Normally on my weekly podcast, I talk about one of the eight basic fundamentals of running a restaurant. Each week, I break down common problems and struggles we all have into easy, actionable steps for everyone to become 1% better every day and earn their place in the Top 5% of all restaurants nationwide.
Today we are going to do something different... and fun! Today, we are going to take a quick look into the future, and I am going to make some big predictions. Let’s get started.
50% of all traditional restaurant jobs will be gone by 2025.
I know that seems crazy because our industry is so short-handed today, but it’s going to happen, and here are three reasons why:
The first blow is the lack of motivated workers.
Millennials don’t want to schlep food. Millennials want to play on their computers. Restaurant customers and guests are sick of paying 20% tips for lousy service. The 20 hour work week (the goal of all Millennials) is killing our industry.
I just heard a story about a Wendy’s that locked its doors and only uses the pick-up window, you can’t come in and sit down, or use the bathroom. They are doing this because they can’t find anybody who is willing to work there. Personally, I think this is the future fast food model. It makes sense to me.
And, there is really nothing cool about working in fast food… It used to be a good place to start in the working world for teenagers, but today’s kids just aren’t interested.
The $15 minimum wage will be the second blow.
This will drastically change our business, this is why BIG restaurant companies are investing heavily in tech. Think of it like gas prices, when gas is under $2 nobody worries about it. But when it hits 5 or 6 bucks a gallon, people start screaming for electric or hydrogen powered cars. It’s the same thing with the minimum wage. I believe the minimum wage will have the exact opposite effect of its intentions.
Once the minimum wage hits $15, that will become the new stigma, who wants a lousy minimum wage job at only $15 per hour. The $15 minimum wage will force good places pay $20. The good news is that the $15 minimum wage will force us to find better alternatives. The bad news is that it will hurt the untrained and uneducated people.
Changes in technology will be the third blow.
The smartphone, the iPad, robots, and drones. Don’t forget Smart clothing that will enable the drones and robots to find you in the crowd. It’s all pretty simple and true, the future is going to be fun, real fun.
I believe by 2025, restaurants will split into two major categories: Full-Service Restaurants on one side and Quick-Serve/Fast Food on the other.
First, let’s look at Full-Service Restaurants.
These are nice places where service and hospitality are vital. These places must have real professional waiters not “food servers”. There is a huge difference between a professional waiter and a server. Servers don’t know wasabi from quinoa, or a spinalis from a hanger steak, they just take the order, deliver food and collect their tips. The server will be easily replaced by the iPad or an app on your phone, because they don’t add any real value to the equation for the owner or the customer.
Middle-of-the-road restaurants with “OK” service will be forced to switch from full-service to high-tech. Think about it, what does the typical waiter in a mediocre restaurant really offer anyway? Slow un-knowledgeable service and a bad attitude? The $15 minimum wage and loss of the tip credit, will put the “Server” and their bad habits out of the business for good. I’m looking forward to it. There will always be a demand for a first class, excellent dining experience.
Full-service restaurants will need polished waiters, professional craftsmen--who really know their stuff. The number of full-service restaurants will continue to disappear, until the market reaches equilibrium. Then everybody will long for the days when we had service in restaurants instead of the faceless iPad.
Another nail in this coffin is that we have to tip servers. I have no problem tipping professional waiters and craftsmen and women who deliver great service, and by the way, I am a really good tipper! But most customers don’t see it the way we do, they see the 15% or 20% tip as surcharge or added expense. Another way to say that is that it costs 20% more to eat at Village Inn than it does at a quick serve breakfast joint because you have to tip. Why pay the 20% if there is no perceived added value?
For these reasons, I believe the full-service restaurant will only be 20% of the market by 2025.
Next, let’s look at the future of Quick-Serve & Fast Food
We will order from a counter, call ahead from our smart phone, order at the table from an iPad, or order from a kiosk. Some places have runners who bring the food to you, Others make you wait for your number. Places like Chili’s have the Ziosk machine, you order your stuff and someone brings it to you. Then you pay your bill right there on the Ziosk without the help us a staff member. I love that.
Today this technology is great for the big chain restaurants, but it’s just out of reach for us little independent restaurants people. I think the quick-serve model will become 80% of the market by 2025.
Here’s a few more to help you visualize:
By 2025 we will have robots involved in the service process. They will either use your smartphone or smart clothing to find you in the crowd. Also, drones will be very common. Hey don’t laugh, this will happen way before you know it. Companies like Infinium are working on it now. There is also a company called Air Selfie that makes a drone that you can put your cell phone into, it flies up and takes your picture, crazy, I love it. Driverless cars are right on the horizon today. Can you imagine how they are going to impact our business model?
Restaurants will have to choose between one of the two restaurant categories in order to be successful (full-service and quick serve/fast food).
On one hand we have the high-tech quick-serve restaurants and on the other we have low-tech full-service restaurants that stick to the basic fundamentals. Both approaches will work, but you are going to have to pick one or the other.
The Artisan Explosion
The butcher, the baker, the candlestick maker of the future must be highly-trained craftsmen and women. There really are two kinds of people: The computer people and the people who want to make things the old fashioned way with their hands.
Look at the craft beer explosion: People are really into making great beer. Look at Artisan Cheese, small companies are making some great cheese. And charcuterie... people like Laquercia in Iowa are really into making great charcuterie. Here’s the point: restaurant chefs and cooks must become artisans if the restaurants want to get and stay ahead of the big chain restaurants.
Restaurants must specialize in something, by making world-class products that are totally amazing. This is a big move up from the “thaw and serve” crap that most places are getting away with today. Think about that! The places that serve jalapeno poppers and such are a “dime a dozen”. They will not have waiters, they will rely on technology. But, if they are not big chain stores, they will have to use “OK” or inferior technology.
The artisan craftsmen will always have the option of full-service or counter service like the old-time deli. I believe that 20% of people are looking for something real, something special, a one-of-a-kind experience. And 80% of the people just want it cheap and now. Most people are ok with the run-of-the-mill commodity.
My point is, you will have to pick: Artisan Craftsman or High-Technology Commodity.
The Artisan Farmer:
Today most farmers grow corn, beans, and wheat because they are the money crops. It’s relatively easy to grow these crops because of the machines and technology. Today’s tractors cost hundreds of thousands of dollars and have GPS & great sound systems so you can listen to music or even this podcast as you plant your fields. That’s a far cry from the days of old!
I see the artisan farmers expanding into vegetable market. I see local farmers starting to grow great fresh local produce and finding a way to get it into local restaurants. Look at the amount of people who are becoming vegetarians or vegans... This is not a fad; this is a real movement, and the quality and variety of our produce needs to follow this trend.
The real disconnect today is between the chef and the farmer. We need a way for the chef and the farmer to connect that makes sense. It’s a real shame to buy stuff across the country when the farmer down the street has great stuff.
Another problem is seasonality, it really offends me when I see restaurants in the midwest say they have local produce in January, come on really? And the crazy part of that is that some customers actually believe them. I believe people are just in love with the local ideal, so they just go to places who say they are doing it, even if it’s total bunk. I say it’s time to start building a bridge between the farmer and the restaurant.
The other problem is the state of the current farmer’s market. In my city, the farmer’s market is way too expensive. This is because the people who put on the framer’s market are gouging the farmers. They are charging the farmers high prices for their space and, in turn, the farmers are having to charge double what it costs to buy the same thing in a grocery store. I understand that the farmer’s market organizers have expenses, but we need to find is a better smarter way to get the farmer and the people to connect. The grocery store might be the place, if they can get past the money stuff.
The Speed of Future Growth.
So today we have discussed three things that I see happening between now and 2025:
50% of all traditional restaurant jobs will be gone – replaced by technology or good old fashioned ingenuity.
Restaurants will be divided into two major groups: full-service and quick-serve technology-based businesses.
You will have to pick a direction: old-world craftsmen or modern-day technology commodity.
I believe these changes will happen between now and 2025 because of the speed of technology.
This law states that the speed and capability of computers doubles every two years. I believe that we will continue to see Moore’s Law in effect for many more generations into the future. So, every time you see a new technology or gadget, expect it to double its ability every two years. So whatever you think is going to happen in the next 6 years is most likely way off, because most people think in linear terms.
Linear vs. Exponential:
In linear thinking, things move outward in a straight line. Let’s use a penny as an example. If we get one penny a day for 31 days we will have 31 cents at the end of the month. When we think exponentially, things really get interesting. Let’s imagine we take a single penny and double it every day for 31 days.
Here how that works:
Week One: 1, 2, 4, 8, 16, 32, 64 cents
Week Two: 1.28, 2.56, 5.12, 10.24, 20.48, 41, 82, 164 dollars
Week Three: 328, 656, 1,312, 2,600, 5,200, 10,400, 21,000 dollars
Week Four: 42k, 84k, 168k, 336k, 672k, 1.3 million, 2.7 million, 5.3 million, 10.8 million dollars
Technology is doing the same exact thing… but we are not really paying attention to it. The speed and capability of technology is doubling every 2 years. Today is July of 2019, by July of 2025, in six years, the speed and capability of technology will have doubled 3 times.
Imagine if your restaurant is doing one million dollars in sales today, now double that three times. 1 million, 2 million, 4 million, 8 million, don’t you wish you could grow that fast? That’s what technology is going to do between now and the year 2025.
Think of money for a second: We have thousands, millions, billions and trillions. When it comes to “growth” we know about linear growth and exponential growth. Did you know there are layers above exponential where things go really, really, really fast… These layers are called Super-Exponential, Tetration, Pentation, and Hexation. What do you think will happen when the world reaches those speeds?
I think it’s time to giddy up…
My name is Peter Harman. I am the Food Guru, and my goal is to start a Restaurant Revolution where every restaurant owner in America has the information they need to create financial freedom and live the life of their dreams.
I just want to get your mind open and ready for the future… I want you to open your mind to what is coming up and what you can expect in the very near future, 2025 is not far away. If you are struggling to keep up with the competition today, what are you going to do when they hit super-exponential or super-hexation speed?
I have written a book called Restauranting 101, and it focuses on Eight Basic Fundamentals that will propel your restaurant into the Top 5% of all restaurants. Restauranting 101 has the power to change your life and it's available on Amazon today. I encourage you to read it, and if you really like it, buy a few extra copies for your key people.
These Eight Basic Fundamentals have helped me and my teams accomplish amazing results, I’m sure it will help you and your people too. This book is very important for you and your people today, because we need to get up to date and current before you head off into the wild, and untamed future.