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In 2023, a study by the International Franchise Association (IFA) and FRANdata revealed that labor shortages currently stand as the foremost challenge for franchises. Compounded by recent minimum wage increases in several states, these staffing issues have prompted a crucial reassessment of business operations within the franchise industry. In response to this challenge, franchises are strategically embracing innovation. Automation, streamlined footprints, exploration of nontraditional locations, adoption of cutting-edge inventory management technology, and the pursuit of more efficient staffing methods have become focal points of planning and forward-thinking initiatives. However, Capriotti’s and Wing Zone, known for their proactive approach, have consistently implemented bold strategies to navigate and stay ahead of these challenges.
How is Automation Changing the Restaurant Industry?
David Bloom, Chief Development and Operating Officer of Capriotti’s and Wing Zone underscores the growing push for automation driven by consumer demands. Recognizing the need to cater to evolving preferences, Capriotti’s and Wing Zone have embraced innovation in automation, including AI phone ordering integration, redesigned kitchens, and self-order kiosks.
“The push for automation comes from today’s consumer: they want what they want, when and how they want it. Whoever’s the best at wielding will have a competitive advantage. To do that, you have to find people that want to work long hours and flip wings at 1 a.m., or you have to automate,” stated David Bloom. Through all of this, Capriotti’s and Wing Zone aim to maintain a competitive edge in the industry by staying at the forefront of technological advancements to keep franchise partners competitive well into the future.
Why are Smaller Restaurants Better?
Many Quick-Service Restaurant (QSR) franchises are opting for smaller footprints to combat rising costs and navigate labor shortages. Capriotti’s, a pioneer in this approach, has successfully reduced restaurant square footage, optimizing space for drive-thru lanes and pickup areas. In 2018, Capriotti’s rolled out a new design prototype that reduced the square footage of its restaurants from 1,800 square feet to 1,400 square feet. Since acquiring Wing Zone in 2021, they have integrated a similar strategy, reducing its square footage by 40%. This new design also incorporates a smaller cookline, which has helped reduce the cost of the franchise equipment package by 20%. This not only reduces operational costs but also enhances revenue-generating opportunities.
Diversifying into nontraditional locations is another approach franchises are adopting. Beyond attracting new customers, this approach helps minimize staffing requirements and startup costs. Capriotti’s has successfully integrated non-traditional restaurants into various venues in Las Vegas, including Alegient Stadium and the T-Mobile Arena. Capriotti’s has also found its way into the Las Vegas Railroad Pass Travel Center, and both Capriotti’s and Wing Zone can be found on the Las Vegas strip. This showcases the adaptability and resilience needed to thrive in a dynamic market.
Technology-driven solutions become imperative in the face of rising costs and labor shortages. Capriotti’s and Wing Zone leverage a robust Point of Sale (POS) system that integrates inventory management, sales data, and labor costs. This empowers franchise partners to streamline operations, reduce waste, and optimize ordering and staff scheduling, and regular reviews by the corporate teams further enhance operational efficiency.
What is the Best Inventory Method for Restaurants?
Despite challenges in distribution, Capriotti’s and Wing Zone, served by SYSCO, ensure the quality and consistency of their proprietary items. With a network spanning 28 distribution centers, they remain resilient in the face of natural disasters and labor disruptions, emphasizing the importance of maintaining high food standards.
“While distribution can be challenging these days, there is likely no one in the food service distribution industry who is better prepared for natural disasters or labor distributions,” stated SVP of Supply Chain Ami Lindsay. At Capriotti’s and Wing Zone, the quality of food and ingredients must remain high regardless of supply chain or labor disruptions. “We work with reputable manufacturers and ensure they have all the necessary food safety protocols. All our stores have requirements in place to buy only from approved sources.”
How to Combat Increased Minimum Wage?
While automation addresses the labor shortage, increasing minimum wage challenges persist. Franchisees, especially in states like California, are grappling with new legislation. The shift to a $20 per hour minimum wage for quick-service restaurant employees raises concerns about its impact on profits, hiring practices, and overall operations. Navigating this requires combining technology, optimization tactics, and employee-centric initiatives.
Cross-training emerges as a creative solution to staffing shortages and increased minimum wages. By efficiently utilizing existing staff through training in various tasks, businesses can mitigate the impact of a smaller workforce. Development plans and flexible scheduling further attract and retain employees, fostering a sense of well-being and career advancement.
While handling escalating labor expenses might pose an ongoing challenge for franchisees, the franchise sector consistently generates new employment opportunities. Projections for 2023 indicate an expected growth in total franchise employment to reach 8.7 million. By integrating a blend of technology, optimization tactics, and employee-centric initiatives, franchises can address labor-related challenges, ensuring sustained profitability and competitiveness in the market.
Invest in a Franchise with its Eyes on the Future
Established brands like Capriotti’s and Wing Zone provide franchise partners with confidence amid challenges. By embracing the latest technology and implementing strategic processes, Capriotti’s and Wing Zone ensure sustained profitability and competitiveness in the ever-evolving restaurant industry.
