Health check, and the rising price of rent
The real-estate issue never lets up, does it? Unless you own a space outright (that isn’t as easy, or common—by far—as it once was), rent is an unavoidable overhead expense for full-service operators.
Fifty-eight percent of respondents said they spend up to $7,000 every month on rent. Of the major cities surveyed, New York and Miami topped the list as the most expensive for commercial rent in the country. In those cities, one in seven restaurateurs said they spend more than $12,000 per month on rent. Those are pretty staggering figures.
Just 16 percent of the restaurateurs said they don’t have to deal with rent and landlords because they own their space.
How much money are restaurateurs spending on rent per month:
- 24 percent: $3,000–$5,000
- 20 percent: $5,001–$7,000
- 16 percent: Own the space
- 14 percent: Less than $3,000
- 11 percent: $7,001–$10,000
- 8 percent: $10,001–$12,000
- 7 percent: Over $12,000
As TouchBistro points out, rent prices don’t tell the entire story. You need to measure them against sales. For the majority of restaurants, rent represents about 5–10 percent of monthly sales.
Two-third of restaurateurs said they could handle a rent increase of more than 4 percent, but this depends on the size of the restaurant. Generally, TouchBistro said, the larger the restaurant, the easier it is to cushion an increase in rent. The survey also found that restaurants in Miami and New York—the most expensive markets—were more prepared than restaurants in less expensive cities to handle rent increases of 10 percent or more. What does that suggest? Perhaps that spending more on real estate sometimes pays off. It’s risky to compete in that arena, but it can return dividends. Massive volumes come out of prime outlets, naturally. At the same time, though, miscalculate traffic at those high-priced spots and rent will quickly overwhelm a restaurant.
Staffing, staffing, staffing
We’re beating a very worn-out drum talking about the tightened labor market and what that entails. To put it simply, it’s tough to find help right now. You just can’t pay somebody money anymore and expect that to be enough (although it’s still the most important factor). Incentives. Work culture. Benefits. There are all playing a larger role than ever. And then there’s the issue of retaining quality employees; what it costs to lose them; what that means for your customer service. And on we go.
How restaurants find employees:
- Referrals/networking: 51 percent
- Job sites: 50 percent
- Social media: 46 percent
- In-store advertising: 45 percent
- Company website: 37 percent
- Job fairs: 23 percent
- Headhunter/recruiter: 20 percent
Restaurants are pulling out all the stops to win with talent. Two-third of restaurants use higher wages to attract employees. Benefits, like professional development opportunities, are secondary to competitive wages in the battle for the best employees.
Seven in 10 restaurants said they experience regular labor shortages at some point. A third said they struggle with server shortages, while a quarter lack dishwashing staff most of the time. Full-serves that make more than $2 million in annual revenue also struggle to retain chefs, line and prep cooks, and bartenders.
One in three full-service restaurants experience an annual turnover rate of more than 20 percent, the study said.
Annual employee turnover rate:
- 35 percent: Less than 10 percent
- 27 percent: 11–20 percent
- 14 percent: 21–30 percent
- 11 percent: 31–40 percent
- 12 percent: Over 40 percent
The most important traits
- Hard work
- Positive attitude
Somewhat important traits
- Goes above and beyond
- Has integrity
- Quick thinker
Least important traits
Ever met a restaurateur who said training wasn’t important? But how much training is needed to be successful exactly? That’s a more nuanced debate.
TouchBistro found that training time varied greatly among full-service restaurants, and ranged anywhere from one hour to more than 12 per employee. Larger restaurants, however, tended to offer more training, as about half of them train their staff members for more than 12 hours each. Resources play a role.
The amount of training front-of-the-house staff receive:
- 26 percent: 4–7 hours
- 25 percent: 1–3 hours
- 24 percent: More than 12 hours
- 21 percent: 8–11 hours
- 3 percent: Less than one hour (not many people would admit this).
Training BOH staff receive:
- 28 percent: More than 12 hours
- 26 percent: 4–7 hours
- 23 percent: 1–3 hours
- 18 percent: 8–11 hours
- 5 percent: Less than 1 hour
The cost: 55 percent of full-service operators said they spend less than $2,000 per employee on training, but this depended on the restaurant’s annual revenue. Venues that generated less than $1 million in annual revenue tended to fork up less than $2,000 per employee, while restaurants that made more than $1 million annually spent more.
A third of restaurateurs also said they use employee-scheduling software, while a quarter stick to spreadsheets. The rest use old-school tactics like pen and paper, or a combination of tech and traditional methods.
How restaurants create staff schedules:
- 33 percent: Scheduling software only
- 26 percent: Spreadsheets only
- 13 percent: Pen and paper only
- 12 percent: Spreadsheets and software
- 6 percent: Pen/paper and spreadsheets
- 5 percent: Pen/paper and software
- 5 percent: All three
Additionally, 23 percent of restaurateurs said employee schedules take them three hours or more per week. Half of the operators said they reduce labor costs by increasing productivity, and four in 10 have done so by cross-training staff and using POS data to predicting scheduling needs.