The industry of the restaurants USA vs. Spain
The restaurant industry in the USA is responsible for many of the innovations and business trends currently. The USA is a huge market, very competitive and mature. Successful businesses there tend to also have success on this side of the Atlantic. Many of the novelties of the hospitality industry in the USA appear after a short time in Europe. Many of the great hotel franchises USA are the ones that dominate the business around the world and I am sure that many of the franchises that are now growing there will soon do so here. Being attentive to what happens in the USA means knowing the trends of the world hotel industry.
Spain, on the other hand, is the country in the world with the highest number of restaurants and bars per capita, besides being one of the countries that receives the most tourism (third world power). Spanish gastronomy is recognized throughout the world and Spanish professionals in the sector are also recognized internationally, both chefs, hotel professionals and restaurant managers.
I have had the opportunity to exchange opinions with my friend Donald Burns, considered one of the 50 most influential people in the restaurant industry in the USA and we will try to reveal in 6 questions the keys to the current situation of the sector in both countries.
DONALD BURNS, TheRestaurantCoach, is an expert in the US restaurant industry, consultant, regular speaker and author of “Your Restaurant Sucks!”. It is also Host in EXPOHIP. Its motto is that the problems of restaurants are actually people problems.
1. What is the situation of the restaurant business in the USA? What forecast do you have there for 2019?
Donald Burns: The casual dining concepts like Chili’s and Applebee’s are losing market share because they fail to adapt fast enough to market changes. Independent restaurant without a solid brand identity will also continue to close at a fast rate. The government push for higher wages for hourly employees here is also forces restaurants to rethink and rebrand their service. I expect more restaurants to adopt a fast-casual service model or move more towards technology (kiosks and handheld devices) to alleviate the rising labor costs.
Manel Morillo: In Spain we are still growing, both in the number of stores and in sales. We continue in a process of reconversion of the sector: More than 50% of the restaurants are zombies and can hardly survive or survive by legal traps. The big brands are gaining weight, some of them thanks to the entry of investment funds. Independent restaurants need to change and define clearer business concepts. It seems that the future in Spain will be in casual food, in highly specialized offers and in new market trends. 2019 will be characterized in our country by a boom in delivery, casual food and street food proposals. Traditional restaurants will still have to adapt to changes and modernize.
- In the USA, the big brands are a very high percentage of the market, unlike in SPAIN, where independent restaurants are a clear majority. What do you expect for both types of business in the USA?
Donald Burns: Emerging brands are the hot topic in the USA. The independent restaurant is struggling due to lack of solid branding, consistency, and marketing. The more niche your restaurant is the better it seems to be accepted in the USA. Rising brands like Crack Shsck, Sweetgreens, and Slapfish are expanding rapidly from solid business planning and investments from venture capitalists. These hot concepts require lower investments to get up and running.they also run tighter labor and food costs than many independent restaurants making them the idea investment. It seems like everyone is looking for the next Chipotle.
Manel Morillo: In Spain, organized restaurant companies will continue to grow and will have an increasingly high percentage of market share. The solvency and security offered to the client, as well as their investment capacity, will give the leading brands leadership. Independent restaurants should be more flexible, with smaller stores, lower fixed costs. These small restaurants should specialize in specific dishes, be prepared to meet the delivery business and will need to get the respect of the customers of their neighborhood.
- What is the biggest challenge you face in the restaurants you advise like TheRestaurantCoach tm?
Donald Burns: While I advise for some big brands, the majority of my work is still with independent restaurants. The problems they face are global because once again, all business problems are really people problems. Those people problems are 99% communication problems. Restaurant need to understand want their core values are and why they do it. There is a story behind you and your restaurant. You need to share that story and connect with people on an emotional level. Stop trying to be cool or hip and just be human.
Remember that culture flows down, not up, and that starts with you. As the leader you must step up to become a better person. If your restaurant sucks, it’s because you suck as the leader.
Manel Morillo: In my case, in Spain, the biggest challenge in the restaurants I advise is to improve the professionalization of their entrepreneurs. Owners need to understand that restaurants are businesses that need to be managed professionally. In addition, they must assume that management begins with having a clear business concept, with a story to tell and that, in addition, be authentic. The teams of people in your restaurants must have excellent training and be motivated. In many cases we have to tell the entrepreneur to improve their own skills, to be trained, to make the company culture better and that this culture is more oriented to make your restaurant excellent and not mediocre.
- What innovations in robotics and digitalization are already being used in the USA today?
Donald Burns: Robotics are coming wether we want them or not. As labor costs constantly rise year after year, we will see robotics come in to replace repetitive tasks. This could be flipping burgers or making pizzas. It’s a self fulfilling prophecy that lack of interest in entry level jobs create the need to replace those people by machines. Even over the last 10 years advancements in cooking technology have changed how many global brands (like McDonald’s) produce food at a faster rate with less staff.
Manel Morillo: In Spain there is a lot of interest in buying the new machines connected to the internet. There is also a lot of interest in robots, especially in the kitchen, which replace routine and hard work (to make hamburgers, tortillas and other dishes). The restaurant sector, at the moment, is experiencing a revolution in the way of managing and incorporating new digital tools. In Spain, new digital management tools for restaurants are being developed almost every day.
- From your experience What is the great challenge of restaurant managers in the USA?
Donald Burns: Mangers in the USA struggle with leadership training. Most are not adequately prepared for the jump into management. They are promoted too quickly when someone above them is terminated. Here’s the thing: a lot don’t really want to be managers, however they are afraid to say no or turn down the raise. They get thrown into situations they are not prepared to handle. Managers need more training on the “soft skills” like time management, communication, and stress management. We set people up for failure when we give them the job without the proper training to reach excellence!
Manel Morillo: Restaurant managers in Spain must MANAGE their brands with professional criteria and improve their own skills. Restaurants are businesses and many entrepreneurs do not seem to know it. We also have to understand that our sector is in full transformation, that our business will change in a few years thanks to the new consumer habits of customers. Adapting brands to these new consumption habits will be the key to success.
- What are the innovative business concepts that currently prevail in the USA?
Donald Burns: The food hall is the big concept sweeping the USA. The lower start up costs make it appealing to new concepts to use as a testing ground before going into a full sized brick and mortar store. Plus, many food halls operators are investing in teaching business skills for tenants to increase their odds for success like a business incubator.
Manel Morillo: In Spain, the delivery business is booming. We also live a strong growth of street food and casual food, with new brands that are growing rapidly. In addition, many of the consolidated brands are becoming more professional thanks to the entry in their shareholding of some capital funds.
I am very grateful to Donald Burns who has collaborated with me in the writing of this article.