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Leadership

6 surprises sprung on restaurateurs this week

Attendees of the Restaurant Leadership Conference were treated to a host of aha moments, including these.

Here’s great news for the masochistic sorts who fear the restaurant business is getting too easy: A big slab of trouble is about to be slapped on your plate. Just ask the keener-eared attendees of this week’s Restaurant Leadership Conference (RLC) in Phoenix, where speakers warned of new problems arising from the times.

But not all the surprises sprung on the 1,200 name-badged operators were negative. There was the astoundingly simple safeguard one speaker shared for avoiding bad partnership deals, along with news that the industry is making a stand against a worrisome new government mandate.

Here are six surprises you missed if you weren’t there.

1. A lobbying landmine

The restaurant industry’s lobbying power could be undercut by a surprising factor: the gender gap in managers' pay.

“That issue is particularly critical to us,” said Joe Kefauver, a veteran industry lobbyist who heads the firm Align Public Strategies.

He explained that the industry’s most effective lever for moving state and local officials is the trade’s recognition as a business of opportunity. Unequal pay for men and women is like kryptonite in neutralizing that impression, he suggested.

Kefauver offered the observation after fellow presenter Victor Fernandez, director of insights and knowledge for researcher TDn2K, shared the firm’s finding that female general managers earn only 89% to 94.9% of what male counterparts are paid.

2. Losing staff to the gig economy

Kefauver and TDn2k CEO Joni Doolin also warned of a potent new competitor for talent: Uber and other pioneers of the gig economy.

The opportunity to work as a freelancer, with complete freedom on when, where and how many hours you labor, is likely to siphon off the part-time employees who’ve been the restaurant industry’s traditional workforce. That warning was sounded not just during Kefauver and Doolin’s session (“It Is Not Your Imagination—It Is the Toughest Job Market of Your Career”), but at other points during RLC as well.

An Uber driver may still log 15 hours a week at a casual-dining chain, noted Kefauver. But having that other gig tips the balance of power toward the restaurant employee, since he or she is no longer dependent on a manager’s favor for an income.

“It presents some challenges for the industry, not only now but 10, 15 years down the road,” the former Darden Restaurants executive said. “We’re used to competing with other restaurants; we’re not used to competing with hotels and transportation companies.”

3. Money matters more

Fernandez noted how the long-standing wisdom on manager retention is shifting, with compensation becoming more of a determinant of whether an individual stays or goes.

It’s long been an article of faith that restaurant employees seldom change jobs because of money. Indeed, Chipotle Chief Restaurant Officer Scott Boatwright noted in a separate session that the three top reasons his brand loses employees are unrelated to pay. An exit is more likely the result of an employee feeling unliked, undertrained and overworked, said Boatwright.

Fernandez noted that money is creeping up the list of factors for general manager turnover. When they leave, “in some cases they’re getting a promotion,” he explained. “In others, they’re leaving to get a raise. So money is becoming very important.”

Operations that score highest on TDN2K’s sales gauges tend to retain managers longer than competitors, Fernandez continued, and those outperformers tend to pay more. “A little bit more, not a lot. But they provide better performance-based incentives,” he said.

4. Life enrichment as a stabilizer

Another way the overachievers are boosting retention is by offering more career and life-skills training, noted Fernandez.

“They spend more time on teaching their general managers to become better leaders,” he explained. “They spend time teaching them about HR, about how to handle problems.”

The same notion was raised the day before by an executive of KarpReilly, a private-equity firm that’s about to test a new training model for restaurants. Its focus is crewmembers as well as managers. “When we train them on a sandwich station, we’re training them to have a conversation at the sandwich station,” not just to make a sandwich, said Adam Burgoon, a partner in the restaurant investment concern.

5. The effectiveness of common sense

A frequent focus of presenters at RLC was the invaluable help technology can provide in making decisions. But low-tech approaches can also be a powerful aid, suggested Daniel del Olmo, CEO of Umami Burger parent Disruptive Restaurant Group.

Asked about the importance of picking good development partners, del Olmo confessed to using a gut check before signing the contract: Is the would-be collaborator someone he’d welcome as a fellow traveler on a cruise? Is this someone whose company he’d enjoy in the close confines of a ship?

His tech-free approach echoed the confession a day earlier of NRD Capital Managing Partner Aziz Hashim. Before plunking down millions to buy a restaurant operation, Hashim revealed, he asks himself, “Is this a brand I’d want to be a franchisee of?”

6. A challenge of predictive scheduling

A topic that arose routinely in sessions devoted to labor was the spread of so-called predictive scheduling laws, where restaurateurs are required to set schedules at least two weeks in advance, or pay a penalty per change.

A particularly stringent version is now law in New York City. Kefauver warned that a similar mandate is likely to pop up in Chicago and other cities because the industry missed its chance to act pre-emptively.

But the industry is taking action. Michael Lotito, a partner in the labor law firm Littler Mendelson, revealed during the RLC that “We’re putting together a challenge of the New York law right now.”

The Restaurant Leadership Conference is presented by Restaurant Business and its parent company, Winsight.

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