An Open Letter To The Service Industry

Long before my partners and I opened our restaurant in 2013, my family and I loved to eat out.  We enjoyed going to various restaurants that offered a unique experience and I often found creative inspiration that influenced my own cooking.  When I left my day job to become a full-time restauranteur, the life of a restaurant owner became all-consuming and my opportunities to dine out dwindled.  After a time, I decided it was important to make a concerted effort to take my key staff out to eat on Mondays when our restaurant was usually closed.  We would target some new restaurants or other places that we would learn about via social media or word-of-mouth, and would take notes everywhere we went.  Chiefly, we focused on food quality and service experience and would discuss things others were doing or not doing that could inform our own operations.  This became a routine part of our approach to continuously improving every aspect of our restaurant.  

Naturally, this was all well before Covid 19.  We all became accustomed to good service and food quality most places we went.  We knew enough about what could go wrong to cut places some slack when things went wrong.  I had gained the unique perspective of an owner /operator during normal times.  Then came the Covid 19 pandemic which initiated a horrible era for the restaurant business.  We've all seen the lists of restaurant closings.  Just drive around your town and you'll see dozens and dozens of places that are boarded up or listed for sale or lease - all places we used to frequent.  It's a sad state of affairs.  I used to have a saying when I would see a place close.  It went something like, "Well, another one bites the dust...unfortunately, there's always a long line of prospective restauranteurs just waiting to lose their asses in the restaurant business."  One would close and another would open in its place. 

As we try to fight our way out of this pandemic, to paraphrase Dickens, "it's the best of times and it is the worst of times." There is a dearth of locations available for sale or lease.  With that comes buildings full of good used equipment at fair prices.  However, the otherwise long line of people willing to throw their money into one of the riskiest businesses out there has all but dissipated.  Why?  Uncertainty.  I believe we have a level of uncertainty that probably has not been seen since the 1930s.  Businesses cannot find employees, even when they are offering a "living wage."  Supply chain problems mean uncertainty in the critical equipment and supplies.  And although folks like me want to venture out and put my support behind independent and even chain restaurants, more often than not, poor experiences test my patience and fuel a desire to simply stay home.    

It is no secret that it is extraordinarily difficult to turn a profit in the restaurant business during even the best of times.  I think the Covid 19 Pandemic, protests, riots, cancel culture and extended unemployment benefits have delivered a death blow.  Restaurant workers who have opted to remain home and collect extended benefits are turning a short-term problem into a long-term problem.  One day, I think these people are going to wake up, look around them and ask, "how in the hell did this happen?"  I'll tell you how that will happen in a bit. 

First, I think many people, whether employees or customers, view restaurant owners as these rich folks who make money on the backs of employees who struggle to get by on $2.13/hour plus tips (in the case of servers) or wages that are otherwise considered low compared to most other industries.  Well, I have news for you.  Most restaurant owners are not rich.  They do what they do because they love the business.  They mortgage their homes (if they even have one) and put everything on the line every day to stay afloat, make payroll, pay rent, insurance and maintain the multitude of commitments to their many stakeholders.  From my experience and knowing what I know about cash flow in this business, most restaurants are lucky if they have a couple weeks of working capital available to ride out a major weather event or business downturn before their employees and customers show up one day to find a "permanently closed" sign on the door. 

I can also tell you that although the White House and certain members of the press want us to believe we have a strong economy, it can't possibly be the case.  Look around.  Small and medium-sized businesses, particularly in the service sector, are the engines that drive our economy.  A majority of the restaurants in my orbit have cut back their days and hours of operations.  Many independent restaurants will normally close on Sunday or Monday to give the owners and employees at least one day off.  But an informal survey I conducted lately suggests that more than half have shaved 2-3 hours a day and are only open 4-5 days a week.  How can they make their fixed payments like rent, insurance, certain utilities and equipment?  The answer is that unless they dip into savings or rely on some forbearance agreement with their landlords and lenders, they can't.   And with stimulus and other help exhausted, this causes a ripple effect.  When a business can't cover its payment obligations, someone else was counting on that money to pay someone else, etc.  One domino falls and they just keep falling. 

During normal times, restaurant owners and workers know that customers are fickle.  Tastes change and you may not even realize it is happening until it is too late.  Furthermore, a bad (or worse, false and disingenuous) review on Yelp or Google can cause people to turn on you in an instant.  Again, this all happens every day whether there is a pandemic going on or not. 

This situation existed before pandemic and Covid 19 just poured gasoline on the flames.  So, we move into 2021, we have vaccines and hope to approach herd immunity - things start slowly open up.  Even before things opened up, my family and I tried to support more restaurants than ever before by ordering carry-out and delivery multiple times a week, sometimes multiple times a day.  We've been fairly lenient and refrained from ripping into a restaurant for messing up an order, overcharging, forgetting to put napkins in the bag or shorting us on sauces or sides.  Most customers have long memories.  Long ago, a read some research that said the average customer will tell a good customer service story about 3 times.  The research also said, those same people will tell a bad story about 20 times - and that was before the advent of social media.  Now, there is the potential that hundreds or thousands will hear those unfavorable stories, creating an indelible mark that is very hard to erase.   

Here are some very fresh examples.  Last Friday, I left an event near downtown Louisville and was famished.  I usually don't do drive-through fast food unless I am desperate.  These days, as I gather material for Tasty Bites by Mike, I try to plan my meals to knock off another place on my list.  I figured 7:30 on a Friday night when so much of the city is consumed by college and high school football, I could hit one of the local BBQ joints on my list that might be a little out if the way, but is otherwise on my way home.  To ensure the trip was not wasted, I called the first joint to place a carry out order.  Their Google page indicated they were open.  The phone rang and rang with no answer.  

OK, BBQ joint number two.  Again, Google says they are open.  I call and get a recorded message thanking me for my business, but no one answered and there was no option to reach a real person or order online.  Crap!  Last chance.  I dial another place on my list and a guy answers immediately.  Awesome! He explains that they are out of everything except hot chicken.  I'm not doing hot chicken at this point.  "No brisket?" I asked.  "No sir," the man said.  Wow, I thought. I want to give someone my money and be able write about their beef brisket, but no dice.  Three strikes, I'm out.  This should not be this hard.  

Now desperate, I see a Wendy's up ahead on the left.  I think, "I usually have a pretty good experience at Wendy's."  It's about 7:45pm and Wendy's will have to do.  I also notice only one car in the drive-thru. I think "Score! This should be quick."  I pull up to the speaker and a female voice comes over the intercom and says, "I'm sorry, but we're closed for about 15 minutes." I said, "Really?"  Now I'm beyond disappointed and I drive off. 

I head over to Bardstown Rd at I-264 and proceed south.  There are a hundred fast food joints between there and my house.  As I am driving, I'm thinking "I'm really hungry, but which is going to be the lesser or all these evils."  Places either had drive-thru lanes packed with cars (and an unacceptable wait time) or they appeared to be closed - no nights on or activity inside before 8pm on a Friday night.  Unbelievable!

My choices are dwindling.  Several miles down the road, I finally see another Wendy's with four cars in the drive-thru so I get in line.  I pull up and order.  Within a span of about 20 minutes, I get to the window and pay and have my order passed through the window by a very friendly and enthusiastic employee.  Still an unacceptable wait time but, success!  Before I drive away, I inspect the order and everything is correct including the sauce.  I should not be amazed, but I am.  

The next day, I go through the same process for two different meals.  In the immortal words of Mick Jagger, "I can't get no satisfaction."  I should have read the tea leaves - the band playing in the club I had just left opened with the same song.  Oh, I was able to get food, but the food I got suffered from quality issues and was not what I ordered.  At this point, I guess I should not be surprised. 

If I were not remodeling my kitchen, I would prefer to just go home and cook my own meals instead of putting up with this nonsense practically every damn place I go.  I understand why, but I think "what the hell has gone wrong with the world?"

Pictured above (A sorry excuse for a Coney Island Hot Dog)

 

I imagine everyone is having the same experience because the restaurants simply cannot get people to come back to work.  Help wanted and now hiring signs are everywhere.  Restaurants have taken to offers like "Work today, get paid tomorrow."  That's wonderful until the employee gets paid the next day and then never shows up again.  I know this is happening everywhere.  

I indicated I would get back to this but here is what is going to happen.  In fact, it is already happening.  Restaurants are going to adapt to the labor shortages with technology.  

Last Saturday afternoon, my wife and I visited a local brewery / eatery:  Chimera Brewery and V-Grits located where the Monkey Wrench was previously situated at the corner of Barrett and Winter Ave..  We walked in a read the signs that indicated we needed to grab a table and scan a QR code on the table top to see the menu and order.  We did.  We ordered and paid without any human interaction.  Our beers were brought to the table almost instantly.  A few minutes later, a runner brought out dish one and shortly thereafter, dish two appeared at our table along with napkins and utensils.  The process was virtually seamless.  When we finished, we threw away our trash and walked out without needing to wait for a server to complete the payment process.  In this climate, I thought it was awesome and foreshadows a major disruption.  This restaurant will never go back.  Frankly, this is an ordering, payment and delivery process I will seek out and frequent from now on. 

This is where the law of unintended consequences comes into play.  These technologies are available to everyone.  Virtually everyone owns a smart phone with a QR reader and can have the same experience we did.  As more and more former restaurant employees drag their feet re-entering the workforce, more and more restaurants are going to adopt these technologies.  Sure, they will still need someone to prepare and run the food, either to a table or to a pickup counter or window.  But this is going to permanently reduce the need for cashiers and servers.   And the employees who relied on this business as an easy place make money or jump from job-to-job will eventually find it's harder and harder to find gainful employment.  It's happening.  The smart restaurant owners will be the early adopters because they know they cannot afford to let this workforce or our government put another dent in their operations or run them out of business altogether.  The slower adopters will get there too.  They will see that the world is changing and will jump on the bandwagon.  

Eventually, the only restaurants where people like me will be able an old-school service experience will be at the more upscale, white tablecloth places with high-end price tags.  This has happened across a multitude of industries who found technology adoption was the only way to survive.  

The IT consulting company Gartner, Inc. publishes reports that chronicle the technology adoption curve they refer to as the "Hype Cycle."  The Hype Cycle has been used to detail thousands of technologies and the related business implications.  It is usually pretty accurate. 

I have not seen a Hype Cycle for the restaurant / service industry, but curve generally looks like this. 

1.  We begin at the bottom with an Innovation Trigger.  This is a new technology with tons of promise and expectations.  This is where the "hype" comes from.  

2.  The curve then looks like a hockey stick as it trends upward listing numerous technologies attempting to take advantage of the innovation concept.  

3.  The curve reaches a "Peak of Inflated Expectations."  

4.  Next, the curve trends downward into something Gartner calls the "Trough of Disillusionment."  This is the phase where promise meets reality and many otherwise promising technologies fall by the wayside. 

5.  Finally, the curve begins to trend back upward as the surviving technologies improve across a number of value disciplines - namely, costs go down, productivity increases, integration with other technologies flourish and the technology bundle literally becomes a game changer for the industry.  At this stage, the curve continues to trend upward, called the "Slope of Enlightenment."

Sometimes these trends peter out and the technologies fail to reach their full potential.  And quite often, the Slope of Enlightenment gives way to an entirely new standard in how the business or industry operates. 

Another favorite of mine is futurist Ray Kurzweil and his theory called the "Law of Accelerating Returns." This is the opposite of the classical economic theory you may have learned in school called the "Law of Diminishing Returns."  Kurzweil has demonstrated that in situations like we are seeing here, the rate of change and technology adoption actually picks up steam as it moves up the curve.  Things move at an unbelievable rate.  I believe that is what is going to happen here.  It's going to be interesting to watch.  

My suggestion for politicians and business leaders is that instead of offering benefits to keep folks out of the workforce, we must find ways to get these same people to go back to school to learn how to develop, run and maintain these technologies.  If you are in this business, here is your wake-up call.  Act now, because the ground is shifting beneath your feet.  Embrace the new business model - those old restaurant and retail service jobs simply won't be there in the future.