Is the restaurant industry headed for a persistent slowdown? RB Executive Editor Jonathan Maze and Editor-at-Large Peter Romeo offer opposing points of view. For the alternate take, see The Bottom Line.
Let’s shelve the debate for a moment to consider this breaking news from esteemed etiquette expert Miss Manners: It is now officially in good taste to exclude my colleague Jonathan “Wrong Way” Maze from all birthday celebrations. Seems he has a penchant for raising a glass—a half-empty glass, regardless of how filled it might actually be—and observing the celebrant is now one year closer to death.
If there’s a dim view to be had, Jonathan will stop kicking puppies long enough to embrace it. Witness the screed he pulled together on the grim state of industry affairs. In his estimation, the only positive to the current situation is the fodder it provides for blues songs.
Hey, those of us with an alternative view are no Pollyannas. We know these are trying times. It’s a slow-growth environment, and there’s no shortage of factors to try the resolve of the industry’s most brilliant operators.
But he’s ignored one crucial fact: Sales are rising. Slowly, yes. But even agents of doom have to acknowledge that slow growth is still growth. Ask someone in the newspaper or movie business how they’d like to have slow growth in sales. Just be sure to have a hanky ready.
To put it in perspective: Technomic is forecasting a 3.6% upward rise in total industry intake for 2018, or 1% if you negate price increases. That “real” growth was once viewed as being synonymous with traffic increases, which means the pie is still getting bigger.
It’s irrefutably a sign that macroconditions are getting better. What’s changing is how the growing pie is getting split. It’s an article of faith that independents are outmaneuvering battleship-sized chains. Technomic found in putting together its Top 500 chain sales rankings that agile, quick-thinking young brands, particularly those that manage to shirk the perception of being a chain, are killing it.
So it’s not that industry fundamentals are worsening. The laments are based on a redistribution of wealth, and the losers are the ones yelping loudest because they tend to be bigger and have more grousing shareholders.
But even for those giants, conditions are not nearly as dire as Jonathan suggests in his doomsday report, which shouldn’t be read with a razor blade nearby. Darden Restaurants, for instance, posted standout results across the board this week for its collection of casual brands, with the only asterisk going to Cheddar’s Scratch Kitchen. The seven gainers included giants such as Olive Garden and LongHorn Steakhouse, which both enjoyed 2.4% increases in same-store sales.
I accede to Jonathan’s point that slow sales will be a reality for the industry for some time to come. I’ll even go further and say the labor situation will be a real elbow to the Adam’s apple. I’ll even acknowledge that current times are a stretch of unmitigated pain for a lot of operators because they can’t adjust to the conditions of a mature marketplace.
But I urge him to take the long view. Is he really suggesting the industry is worse off today than it was 10 years ago, or that even slight growth is a bad thing?
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