Conventional restaurant wisdom had a remarkably bad day on Tuesday at the Restaurant Directions conference in Nashville, where the audience of emerging-chain executives heard how virtual articles of faith just don’t hold true anymore—the result of accelerated change in an industry never known for its stolid inertia.
Here are some preconceptions that attendees were advised to disregard as long-revered laws of the business.
1. A strong economy means happier customers
When the economy improves, consumer confidence usually rises accordingly, leading to increased spending on discretionary treats like restaurant meals. But 2018 is proving an anomaly, explained economist Arjun Chakravarti. Even with wages rising, unemployment at a 49-year low and tax cuts leaving households with more money to spend, the public is still jittery, he contended.
“Right now, we’re in kind of a sweet spot,” said Chakravarti. “We just have to be sure that some of the things that put us in the sweet spot are not deteriorating.”
He explained that consumers harbor a significant level of distrust about the factors favorably shaping their economic situation, an unease fostered by the fractious political situation. There’s clearly emotion coloring the assessment. “If we have a shock, it will hit people pretty hard,” he said. “Is a recession looming?”
Even without a recession, conditions may not be as rosy as they appear, Chakravarti observed. Consumers are doing very little saving, which means they may be catching up with debts run up during tougher times. They may also be diverting restaurant dollars to meet fundamental costs on the rise, like gassing up their cars or paying for escalating healthcare costs.
2. A wide net is good marketing
Among the themes repeatedly sounded during the first two days of the conference was the importance of being genuine to consumers who cringe at a whiff of insincerity and opportunism from the businesses they frequent. For that reason, restaurant operators should be wary of bending their principles to keep all of their customers happy, even if the risk of alienating some patrons is obvious and considerable, advised Sara Monette, VP of research and insights for Technomic.
“Take a stand in what you believe in, do it in a respectful way, but understand that there could be a backlash,” said Monette. “The reality is, if you try to be everything to everyone, you’re probably going to get lost in the noise because consumers can’t pick you out from the crowd.”
She cited the example of a Texas restaurant that called for more stringent gun-control laws.
3. A concept has to be massaged for growth
Before a restaurant can morph from a one-off into a viable expansion vehicle, some of its sharp edges and operational peculiarities may have to be planed down. Or at least that’s been the traditional mindset.
One of the industry’s hottest concepts, the HopCat casual-dining chain, isn’t buying it, explained Mark Gray, CEO of its parent company, BarFly Ventures. He explained that leadership of the 40-unit chain is transitioning from the concept’s founder to Gray, but the shift isn’t exactly a harbinger of change. “The founder, Mark Sellers, said to me, ‘I don’t want to hear how we have to change to grow, I want to hear how we can grow without a change,’” Gray recounted.
That doesn’t mean an upstart concept can be slapped together and declared fit for rapid duplication. Crushed Red, a regional salad and pizza concept, was brainstormed for seven years before the prototype opened, revealed co-founder Chris LaRocca.
4. The labor situation can’t get any worse
The assessments of the industry’s labor plight tended to fall into two categories: awful and worse. As Victor Fernandez of TDn2K noted, 73% of restaurants are unable to hire all the front-of-house employees they need, and 93% are short-staffed in their kitchens.
The situation is even coloring investors’ decision about where to put their capital, according to panelists in a general session on finance. “Part of growing is finding real estate, and part of growing is finding the talent to run restaurants,” said Rahul Ketkar, a VP for investment firm H.I.G. Capital. “Having a strategy for both is critical.”
Managing the workforce is also getting tougher, noted Roy Salins, a partner with law firm Davis Wright Tremaine and the host of an educational session on sexual harassment. As he noted, new sexual harassment regulations are imposing added obligations on restaurants, particularly around stepped-up training to avert the problem.
5. The hot chicken trend is toast
Nashville may be the holy land for country-music fans, but foodies know it as the stronghold of hot chicken, the spicy fried variety that caught the industry’s fancy about two years ago. Restaurant Directions disproved assumptions that the mainstream embrace of hot chicken is yesterday’s news, a product watered down for mass tastes at the likes of KFC.
An attendee led off an early session by remarking that he’d visited seven local hot chicken joints before the conference had even started. His interest in what seemed like a waning food craze was shared by a number of conference participants, who shared notes over the next two days about the landmark hot chicken places they intended to hit before flying home.
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