The on-again, off-again, on-again story of U.S. tariffs remains a daily topic on the news and in general conversation. While many other businesses grapple with the uncertainty of the way tariffs impact their industries, foodservice can turn to a more recent challenging period as it tries to chart a plan forward.

I am referring, of course, to the way the COVID-19 pandemic affected the foodservice industry. During the challenging times brought forth by the pandemic, the industry experienced labor cost increases, food cost increases and development cost increases. Should the proposed tariffs eventually stick, the industry can expect to deal with these challenges once again. While nobody wants to go through this, the silver lining is that the foodservice industry has proven its mettle when it comes to dealing with such adversity.

Similar to five years ago, the solution remains simply complex. As an industry, we must stay vigilant and proactive when dealing with this trio of cost category challenges. More succinctly, we must continue to innovate since looking for solutions to all these areas has been the course for us along the way, in both good times and bad. The best-in-class concepts follow a continuous improvement philosophy, where they always look for ways to streamline these cost centers to ensure the best unit economics for the concept. 

Labor Cost

The optimum way to attack the labor challenges is to develop a system where the operators get the optimum deployment guides to be able to deploy the right labor in the right place at the right time, doing the right things the right way. The best way to get the labor right is to apply time and motion studies, a primary industrial engineering technique, to calculate the work content. In this scenari,o the primary driver of the labor deployed is directly dependent on the time it takes to do all the activities to deliver the customer experience, and not on a percent of sales financial target. Having accurate labor guides will enable the employees to deliver the best customer hospitality and minimum labor costs.

Another key piece is to simplify and streamline the work the employees do. In doing so, account for the ergonomic capabilities, both physical and cognitive, and strive to make the employees’ jobs not only easier but also fun. This will enable the employees to deliver the brand promise and it should have a positive impact on turnover. We all know that a tenured employee is much more productive than a new one. Some reports show that the cost of replacing an employee can be close to $6,000. 

Food Cost

Make sure that you have the right food cost model. Typical food cost models account for only the cost of food. Optimum food cost models should account for the labor necessary to prep and serve the menu items. It should also consider the difficulty of executing these food items, including the impact on product quality, order accuracy, speed of service and overall hospitality. This ties directly to the prior section; the best way to manage labor costs.

Development Cost

As with labor and food, it is critical to streamline development costs across all areas. This includes facility size, design, resources included in the design and construction methods. The best way to develop a facility design is to start with the menu and then go through an analytical process to calculate the quantity of resources that will be necessary in the facility. With these steps complete, consider the processes and procedures of creating good and then the workstations before executing the design itself. While defining the resources, one has to consider the sales distribution of orders for both on- and off-premises customers. Taking these steps will impact not only the facility resources but also the food cost and labor requirements.

Indeed, solving the challenges – both known and unknown – will always be simply complex since these three key areas will remain intertwined forever. One always impacts the other.

Seemingly streamlining costs has never been more important. Yet I wonder if the need to do so is really any different than before, since streamlining costs have always played a vital role in keeping foodservice competitive and relevant.

While attending the Restaurant Leadership Conference, I heard a presentation from Technomic providing its take on the state of the industry. It’s worth noting that 78% of operators said they’ve already made changes to protect their businesses from potential tariffs and 74% were confident they could manage the situation, as this Restaurant Business story describes. Dealing with complicated situations like these requires not only keeping a positive attitude but also approaching your business with a continuous improvement mentality, as all best-in-class concepts do.

Continuous improvement will always be a key ingredient for all successful companies. That’s because whatever optimum solution we develop for today will surely not be the right one for tomorrow since a variety of factors will continue to force the foodservice environment to continue to evolve, including customer preferences, technological advances and, yes, economic issues. Tariffs represent the variable dominating the conversation for now.

So, we all must keep evolving. This industry has proven its resilience time and again, which is why I remain confident it will address the present-day challenges and those to come.