As the face of our population is changing, the restaurant industry is changing - by Dennis Serpone

Dennis Serpone, New
England Restaurant Brokers

Can you believe it? It was just Memorial Day...long overdue. Now we’re at the end of July, Labor Day is around the corner...with Thanksgiving and Christmas close behind. Where does the time go?

Unless you’re dead, or at least don’t go out to eat often, you’re unaware of the present health, or better said, the maladies of the food and beverage industry. Your perception of  the industry is probably skewed if you only take the family out to eat one night on the weekend. In that case you probably sense that the industry is doing great...lines everywhere you go...Friday and Saturday nights for sure.

The sad truth is that the industry as a whole is barely sustaining itself. Obviously there are exceptions to every observation. One must also delineate between chain operations and the local independents. For the sake of this treatise, let’s look at a few of the well-known full service restaurants in the Greater Boston market...Legal Seafood, Capital Grille, Del Frisco’s, Davio’s, Stregga...forgetta bout it. Huge staffs, huge rents, huge prices. Yet. visit almost any time and they’re packed. You gotta love those Millennials who make big money, don’t cook, and eat up the cache of hanging in the Seaport district.

Then pair down to the casual dining segment...the Ninety-Nine, Chili’s, Applebees, and the like...very busy. Located mostly in the suburbs where the occupancy costs are scaled down, accessibility easier, and prices more affordable which allows for greater frequency of regulars. However, the Nation’s Restaurant News reports that, across the board, same store sales in the segment are down 3-5% so far this year.

Of the hundreds of thousands of every type of food and beverage business in the U.S., the greatest numbers are in ‘fast food’. Whether it’s pizzerias, hamburger joints, sports bars, or acquires the story is the same...way too much competition. America, home of the brave and the defender of liberty, doesn’t need another pizza shop. Several years ago, I spoke to the owner of a very nice and successful shop owner who had decided that he was tired of fighting for the customers in his area. He went on to explain that when he opened his place 12 years ago, his town only had four pizzerias...now there were 15, The population in 12 years didn’t grow at anywhere near that rate. The owners were simply cutting the pie into smaller pieces every time a new place opened up. If there is a bright light shining under the bushel, it’s that a growing percentage of people are opting for home delivery.

In the same way that we should be thanking our police and first responders, we should be thanking our restaurant owners for providing a service when we don’t want to cook. Food service operators, essentially ‘small business’, drives our economy. It employs the greatest number of people, provides the greatest opportunities, and is a major source of revenue for the local, state, and federal governments.

In pandering to the various unions, social activists, and liberal rabble-rousers, small businesses are being decimated by the growth to a $15 per hour minimum wage, onerous, unsustainable increases of health insurance mandates of Obamacare, and now the shortsightedness of the Dept. of Labor redefining the structure of hourly versus exempt payroll expenses. Simply put, in any business, if you have an employee (assistant manager, manager) exempt from an hourly wage, who isn’t earning just over $47,000 per year, if this person does  any work over 40 hours, he must be paid time and a half for every hour. This is cruel and unusual punishment laid on small businesses. At a time when most small business are suffering from a lack of qualified help, penalizing management for helping out after their 40 hours is destroying the fabric of entrepreneurship so critical in our struggling economy.

In the last half of 2016, I see the large chains expanding into locations where independents have given up and into new mixed used projects where residential and retail components co-exist and flourish. I see continued growth of lifestyle centers drawing customers away from surrounding towns.

However, the huge bubble in our population, the Millennials are dumping restaurants in favor of grocerants, a grocery store that offers fresh, restaurant-quality prepared foods. Whole Foods is a perfect example. In-store dining and take-out prepared meals from grocerants have grown by 30% since 2008 and account for $10 billion in consumer spending last year.

Why are Millennials opting for grocerants? According to the NPD Group, it’s because grocerants offer a wider variety of food and healthier meal options than a full-service restaurant. Grocerants also allow for Millennials to get restaurant-quality food at a slightly lower cost and much faster. As the face of our population is changing, the restaurant industry is changing...not by choice but by mandate. When you vote in November, decide whether Trump or Hillary is going to be an advantage to this totally over-regulated industry.

Dennis Serpone is president of New England Restaurant Brokers, Wakefield, Mass.