work, but they’re not going to get it because they’re part of the opioid epidemic and wouldn’t pass a drug test.

One attendee recounted an expert’s assertion that those unemployable account for as many as 2 percentage points of the 4.1% unemployment rate. Joe Pawlak, managing principal of Technomic and the presenter of the session, said he couldn’t confirm that percentage, but cited anecdotal evidence that the impact is severe, albeit often overlooked.

MenuDirections, a conference for the operators of foodservice operations in colleges, schools, healthcare facilities and businesses, is presented by Winsight, the parent of Restaurant Business and Technomic.

2. Same problem, but this time with a food cost effect

The opioid abuse epidemic was also cited during MenuDirections as a sleeper of a factor on food costs. Distributors and other food haulers are having a brutal time finding drivers for their trucks, and that translates into higher pay and other overhead. Pawlak suggested that the problem will only get worse because the average age of truck drivers today is about 56, meaning a wave is approaching retirement age. That’s why shippers and vehicle manufacturers such as Tesla are experimenting with driverless trucks, he noted.

Pawlak recounted the instance of a foodservice distributor holding a job fair to recruit new drivers. Two hundred people attended, he explained, but the company ended up hiring only one—the lone person who passed a drug test.

3. Lawmakers focus attention on kids meals

The restaurant industry won a battle this week when New Hampshire legislators shot down a proposal to ban the inclusion of sodas—sugared and zero-calorie alike—in kids meals. But the battle appears to be gaining fervor.

Baltimore’s City Council has pledged its support for such a law, though the measure would only prohibit sodas from being included as the default choice in a kids meal, a practice that a number of chains have voluntarily adopted in recent years. (The New Hampshire plan was an outright ban; the only way kids could get a soda would be by having their parents buy it a la carte.) Among the proponents of the measures are local churches.

Legislation similar to the Baltimore proposal is currently pending in New York, Vermont, Hawaii and Massachusetts. Seven jurisdictions in California have already passed a default-soda ban.

4. New agonies in security breaches

Applebee’s operator RMH Franchise Holdings confirmed last Friday that it had detected a security breach on Feb. 13. As is the standard protocol in a hacking, the 167-unit operator provided information about the incident, how it happened, why customers can still use their cards with assurance, and what they can do to lessen their chances of being victimized by the data thieves. And that’s where things got complicated.

Many states have their own processes and protections to protect residents. In the case of RMH, whose restaurants are spread across 15 states, that warranted providing the specific remedial information for each of five states.

The whole posting on RMH’s website ran 2,067 words. Just under 1,400 of them consisted of protective information specific to one state or another.

In addition, a hotline number was provided for patrons to get more info, such as exactly what restaurants were involved, and when.

5. Coke tries stronger stuff

Pushback on sodas didn’t dissuade Coca-Cola from breaking a long-held barrier this week: The soft drink giant acknowledged plans to introduce its first alcoholic canned beverage.

The drinks will be shochu-based, and will be introduced solely in Japan, where a packaged shochu and sparkling water combination called Chu-Hi is already popular. Local Coke officials say it’s unlikely that the beverage will ever reach U.S. shores.

The company experimented with wine in the 1970s, selling the adult beverages under unaffiliated brand names, but opted out of the market to focus on soft drinks.


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