Note: This is a multi-part article.
Part 1: Challenges & Status Quo. // Part 2: Best Practices & Future [link will follow as soon as published].
The Bay Area, home to some of the world’s most exciting fine-dining establishments hosted a get-together — the first of it’s kind.
Chefs, restauranteurs, owners, domain experts, consultants, members of the press gathered and exchanged their experience about the state of ‘the Industry’.
A recurring theme: Change.
Like many other traditional industries, fine dining experiences an overhaul on multiple levels.
This piece is a subjective outlook at the business of culinary arts. The main challenges & takeaways are based on (but not limited to) the realities in the Bay Area.
5 Challenges That Keep Us Awake at Night
Building and running a stable and economically viable organization is not easy. Yet it gets significantly harder when your surrounding changes drastically (and quickly).
Fine dining businesses don’t operate in a vacuum. Each of the following groups has an impact on it and vice versa:
- Policy makers
- Local communities
- Owners & operators
We’ll use these separate groups to outline the core challenges of the Industry.
#1 Minimum Wage Increase [Policy Makers]
Here a couple of components to keep in mind:
#1: States set the minimum wage levels.
#2: City & County Government have the prerogative to propose an increase of the indexed levels. The city & county of San Francisco has voted in favor of such a Proposition and the current minimum wage is $12.25 (as of 5/1/2015). The increase of minimum wage has been set for the coming years and will reach $15 on 7/1/2018.
#3: This adds to the burden of the country’s most expensive rental market. → Tough economics for restaurant operators.
Despite the proactive stance on the issue there are no Industry-wide best practices yet → opportunity/need to experiment and learn from each other.
#2 Cry for Sustainability and Relevance [Local Communities]
Fine dining establishments are important to local communities. Their impact is two-fold: social vs. environmental.
#1 Social: Increased mobility and larger wealth disparity drive quick and drastic change of local neighborhoods. The (frequently) resulting gentrification is one of the root causes of tensions between different groups. Fine dining has been an instrumental force in creating a ‘pull-effect’ for neighborhoods in flux.
- As a local landmark → how can restaurants/bars avoid being the ‘antibody in the hood’.
- As an employer → will they ‘provide jobs to locals’ vs. ‘just occupy commercial space and employ outsiders’.
#2 Environmental: Changing climate and the resulting resource shortage are a global phenomenon. Yet California, its citizens and organizations have the moral imperative to be a role model → find solutions and set a good example for other regions/states.
- As an organizational role model → other business will look up at lighthouse organizations and most likely mimic its best practices.
- As a resource consumer → tapping into the local grid, local water supply, and local food supply restuarants/bars have to be effective/efficient with their material usage.
#3 Higher Expectations [Customers]
Food critics & star chefs are the new rock stars and it feels almost that every second person using Starbucks’ WiFi is a Food Blogger.
The rise of ‘foodie culture’ has made fine dining more accessible than ever. This comes with a pinch of salt to the restaurant owners & operators:
#1: The Information Gap has narrowed significantly. Customers know of styles, ingredients, recipes and expect the same (and more) from their service personnel.
#2: Former differentiators have become the ‘new normal’.
I feel that ‘Farm-to-table’ is expected these days. — every other attendee/speaker at GGRA Industry Conference
#3: Increased competition is constantly ‘raising the bar’ for food quality/originality, presentation, service environment, experience level, etc.
Today it is hard to ‘keep up with the Joneses’ and even harder to differentiate a fine dining experience from the plethora of fine alternatives.
#4 Operational Overweight [Owners & Operators]
Historically fine dining has been a low net profit margin business. All of the challenges above put even more financial pressure on the owners & operators.
Therefore restauranteurs have to look inside their organization to identify the ‘excess fat’ and to improve operational economics.
#5 Changing Talent Dynamics [Employees]
The reality is that working in fine dining (regardless if front or back of the house) is an apprenticeship profession.
It is an increasing challenge to recruit, retain, and develop the right talent for a fine dining organization.
The Challenge: How to Build a Stable ‘House’ Under Such Circumstances?
We’ll explore suitable and proven tactics in the second part of this post.
All credits go to the amazing people at GGRA Industry Conference that I had the chance to learn from. All thinking errors and mistakes are entirely mine.
If you like this post please share the love and feel free to get in touch with us.
As usual, all feedback, input, criticism, critique is welcome.
Resources, articles & people that were instrumental to this post:
- 1st GGRA Industry Conference → for gathering smart & open Industry people
- All the panelists & presenters → for sharing their knowledge with the rest of us
- Reza Esmaili → for deep & insightful conversations at the bar
- Wes Rowe → for the ‘creation of the famous WesBurger’ & helpful brain picking
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