Delivery prices increase, Wendy's competes with a breakfast menu, and Millennials are drinking more, why?
Restaurant Delivery Expected to be More Expensive in California
This week the California Senate passed a bill requiring gig employees (delivery drivers, Uber, Lyft) to be classified as employees. The typical set up of the gig economy is to hire workers as contractors to do jobs through their platform. This hereby eliminates the cost of hiring them as traditional employees.
It passed the Senate vote and is waiting to pass the final vote by the State Assembly, if it is approved it will be effective January 1, 2020.
This means companies like Uber, Uber Eats and Lyft will be required to pay millions more in payroll taxes, training, and higher wages costing them a combined $800 million per year.
For users of the apps like DoorDash, Postmates, Grubhub, Uber and Lyft could mean increased prices. For employees of these companies, it could mean huge layoffs. Uber has already laid off 400 employees from its global marketing team since July. Analysts at Morgan Stanley estimate that global ride-hail bookings could fall 5%-9% if this bill is adopted across the U.S.
In the Food Industry
Wendy's Enters The Breakfast Game
Despite their previous failed attempts at entering the breakfast game, Wendy's is prepared to spend $20 million to launch their breakfast program. They plan on using some of their fan favorites to help the success of the launch including the frosty for a frosty cappuccino "Frosty-ccino" and the Baconator "Breakfast Baconator."
Adding the breakfast expansion to the company will call for about 20,000 employees to be hired across the country. A restaurant consultant estimates Wendy's will need to staff four employees for the morning and would need to generate 5%-7% of total sales in the morning to breakeven.
When Taco Bell added breakfast to their menu in 2014, it took about two years for breakfast to become 10% of the brands business. Burger King's breakfast accounts for 15% of their sales, realistically within a few years of the launch Wendy's could expect breakfast sales to be 10%.
Wendy's successful social media game can help with their marketing of the breakfast launch and generate customer excitement with their favorite menu items.
In the Beverage Industry
Millennials Are Drinking More, Why?
Constellation Brands, a beer and wine producer, did research on millennials drinking habits to see how trends have changed. They found that in 2013 millennials consumed about 24 alcoholic beverages per month. In 2019 that number has increased to an average of 29 beverages per month.
About 77% of millennials are consuming alcoholic beverages in the U.S. Generation Z, for those 21-24 are consuming alcohol more slowly than millennials. An analyst for Barclays claims it is because millennials are now having kids, which leads to more stress.
Gen Z could be consuming less but better quality alcohol and beer than millennials. CFO of constellation Brands said it might be too early to tell with Gen Z if they will fall into the same patterns as millennials and maybe life will become more stressful and they will drink more like millennials.
In the Tech Industry
Adopting Tech In The Industry
With technology constantly evolving and changing are restaurants able to keep up? With new technology and trends, restaurants are able to integrate these innovations in their business to help them better succeed.
For many restaurant operators, investing in technology is not at the top of their priorities. Of 170 respondents from franchisees to independent to corporate-owned chains, 39% said they were lagging when it comes to technology adoption.
We are seeing more and more operators put more money into their technology budgets. 52% are putting more into their budgets than last year.
The biggest challenge operators are discussing is the cost of implementation along with POS integration and lack of infrastructure. They need to see a strong ROI in order to adopt new technology because of the tight margins already present in the industry.
Those that have adopted innovative technology have seen a 25% increase in meeting customer demands and a higher ability to control labor costs.
In the future, operators are looking for tools that will compile customer-data and provide a customer relationship management tool for restaurants. Another thing they are looking for is an all inclusive POS that includes inventory and ordering, scheduling, payroll, and all other administrative tasks they might need.
While the restaurant industry is traditionally behind when it comes to tech, there is no shortage of solutions out there for operators to adopt to successfully run their business.