Labor shortages have slowed the post-pandemic foodservice renaissance. Restaurants ranging from fine dining to quick serve are looking at approaches to combat the dearth of workers.

DMA brought together four industry leaders to discuss strategies for recruiting employees. Panelists included Gail Sharps Myers of Denny's, Lewis Rudd of Ezell's Famous Chicken and Kelli Valade of Black Box Intelligence. Gerry Fernandez of the Multicultural Foodservice & Hospitality Alliance (MFHA) moderated the discussion. Susannah Sellers-Ryan offered the supplier perspective from PepsiCo's Dig In program to partner with Black restaurant owners.

Black Box's Valade opened with observations about the current state of the industry. She said that customers know that restaurants are short-staffed but they don't care. "People expect to be treated well now that they are back. They are not forgiving," she said. Valade shared a quote from Brene Brown, "Everyone wants to know why customer service has gone to hell in a handbasket. I want to know why customer behavior has gone to hell in a handbasket."

The main drivers keeping employees away are:

• 57%: Higher pay through unemployment
• 20%: Better quality of life in other industries
• 14%: Higher pay in other industries

Hire Them Young

Myers and Rudd addressed the challenges. Both said that the inability to recruit at the high school level has hurt. Myers said that many Denny's franchisees had previously created a relationship with high schools near the restaurants and shared success stories of high school students who got a job at Denny's and stayed. Rudd said that he has always visited high schools to share his story of starting as a teenager at a chicken restaurant in Texas, and now owning 12 stores with 325 employees, including a location on the Microsoft campus.

Rudd has also spoken at local penitentiaries. He said, "people change and you need to be open to allowing people an opportunity to better their lives."

Many Denny's franchisees do on-the-spot hiring, bringing people in before a background check is completed. They go through two or three days of training and are given customer-facing jobs after passing the background check. In program to partner with Black restaurant owners.

Denny's also informs potential employees of its supplier diversity program, among the most respected in the industry. The theme is "I belong. You belong. We belong here together."

Fernandez noted that the restaurant industry "teaches people how to work" and that employees will learn invaluable life skills. He believes that companies must tell their stories more effectively through social media, even assigning somebody as an "Instagram captain." All agreed that grass roots efforts are the way to overcome the labor shortage. Food Institute Focus

Many fast-food chains, including Chick-fil-A, Wendy's, and Burger King, continue to expand their ghost kitchen operations and lean further into the delivery space.

But with dining restrictions easing and restaurant traffic on rise — why now?

"It's far cheaper and faster to service customers through virtual or ghost kitchens," Dan Rowe, CEO of Fransmart, told The Food Institute. "In the context of a third-party facility making food for lots of different concepts, ghost kitchens specialize in prep and delivery and most restaurant chains —QSR, fast casual or full serve — don't."

Recent Expansions

Chick-fil-A is developing a virtual concept called "Little Blue Menu," which will utilize ghost kitchens to prepare food for a new chain of delivery-only restaurants, reported Business Insider (May 12).

The concept, tentatively trademarked "Outfox Wings," will offer wings and roasted chicken, along with other classic menu items, and is slated to launch in Nashville in late 2021.

Wendy's is utilizing ghost kitchens in a concentrated effort to expand its global footprint to 8,000 restaurants by 2025. The company plans to take 30% of its 1,200 new locations beyond the four-wall drive-thru model to penetrate bigger markets and fill gaps between its traditional restaurants. Virtual unit locations include military bases, universities, hospitals, and zoos, reported QSR Magazine (May 13).

Burger King is also trialing delivery-only restaurants in the U.K. For its first location in London, the chain partnered with commissary kitchen company FoodStars. Customers will be able to order meals for delivery via third-party service Deliveroo, reported The Spoon (May 17).

Future Evolution

Rowe believes that due to the sheer volume of ghost kitchens — many of which are funded by amateur investors trying to buy market share — approximately 80% will disappear. "Many of these will fade the same way most food halls, while a good idea, simply did not match supply and demand," Rowe said.

Meanwhile, the other 20% will "make a killing and create a new reality, like Uber or Airbnb," Rowe said. "People are still brand conscious so [ghost kitchens] will never take the place of traditional brick and mortar. But a "bricks and clicks" strategy allows for greater penetration and faster, cheaper access to incremental customer bases."

"My longer-term prediction is that most of those 20% will try to replace as many outside branded concepts in their portfolio with their own concepts to avoid paying the fees," Rowe said. Food Institute Focus

Restaurants Can Differentiate Themselves and Grow with Plant-Based Foods

As U.S. consumers return to restaurants, operators should embrace plant-based foods to differentiate themselves and boost business in the new world of post-pandemic foodservice.

A recent DMA webinar presented by The Food Institute detailed research showing why foodservice operators should look toward plant-based options, and showcased products that could be easily adapted to expand menu offerings.

Marie Molde, account executive at Datassential, noted that while 69% of U.S. consumers define themselves as "meat eaters" and just 6% as "vegan," there is huge opportunity in the "flexitarian" segment (people who will occasionally eat meat but prefer plant-based products). Currently, 14% of U.S. consumers are "flexitarian" but that number will increase to 22% in the next three years, she said.

Molde also said that 58% of consumers want to increase their intake of plant-based foods. Seventy percent cite health reasons and 62% believe plant-based foods are better for the environment. With that, climate-based food options are beginning to show up on menus, particularly in fast casual restaurants such as Panera and Just Salad.

To satisfy consumer demand, many foodservice operators are giving consumers a choice between traditional meat and plant-based options. Ruby Tuesday sells the Sweet Earth Awesome Burger and Rubio's Coastal Grill has an Impossible Taco Salad. McDonalds is even experimenting with a PLT sandwich.

Plant-Based Recipe Inspirations

Nestle Professional Corporate Executive Chef Matthew Jordan inspired viewers to develop plant-based food that will encourage social network sharing while bringing in dollars and profits. His Sweet Earth Avocado Toast combined avocadoes, Mindful Chicken, onions and a wealth of tasty ingredients to create a knife-and-fork toast that would sell for $10 a plate at a fast casual restaurant. His Mindful Chicken Fried Rice combines napa cabbage, green onions, rice and plant-based chicken to create an entrée that will please consumers looking for poultry alternatives.

Chef Priyanka Naik created a Crispy Stuffed Poblano large enough to feed a family of four. She noted that her Indian culinary heritage has always relied on plant-based foods and that her style of cuisine is being embraced by her Gen Z followers.

Today's foodservice darling is the chicken sandwich with fries. But with all the innovation surrounding meat alternatives, tomorrow's might be a plant-based chicken sandwich with a three-bean salad. Food Institute Focus

Store News:

• Panera Bread is the latest restaurant chain to announce a new design inspired by changes in consumer behavior during the pandemic. Its new layout looks to transform the soup and sandwich chain into a local neighborhood bakery — just with a little bit more tech savvy, reported CNBC (May 20). Full Story
• IHOP will launch its fast-casual spinoff, Flip'd by IHOP, in July — more than a year after initially planned, reported CNBC (May 20). Full Story
• Noodles & Company is testing its first ghost kitchen in Chicago. Full Story
• Little Caesars is looking to award up to 10 new development agreements across the New Orleans market between now and 2024. Full Story
• Bojangles announced plans to add 40 locations over the next seven years, including 15 stores in the Orlando, Florida area, reported The Charlotte Observer (May 4). Full Story
• Auntie Anne's has opened its first drive-thru location in Wylie, Texas, reported Restaurant Business (May 17). Full Story
• Delight Restaurant Group acquired 44 Wendy's stores on Long Island and will build several new locations in that market. Full Story
• SPB Hospitality launched the Ember Smoked BBQ virtual brand available from Logan's Roadhouse in 19 states. Full Story
• McDonald's is testing automated drive-thru ordering using artificial intelligence at 10 Chicago locations, reported CNBC (June 2). Full Story 
• Dickey's Barbecue Pit launched the Big Deal Burger delivery-only brand, which has 45 locations and will add five more this month. Full Story
• Kitchen United signed a licensing deal to launch Camile Thai, an international ghost kitchen brand, in the U.S. and operate it in Kitchen United MIX locations. The rollout will begin in Chicago. Full Story
• Starbucks is running short in some stores on basics including cups and coffee syrups, baristas said, as the chain grinds back to full operations in the wake of the Covid-19 pandemic. Cake pops, cup stoppers and mocha flavoring are among the items that have run out in places at times, reported The Wall Street Journal (June 9). Full Story
• Chuck E. Cheese has signed a franchise development agreement with EWAS Management Solutions to bring Chuck E. Cheese locations to Romania. Full Story

Executives on the Move:

• Church's Chicken / Texas Chicken promoted Russ Sumrall to SVP international strategic development. Full Story
• Bojangles appointed Byron Chandler chief development officer and Jose Costa chief growth officer. Full Story
• Lamb Weston promoted Bernadette Madarieta to SVP and CFO to replace the retiring Robert McNutt. Full Story
• Blaze Pizza named Johnny Jones SVP of Development. Full Story
• Aramark named Debbie Albert SVP of corporate communications. Full Story
• Beyond Meat named Phil Hardin as CFO, Deanna Jurgens as chief growth officer, and Margaret Trask as chief people officer. Full Story
• QDOBA appointed Jim Sullivan to chief development officer. Full Story
• Black Bear Diner named Chad Corrigan VP of franchise sales and development. Full Story
• Shake Shake appointed Katherine Fogertey CFO. Full Story
• Pieology named Bijan Sami chief operations and information officer. Full Story

‘Bullwhip Effect' Felt Through Industry as Restaurants Ramp Back Up

The return to normalcy has created problems for restaurants, bars and other venues as demand outstrips supplies,  resulting in shortages of food and other commodities.

Couple that with difficulty in finding workers in the wake of massive layoffs earlier in the pandemic, and you have what experts call the bullwhip effect – companies that cut back rapidly are finding it difficult to ramp back up.

"The food industry has long suffered from the bullwhip effect, where a plus or minus 5% change in consumer demand impacts upstream suppliers by as much as 40% in either direction," Are Traasdahl, CEO of Crisp, told The Food Institute in an email.

Nate Rosier, senior vice president and consulting group leader at enVista, noted the food industry has seen dramatic shifts in the last year and pent-up demand among consumers now is exploding.

"People miss eating out and enjoying the social experience," Rosier said.

Supply Chain Pain

Supply chain difficulties are nothing new. Sanderson Farms Inc., the nation's third largest poultry producer, said May 19 before the BMO Capital Markets Farm to Market Conference it was trying to find a way of increasing production without raising costs.

Additionally, many food distributors are grappling with labor shortages amid supply constraints and increasing freight costs, reported The Wall Street Journal (May 7).

Walmart threatened suppliers last fall with a 3% penalty for failing to supply 98% of orders on time, the Journal reported. Sysco took a similar stance.

Mark Allen, chief executive of the International Foodservice Distributors Association, told the Journal (May 21) part of the problem is suppliers shifted much of their operations toward groceries to meet pandemic demands and now shifting focus to institutional foodservice and restaurants is proving difficult.

Jeff Edwards, director of opportunity, planning and development at We Pack, told The Food Institute he's not optimistic about a quick turnaround, saying:

"Unfortunately, the options are fairly limited for a quick recovery for those operations that scaled back. Companies that decided to put their world on pause may very well be left with few ways to restart their supply chains."

Some of the strain could be alleviated, in part, with better data collection and analysis, experts told The Food Institute.

"The root cause of the bullwhip effect is a lack of accurate information sharing across the food supply chain. By adopting a new approach, called programmatic commerce, food manufacturers and retailers can use real-time data to stay ahead of rapidly evolving consumer behavior, identify potential supply chain disruptions, predict store and online traffic, track inventory and product performance, understand store conditions and replenish both virtual and in-store shelves," Crisp's Traasdahl said.

"To minimize any supply chain snafus ... distributors, suppliers and manufacturers need to be properly equipped to meet changing consumer demands," said Mike Edgett, U.S. product marketing director, medium segment, at Sage.

"The nature of the food and beverage industry leaves manufacturers and distributors dealing with huge cost pressures and thin margins. As a result, many are turning to tools that can provide better data and analytics to help inform their operations. By implementing modern technology, like industry specific enterprise resource planning systems, distributors can better forecast and report on their operations, leading to improved real-time decision making and increased agility." Food Institute Focus

Same-store restaurant sales were up 5.43% in May when compared to May 2019 even though comparable traffic declined 5.27% in the period, according to Black Box Intelligence. However, sales results dropped 1.6 percentage points from April. Full Story

Meanwhile, the U.S. restaurant industry is showing signs of recovery even if certain locales are lagging 2019 figures, according to OpenTable. Florida, Texas, Nevada, and Virginia all saw at least a 10% increase in bookings for Memorial Day, but New York state remained 34% below Memorial Day 2019, reported New York Post (June 2). Full Story

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Exceeding Customers' Off-Premise Expectations

The PURELL Off-Premise program helps restaurants reassure guests that they adhere to the highest standards in cleanliness and sanitization, and that they care about the safety of customers and employees by providing the most recognized and trusted brand: PURELL. Since customers cannot see visual signs of cleanliness when using an off-premise option--carry-out, drive-thru, or delivery--this program signals that operators are committed to keeping their guests and employees safe.

Core of the program:

• Include PURELL Hand Sanitizing Wipe(s) with each off-premise order (complimentary or as an ad-on item)
• Availability of PURELL Hand Sanitizer to employees and 3rd party delivery drivers to use before delivering food to customers, and for guests when picking up carry-out orders.

Visit PURELL.com/Off-Premise-Program.