Will Restaurants Ever Be the Same?

Today’s Highlights: Danny Meyer talks about what restaurants need to change. Why not consider regional differences in the minimum wage debate? And more good news on vaccines.

OPPORTUNITIES

The restaurant industry will never be the same—and that’s not all bad: “After one of the hardest years on record for restaurants, Danny Meyer, founder and CEO of the Union Square Hospitality Group, is hopeful. Warmer weather is coming, vaccinations are up, and the House just passed a Covid relief stimulus bill that includes $25 billion in grants—not loans—to restaurants and bars, which he views as a step toward making these businesses whole again. Even so, Meyer said the past year has been a period of deep reflection for him as he watched the industry—and his own establishments—go through periods of zero revenue, massive layoffs, and a shaking up of long-held practices. ... And in some cases, he said, ‘I hope we never return to how we were.’”

• “He said he aims to build back the company with the kind of diversity it should have had all along.”

• “Meyer supports the $15 minimum wage. ... Meyer also called for an end to the ‘sub-minimum wage,’ referring to the lower per-hour wages tipped employees earn. ‘Every person in the restaurant industry should get the same minimum wage,’ he says.” 

• “He predicts menus will focus on, say, six to eight great entrees, as a function of smaller teams in the kitchen.”

• “He says he'd prefer a payment experience that's similar to how people pay for ride-sharing: when you're done with your meal, you pay with your phone, instead of needing to wait for a server to initiate the process.” READ MORE

On Tuesday at 3 ET, 21 Hats will host a webinar conversation on the future of restaurants. Even in good times, restaurants are a tough business. Margins are thin, and the pay structure is challenging at best. Is this an opportunity to re-think the business model? The conversation will feature Ari Weinzweig of Zingerman's in Ann Arbor, Michigan; Brian Canlis of Canlis in Seattle; and Carol Downs who founded and ran Bella Luna & the Milky Way for more than 25 years in Boston -- until the pandemic forced it to close permanently.”

TRAVEL

Business travel may never be the same either: “In much of the economy, the big question is when it will be safe to go back to pre-pandemic patterns of spending. For business travel, it’s more like: Who will want to? Corporate chiefs have noted the effectiveness of video-conferencing tools—and the money they saved. Many have also pledged to reduce carbon emissions. The upshot may be bad news for anyone looking forward to resuming a road-warrior lifestyle. The Global Business Travel Association estimates that worldwide spending on commercial travel won’t recover to its pre-pandemic peak of $1.4 trillion until 2025. In the U.S., the latest Census Bureau survey of small businesses found that only 27 percent of companies expect to spend money on travel in the next six months.”

• “‘The outcomes of meetings held on Zoom vs those held in person are not that much different, but the costs are night-and-day different,’ Richard Curtin, director of the University of Michigan Survey of Consumers, said in an interview. ‘It will be hard to justify the costs that were once supported.’” READ MORE

OFFICE SPACE

As cases decline and vaccines rise, companies begin to think about returning to the office: “Does it make sense to go back to the way things were before the pandemic given that people have become accustomed to the rhythms of remote work? ‘Everyone has different comfort levels with coming back,’ said Chuck McShane, a senior vice president at the Charlotte Regional Business Alliance, an organization that has helped lure businesses to the area. ‘For some companies, it depends on the type of work you’re doing and whether you can remain at home. But a concern about continued remote work is, how do entry-level workers get socialized into the office culture?’”

• “About a quarter of employees across the country are going into offices these days, according to Kastle Systems, an office security firm that gets data from 3,600 buildings in the United States.”

• “There are big regional differences. In large cities in Texas, more than a third of workers are back, while the New York, San Francisco and Chicago areas remain below 20 percent.”

• “‘We’re not saying we’re going to stagnate your career intentionally,’ Ms. Luconi added. ‘But if you’re the odd person out when everybody else is back together, that may be challenging for you.’” READ MORE

HUMAN RESOURCES

Why wouldn’t we consider regional differences in the minimum wage debate? “In Mississippi, for instance, the most recent data available show that the median wage is $15 per hour. So if implemented immediately, a federal minimum at that level would apply to half of the state’s wage-earning workforce. It’s unclear how employers might react to a large mandated increase. Maybe they’d lay off lots of employees or reduce hours, as opponents of minimum wages generally argue. This would undercut the policy’s goal of helping low-wage workers. Or maybe employers would raise prices. Or demand higher productivity. Or accept lower profits. Or some combination of all these things. There are, in short, a lot of margins on which employers might adjust, and economists simply don’t know what will happen.”

• “There are risks to raising labor costs during a weak economy, when firms are already reluctant to hire. At the very least it’s safer to index the minimum wage to local economic conditions, such as median wages or cost of living, rather than implement a single nationwide rate.” READ MORE

The Amazon warehouse workers union drive in Alabama is becoming a big deal: “A unionizing campaign that had deliberately stayed under the radar for months has in recent days blossomed into a star-studded showdown to influence the workers at Amazon, one of the world’s dominant companies whose power has increased exponentially during the pandemic. On one side is the Retail, Wholesale and Department Store Union and its many pro-labor allies in the worlds of politics, sports and Hollywood. On the other is an e-commerce behemoth that has warded off previous unionizing efforts at its U.S. facilities over its more than 25-year history.”

• “Many of the employees in the Alabama warehouse are Black, a fact that the union organizers have highlighted in their campaign seeking to link the vote to the struggle for civil rights in the South.”

• “‘This is an organizing campaign in the right-to-work South during the pandemic at one of the largest companies in the world,’ said Benjamin Sachs, a professor of labor and industry at Harvard Law School. ‘The significance of a union victory there really couldn’t be overstated.’”

• “The warehouse workers began voting by mail on Feb. 8 and the ballots are due at the end of this month. A union can form if a majority of the votes cast favor such a move.” READ MORE

THE COVID ECONOMY

President Biden expects to have enough vaccines for all adults by the end of May:  “Mr. Biden said the partnership to make the new J&J vaccine, which was cleared by regulators on Saturday, is ‘the type of collaboration between companies we saw in World War II.’ He said the U.S. will have enough supply for all adults by the end of May, but it wasn’t immediately clear when everyone will be able to get the shot. The seven-day average of Covid-19 vaccine doses administered in the U.S. recently hit 1.8 million a day, according to a Wall Street Journal analysis of Centers for Disease Control and Prevention data.”

• “As of Monday, more than 50.7 million Americans had received at least one dose of vaccine, representing about 15.3 percent of the population, according to the CDC.”

• “The partnership comes as Mr. Biden’s administration has emphasized the urgency of vaccinating the public against Covid-19 and warned of a new and more transmissible variant that is rapidly spreading across the country.”  READ MORE

Texas Gov. Abbott is lifting the state's mask mandate and other restrictions: “Effective March 10, all businesses will be allowed to open at full capacity, Abbott said during a media briefing in Lubbock on Tuesday. Although his executive order allows counties to reimpose anti-virus rules should hospitalizations surge, it forbids them from jailing or fining scofflaws. ... Abbott acted at what federal authorities warn is a critical juncture in the pandemic that has killed 516,000 Americans: While hospitalizations and caseloads have dropped in Texas and nationwide, U.S. vaccinations are not yet widespread enough to provide so-called herd immunity, and new, easier-to-spread variants of Covid-19 are proliferating.” READ MORE

Some Asian countries that crushed the virus are getting left behind: “Countries such as China, Thailand and Australia virtually halted the coronavirus within their borders by shutting off entry to most outsiders and aggressively quashing infections that slipped in. Their citizens live near-normal lives and their economies, with some exceptions, haven’t crashed as hard as those in the West. China managed to grow its gross domestic product by 2.3 percent last year. But that success made it less urgent for many Asian countries to move quickly in vaccinating their citizens, since few are falling sick.”

• “New Zealand, which has kept its Covid-19 cases below 2,500 thanks to one of the world’s strictest lockdown and quarantine programs, is taking a hit because it is so reliant on foreign labor and tourism.”

• “Most countries in Asia have only vaccinated a small percentage of their populations, and most Asian economies won’t reach herd immunity until 2022, Goldman Sachs estimates.”

• “The U.S. and U.K. will likely have vaccinated half their residents by May, Goldman Sachs forecasts.” READ MORE

SUSTAINABILITY

Miami, which has been getting a lot of attention for attracting tech companies, says it can adapt to rising seas: “Officials in Miami-Dade County, where climate models predict two feet or more of sea-level rise by 2060, have released an upbeat strategy for living with more water, one that focused on elevating homes and roads, more dense construction farther inland and creating more open space for flooding in low-lying areas. That blueprint, made public on Friday, portrayed rising seas as mostly manageable, especially for a low-lying area with a century of experience managing water. Climate experts, though, warned that the county’s plan downplayed the magnitude of the threat, saying it failed to warn residents and developers about the risk of continuing to build near the coast in a county whose economy depends heavily on waterfront real estate.”

• “As floods, wildfires and other hazards get worse, disaster experts have increasingly urged local officials to reduce their exposure by encouraging people to leave vulnerable areas.”

• “But cities and counties often resist that advice, worrying that retreat would hurt their economies and upset voters.”

• “What happens in Miami will very likely become a case study for other cities and counties facing climate challenges.” READ MORE

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THE 21 HATS PODCAST

Episode 51: Chicago, New York, or Atlanta? A year ago, Dana White was questioning whether her business could survive the pandemic. This week, she says she’s looking seriously at expanding to another city: “I'd like to make a decision by the end of March, and I'd like to be opening or in the process of opening by this fall. I'm waiting to see how the vaccine does.” Dana also talks about her experience with venture capitalists who seem to be telling her, “We’ll be happy to give you money—as soon as you don’t really need it.” Plus: Stephanie Stuckey explains her team’s recent three-hour debate about whether Stuckey’s should sell the road trip or the pecan? And Dana, Stephanie, and Jay Goltz discuss Clubhouse, the new social media platform. Is it just a time suck, or does it offer real value to business owners?

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