5 restaurant executives and insiders reveal the industry’s biggest challenges for 2020

  • Business Insider spoke with five restaurant industry insiders about the biggest challenge facing the business in 2020.
  • The CEOs of Noodles & Co., TGI Fridays, and Panera all said issues related to workers and labor are top concerns.
  • Industry insiders at the ICR Conference in Orlando, Florida, voiced similar concerns on labor issues and highlighted the “necessary evil” of figuring out how to handle delivery.
  • Visit Business Insider’s homepage for more stories.

ORLANDO, Florida – As the restaurant industry enters a new year, many of its oldest problems continue.

Over the last week, Business Insider has asked restaurant industry executives and experts about the biggest problems facing the business in 2020.

The CEOs of Noodles & Co., TGI Fridays, and Panera all talked about issues related to workers, including rising wages and problems with retaining talent. Industry insiders at the ICR Conference in Orlando voiced similar concerns and highlighted the “necessary evil” of figuring out how to handle delivery.

Read on for five industry experts’ takes on the biggest challenges the restaurant industry will face in 2020.


Rising wages and labor inflation

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Taco Bell

“I think it’s going to be labor inflation still,” Noodles & Co. CEO Dave Boennighausen told Business Insider in an interview on Wednesday. “We’re coming off a year where we had about 5-6% labor inflation. I don’t think that’s going to change for years.”

Boennighausen said that the tight market can create opportunity for some companies, noting that retaining talented general managers is increasingly crucial to success. The fast-casual chain is working to keep workers engaged with new benefits, including adoption assistance and breast milk shipment reimbursement.

Read more: Taco Bell’s $100,000-salary test could set off a domino effect, forcing fast-food giants to increase pay


Finding and retaining employees

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Getty Images

As labor costs rise, David Cantu, cofounder of restaurant industry tech provider HotSchedules, said that the biggest challenge is finding and retaining workers.

“The fight for quality labor is incredibly difficult,” Cantu said in an interview. “Finding high-quality resources to deliver against the increased expectations you have around brand, and the brand promise, and the concept you’re trying to deliver is very, very hard.”

Panera CEO Niren Chaudhary told Business Insider last week that the top challenge was maintaining relevance with customers. No. 2, Chaudhary said, was doing the same with employees.

“How do we create engagement in employees?” Chaudhary said. “What do we need to do to hire the best, retain the best, and train the best that we can find?”

Read more: Panera plans to slash meat from half of its menu as customers seek vegetarian options and fear of climate change heats up


‘Confusing’ legislation and lack of immigration reform

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Reuters/Eduardo Munoz

TGI Fridays CEO Ray Blanchette told Business Insider that one of the top challenges in the restaurant industry in 2020 is the “confusing” legislative environment. With rising wages and low unemployment rates, the immigrants that make up a sizeable portion of the restaurant industry are crucial.

“We need immigration reform,” Blanchette said in an interview on Monday. “Think about who we serve, who our team members are, and having access to a healthy flow of talent.”

“150 years ago, an immigrant would come here and work in infrastructure,” Blanchette continued. “Building the country was roads or railroads or skyscrapers – those were the jobs that were available to immigrants. Today … we are the place where immigrants break the cycle of poverty for their families forever.”

Read more: TGI Fridays CEO says immigration reform is one of the biggest challenges in the restaurant industry


How to handle delivery

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Reuters

Delivery is a major stressor for many chains, even as it drives sales. As it is still unclear how much customers are willing to pay for convenience, many restaurants and third-party delivery partners are eating part of the cost of delivering food.

“It’s how to handle delivery,” Bart Shuldman, CEO of back-of-house automation service BOHA by TransAct, said when asked about the top challenge for 2020. “There’s no doubt that delivery has its pain points.”

Still, most restaurants can’t ignore delivery as their competitors expand in the space. Eventually, Shuldman expects restaurants to charge more for delivery, passing the costs on to consumers.

“I think it’s a necessary evil,” Shuldman said. “The millennials love it, right? You’ve got to figure it out.”

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