5 crises the restaurant industry can expect in 2016

Yeah, yeah, yeah: We all know it’s politically correct to predict warm and fuzzy things for the New Year. So if your fruitcake would be crumbled by a more realistic look at what restaurants can expect in 2016, jump over to YouTube for some videos of kittens. You can probably find one where they’re frolicking with a baby chimp.

The rest of us are going to consider some of the darker developments the industry could confront in the year ahead.

Labor made such jaw-dropping advances in 2015—helped in no small part by government—that some multi-unit employer may well be rope-a-doped into a corner this year.  Organizers will turn the chain or multi-concept group into a test case, mustering boodles of money, publicity and effort to win one high-profile battle. 

The unions will regard the victory as the first of many dominos to fall in quick succession.

Ironically, the initial target is likely to be McDonald’s, one of the industry’s best employers. The chain’s reputational baggage doesn’t match what it’s done in training America’s workforce and extending a rung of the ladder to the underprivileged.  Remember, it’s one of the company’s that pledged to voluntarily raise its wages and expand its educational benefits.

Thanks, Chipotle. By failing to do whatever was necessary to stop making customers sick—while crowing the whole time about how much the brand had done to keep guests safe—you strained the public’s confidence.

The industry can only hope the worriers don’t see the lurking danger in serving fresh, untreated foods, as the industry is striving to do as a matter of course.

It’s commonplace for the industry to predict dire consequences if any number of new responsibilities or costs are foisted on the business by government. “If ____ (fill in the blank with any significant burden, from Obamacare to the ADA) should happen, you’re going to see whole legions of restaurants going out of business.”

This time, it may not be crying wolf. Labor costs are increasing in such big jumps that the body blow is real. Add the wallop of healthcare costs, blend in such additional benefit-related expenses as paid sick leave, and finish off the finance department’s nightmare with the reclassification of managers as employees entitled to overtime.

And did we mention the whole dilemma about how to handle tipping when laws and litigation have turned that mode of compensation into a minefield?

This time around, plenty of restaurants will throw in the napkin—not because they can no longer be profitable, but because the business is just too difficult. Operators of long-successful restaurants sitting on valuable pieces of real estate will cash in and quit the grind.
 

Like a cranky old person, restaurants are likely to complain in 2016 (and beyond) that it’s either too hot or too cold, too rainy or too dry, too snowy or too temperate. The issue isn’t comfort, but the weather’s effect on sales, a dynamic that will become more pronounced (and lamented) unless the extreme conditions of recent years prove a blip. Places that rely on extremes—skiable snow or bone-baking sunshine—may have the toughest times. Why trek to a beachside resort when its restaurants and other attractions are underwater?

Just when the industry is set to comply with the menu-labeling mandates that take effect Dec. 1, regulators will up-end the prep with a few more requirements. This time, it’s to address the public’s concerns about GMOs and what’s natural vs. organic vs. unprocessed. There have already been attempts to mandate the disclosures—on retail products so far, not restaurant items—in several states.

Bonus (and related) prediction: ABF, as in antibiotic free, will become a buzz term as widely recognized as GMO.