5 restaurant executives and insiders reveal the industry's biggest challenges for 2020
Rising wages and labor inflation
"I think it's going to be labor inflation still," Noodles & Co. CEO Dave Boennighausen told Business Insider in an interview on Wednesday. "We're coming off a year where we had about 5-6% labor inflation. I don't think that's going to change for years."
Boennighausen said that the tight market can create opportunity for some companies, noting that retaining talented general managers is increasingly crucial to success. The fast-casual chain is working to keep workers engaged with new benefits, including adoption assistance and breast milk shipment reimbursement.
Finding and retaining employees
As labor costs rise, David Cantu, cofounder of restaurant industry tech provider HotSchedules, said that the biggest challenge is finding and retaining workers.
"The fight for quality labor is incredibly difficult," Cantu said in an interview. "Finding high-quality resources to deliver against the increased expectations you have around brand, and the brand promise, and the concept you're trying to deliver is very, very hard."
Panera CEO Niren Chaudhary told Business Insider last week that the top challenge was maintaining relevance with customers. No. 2, Chaudhary said, was doing the same with employees.
"How do we create engagement in employees?" Chaudhary said. "What do we need to do to hire the best, retain the best, and train the best that we can find?"
'Confusing' legislation and lack of immigration reform
TGI Fridays CEO Ray Blanchette told Business Insider that one of the top challenges in the restaurant industry in 2020 is the "confusing" legislative environment. With rising wages and low unemployment rates, the immigrants that make up a sizeable portion of the restaurant industry are crucial.
"We need immigration reform," Blanchette said in an interview on Monday. "Think about who we serve, who our team members are, and having access to a healthy flow of talent."
"150 years ago, an immigrant would come here and work in infrastructure," Blanchette continued. "Building the country was roads or railroads or skyscrapers — those were the jobs that were available to immigrants. Today ... we are the place where immigrants break the cycle of poverty for their families forever."
Read more: TGI Fridays CEO says immigration reform is one of the biggest challenges in the restaurant industry
How to handle delivery
Delivery is a major stressor for many chains, even as it drives sales. As it is still unclear how much customers are willing to pay for convenience, many restaurants and third-party delivery partners are eating part of the cost of delivering food.
"It's how to handle delivery," Bart Shuldman, CEO of back-of-house automation service BOHA by TransAct, said when asked about the top challenge for 2020. "There's no doubt that delivery has its pain points."
Still, most restaurants can't ignore delivery as their competitors expand in the space. Eventually, Shuldman expects restaurants to charge more for delivery, passing the costs on to consumers.
"I think it's a necessary evil," Shuldman said. "The millennials love it, right? You've got to figure it out."
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