The Rush by Toast - August 30

By: Isabelle Hahn

8 Minute Read

Aug 30, 2019

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Welcome to the fifth edition of The Rush, where we cover notable happenings in the industry. This week's coverage includes a recap of Panera’s delivery pilot program and some of the most important issues the restaurant industry currently faces in regards to hiring and retention. Plus, a helpful resource for the industry-wide issue of high labor costs.

⏳Here's what you need to know about this week's restaurant trends in 10 seconds or less:

  • Panera opened up delivery through Grubhub, Uber Eats, and DoorDash, in addition to its own mobile app and website.

  • The Trump administration’s crackdown on immigration is hurting many restaurants that rely on immigrant labor.

  • Food-service jobs have grown nearly 50% over the past two decades. But with unemployment at a record low, restaurants across the U.S. are facing one of the worst labor shortages in decades.

If you have more time:

Panera Expands Delivery Operation

  • Panera opened up delivery through Grubhub, Uber Eats, and DoorDash, in addition to its own mobile app and website.
  • By expanding their off-premise delivery operation, Panera is able to access more potential customers and allow customers to use the delivery platform of their preference.

  • With this deal, Panera is also solving huge quality assurance issues that can plague third-party delivery services by using their own, in-house delivery drivers.  

  • According to the 2019 Restaurant Success Report, roughly half (51%) of consumers have used a restaurant's website to place an online order in the past month, while 38% have used an online order aggregating service.

Panera is a delivery pioneer, first with its online ordering app and fully developed in-house delivery team, and now the chain is adding a deal with three large third-party delivery services to its stack. This new hybrid delivery model — of Panera delivery and third-party delivery — brings together DoorDash, Uber Eats, and Grubhub. Delivery currently represents 7% of Panera’s overall sales, according to a Restaurant Dive brief. Panera is seizing the potential of delivery by partnering with these third-party sites in hopes to expand their customer base. 

The growing demand for delivery from consumers — and delivery that offers an optimal customer experience — is a huge growth play for restaurants within the fast-casual space. Third-party delivery services allow restaurants more points of access to their customers, but can come with fees or questionable employee treatment. By utilizing its own delivery team, Panera is able to ensure that their food is up to standards, delivery times are met, and their drivers are paid fairly and positively represent the Panera brand. 

Panera is not the first chain to pilot a new delivery program. In February, Pizza Hut partnered with Grubhub using in-house drivers as well. 

According to CNBC, this deal comes as part of Panera’s efforts to be more accessible to a wider range of customers. By bringing in third-party delivery, Panera is able to reach the 38% of diners who are likely to use an online order aggregating service over online ordering on a restaurant's website.

Numerous Staffing Issues Continue to Plague the Restaurant Industry

  • Food-service jobs have grown nearly 50% over the past two decades. But with unemployment at a record low, restaurants across the U.S. are facing one of the worst labor shortages in decades.

  • The Trump administration’s crackdown on immigration is amplifying the restaurant industry's staffing issues.

  • Restaurants have become more reliant on immigrant labor, due in part to the declining number of teenagers joining the workforce, and many restaurants face large fines for continuing to employ undocumented immigrants. 

Recruiting and retaining employees is cited as one of the top challenges faced by many restaurant owners and operators. In our own Restaurant Success Report, 51% of restaurateurs cited hiring as a top challenge. 

It’s no secret that the restaurant industry attracts a diverse group of people. Your employees could be high school or college students trying to save money. They could be trained in fine dining and make a living off of tips, or skilled chefs who came to the U.S. for a new life. Maybe your general manager rose through the ranks, or maybe they graduated with a degree in hospitality. Whatever the case may be, and whoever they are, they are vital to your operation. 

Jobs in the restaurant industry have increased by nearly 50% over the past two decades, which makes sense as the industry has seen a recent boom. The National Restaurant Association projects overall industry sales will hit a new high of $863 billion in 2019, up 3.6% from last year.

However, according to Restaurant Dive, restaurants around the country are facing one of the worst labor shortages in decades due to a record low unemployment rate. In an industry known for quick turnover rate, low base pay, and blockers to professional growth, it's getting harder to attract and retain talent. 

For years, the restaurant industry has employed teenagers and immigrants as part of its regular labor force. “Restaurants, in particular, have become more reliant on immigrant labor, due in part to the declining number of teenagers joining the workforce, as well as the explosive growth of restaurants in an oversaturated market,” reports Eater. A recent article by The New York Times also cites immigrants as vital to the restaurant economy. And according to a new report from the Pew Research Center, only 34.6% of teens are taking paid summer jobs, including summer jobs in restaurants. Teenage employment is also expected to shrink by 600,000 from 2016 to 2026, meaning that fewer teens will be staffing restaurants.

In March and April of this year, employers began receiving warnings about their workers providing incorrect Social Security numbers, The New York Times reported. These errors could be explained by misspelling a name or making a simple numerical error, or it could be because that person is undocumented. Because of the Trump administration’s crackdown on immigration, restaurant owners and managers are having to choose whether to keep their employees in a tight labor market and face massive fines or legal penalties, or let them go.

Restaurant Dive reported that, “with 1.6 million new restaurant jobs expected to be added by 2029, restaurants are going to have to get creative to stay in operation — perhaps with automation or other technology, or even more enticing benefits.”

How These Trends May Impact Your Restaurant Operations

  • Keeping up with delivery: The not-so-well-kept secret to delivery's success is convenience. Why are diners loyal to one delivery platform over the other? Because it's convenient to order food off of the platform that knows your favorite restaurants, your recent orders, and has your credit card information on file. These delivery platforms can get your food in front of more customers and open your restaurant to more people. But if you're worried about quality assurance, try incentivizing diners to choose your in-house delivery by offering discounts.
  • How to handle staffing challenges: Restaurant staffing has been a complex challenge for restaurant owners, operators, and managers for a long time. New challenges sometimes arise within different time periods and political climates, but even at its peak, hiring will always be a professional skill to continually develop. Luckily, we have plenty of content for exactly that:

Extra, Extra! 📰🗞️

The cost of restaurant labor is an industry-wide challenge. At the same time, labor is also a restaurant's most controllable cost. We collaborated with Toast partner, Restaurant365, on a new article that digs into how restaurants can better control labor costs by integrating restaurant technology systems like POS, accounting, payroll, and scheduling.

“By integrating our POS, scheduling, accounting, and payroll systems, we have reduced labor hours tremendously from a support perspective, and there’s now an overall ease when it comes to transactions related to payroll. It’s made everything more seamless, and it keeps our workforce engaged and small." - Ryan Egozi, Director of Operations at SuViche Hospitality Group.

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