The GBQ Restaurant Services Team had the pleasure of attending the Restaurant Finance and Development Conference (RFDC) from November 14th through November 16th in Las Vegas. The festivities began Sunday evening when GBQ, along with C-Squared Advisors, Huntington Bank, and Hylant Insurance hosted our third annual “Eve of RFDC” happy hour. We were honored to host so many attendees which included representatives from all restaurant segments as well as industry consultants and service providers.
The formal conference and associated sessions kicked off on Monday, November 14th with an energetic economic briefing from the former chairman of President Obama’s Council of Economic Advisors, Austan Goolsbee. Following the economic update was an inspiring keynote speech focused on passion and success from Heisman trophy-winning quarterback Tim Tebow. GBQ employees who attended the conference were also able to attend many other specialty sessions which discussed current hot topics and trends within the restaurant industry.
The following are a few major takeaways from the conference:
Industry Challenges – Inflation and Labor
The rain cloud of inflationary pressures and labor challenges that has been looming over operators since the pandemic started was a hot topic and touched on in multiple sessions. The cost of doing business continues to increase, and reduced margins and an increasingly difficult labor environment pose numerous challenges to businesses. Even with these challenges, one aspect of business that cannot afford to be diminished is the customer experience which has resulted in increased costs and stresses across the board. Here are a few ways that businesses are combating these challenges.
Inflation
- Offering strategic decisions on menu pricing (i.e. when to take pricing increases, by how much, and on what menu items).
- Reduction in the square footage of space to reduce overall operating costs.
- Utilization of additional automation and artificial intelligence (read more on this below).
- Being strategic with suppliers and how costs are negotiated, paying more attention to freight costs and packaging.
- Perfecting the art of menu engineering to put forth those menu items that are more profitable based on current commodity pricing
Labor
- Predictive scheduling – There are already local and statewide laws in certain states regarding this, and there is an expectation of seeing a further push for predictive scheduling in upcoming years. This also ties into employees’ need for flexibility whether it be working the same shifts each week or only working a set number of hours each week. Flexibility was the number one priority for employees.
- Upward mobility – A team-building culture allowing upward mobility for lower-level associates has been proven to increase employee retention which is key in today’s labor environment. A great culture was a foundation of retaining employees that showed employees were cared for and not a commodity.
- Leadership training – The offering of leadership training ties in with the path to upward mobility and rewards those employees who complete leadership courses and show a passion for the business. The restaurant industry allows someone to start at the bottom and make it to the top, whether it is becoming a store general manager, CEO, or franchisee.
Automation: The New Normal of the Hospitality Industry
Who would have thought 15 years ago that so much of the restaurant industry could be automated? From the check system, table reservations, POS systems, artificial intelligence (AI) enabled ordering, loyalty programs, and pay-at-your-table systems, the list can go on and on. Automation of front and even back-of-house operations has become the new normal in the industry and being behind the curve of automation can affect your customers’ experience. To some people, it means a lot to save that five minutes of their time by just paying their bill at the table as opposed to waiting for service to retrieve and process the bill.
A few examples of AI and automation, some more successful than others, that were discussed at the conference are as follows:
- Back-of-the-house robotics, specifically the use of robotics in the kitchen.
- The use of AI at drive-thrus allows for reduced human interaction and increased efficiency
- QR scanners at tables, including those that allow for direct ordering to free up wait staff
- Dynamic pricing which adjusts upward/downward throughout the day based on foot traffic and peak hours
The FAST Recovery Act
From the law and regulatory side of the house, the focus during the conference was spent on discussing the details of the FAST Recovery Act (the FAST Act). The FAST Act is a pending piece of legislation in California that is part of a well-funded and coordinated strategy to change the labor landscape in the hospitality industry. The FAST Act would create a 10-member council of appointed worker and union representatives, employers, and state officials tasked with setting fast-food workers’ minimum wages and codifying law
s for work schedules. The current wording in the act would allow the council to raise the minimum wage to as much as $22 per hour from the current $15 per hour minimum wage in California. The FAST Act was signed by Governor Newsom of California on Labor Day of 2022. However, various industry coalitions have received the one million signatures necessary in opposition to halt the law for now and require it to appear on the ballot in 2024 for California voters to decide its fate.
Proponents of the FAST Act point to the increased wages and flexibility in scheduling that it would provide to industry workers whom they say have long been exploited. Trade groups and businesses who oppose the FAST Act point to the current inflationary environment which has already made business extremely difficult and the increased labor costs that the FAST Act would enforce on them. These increased labor costs, trade groups and businesses say, would force operators to increase menu prices and reduce staffing to offset any associated cost increases. The lead-up to the 2024 election in California will surely be highly advertised and politicized, and the results could have far-reaching impacts as many other states are expected to pass similar laws and regulations should the FAST Act prevail on the ballot.
ASC 842 – It’s Finally Here
ASC 842 Leases, the long-awaited lease accounting standard which will significantly affect the financial statements of many restaurant operators, is finally here. While this is no surprise, it is still worth noting as this standard will most likely impact any organization that is required to present financial statements in accordance with generally accepted accounting principles. GBQ summarized frequently asked questions associated with implementation in the November 2022 issue of Table Talk as well as our previously released implementation guide.
The Restaurant Finance and Development Conference was a great experience for us, and it is such a great opportunity to meet with our clients and network as well as stay on top of the key industry issues facing the industry. If you have not attended before, we highly recommend it. Next year’s conference will be in November 2023, and it takes place at the Bellagio hotel. We hope to see you there!
Article written by:
Tawny Flareau, Tax Manager
Tobin Perrill, Assurance Senior Manager
