Restaurant And Hospitality News – September 14, 2015
By Christine Kern, contributing writer
In news this week, restaurants feel the pressure from patchwork minimum wage requirements, Cuba provides great opportunities and obstacles for the hospitality industry, disruption spells opportunities for techies, and Amazon moves into food delivery in Seattle.
Restaurants Challenged By Patchwork of Minimum Wage Requirements
Since July 2009, when Congress approved the last hike to minimum wage requirements to $7.25 an hour, restaurants have encountered an increasingly complicated patchwork of increases, according to the Nation’s Restaurant News. A number of local and state regulations have been passed that changed the base wage requirements, leaving restaurant operators facing a wide range of salaries to deal with. From New York City’s new plans to raise limited-service restaurant employee wages to $15 to Seattle’s introduction of a tiered plan for phasing in the $15 an hour minimum by 2021, the regulations mean that franchisees are frustrated. The restaurant industry’s 14 million employees comprise approximately 10 percent of the nation’s workforce and is the largest U.S. private-sector employer behind health care. The NRA reported that the U.S. had approximately 1 million restaurant locations. And, while total U.S. employment grew only 1.9 percent in 2014, the National Restaurant Association said industry employment grew 3.5 percent. The restaurant industry has become an especially popular target for groups who wish to raise the national minimum wage. As the NRN article states, “With restaurant companies adopting compensation packages to meet regional labor pressures and states and cities enacting their own thresholds, the patchwork of minimum-wage standards will likely continue into the foreseeable future.”
New Report Finds Great Opportunities and Great Obstacles in Cuba
A new report from the Center for Hospitality Research (CHR) at Cornell University, "Cuba's Future Hospitality and Tourism Business: Opportunities and Obstacles," has found that the resumption of diplomatic relations between the U.S. and Cuba means that a great number of opportunities – and obstacles – now exist for the island’s hospitality and tourism business. "Cuba's government has taken many steps in recent years to encourage foreign tourism companies and investors," said lead study author John H. Thomas, an assistant professor at FIU. "Some companies, notably Melia Hotels, have done well in Cuba's hospitality and tourism business. With that success, Cuba is planning to open more hotel rooms and encourage more arrivals. Still, we see more changes that must be made, and there's no indication that the U.S. Congress will reconsider the trade embargo." The report identified four issues that may interfere with international investment: (1) finance and banking availability is lacking; (2) the Cuban government must be a partner in every foreign enterprise; (3) labor availability and terms are controlled by the government; and (4) the nation lacks credible dispute resolution entities (courts or arbitration). However, these obstacles are surmountable, and open the way to great opportunities as well.
Cornell Panel Says Disruption Means Opportunity For Tech Entrepreneurs
The explosion of new technology has created a host of new opportunities for entrepreneurs, panels at a recent Technology Entrepreneurship Roundtable, held at the Cornell University School of Hotel Administration (SHA) stated, but they also asserted that the cloud alone is not enough. Businesses also need support from the crowd. Mona Anita K. Olsen explained, “We need to focus on adding value by more effectively using the cloud, making a difference by continuing to foster innovation and disruption, and remaining open to possibilities to adjust operations via cloud-based applications. Entrepreneurs and existing brands will also find ways to prosper globally by embracing mobile computing.” The conclusions of the roundtable are highlighted in a report from the Center for Hospitality Research (CHR), "Utility and Disruption: Technology for Entrepreneurs in Hospitality." Many tech-supported enterprises are disruptors that support the growing customer desire to have a personalized travel experience. And some companies like Chipotle have created disruptive operational innovations that are not necessarily based on mobile technology. As mobile and cloud-based technologies develop, the hospitality industry will find ways to serve new market segments.
Amazon Pilots One-hour Restaurant Delivery Service In Seattle
Amazon has announced that it is now testing a one-hour restaurant delivery service in the Seattle area as part of its Prime Now app. The Amazon website states, “We’ve moved restaurant delivery to Amazon Prime Now to give you speedy delivery on everything from dinner to daily essentials. Download the Prime Now app to get delivery from the restaurants you love (and a whole lot more.)” The service is as part of its Prime Now delivery-in-hours app launched last month. While the service is only available in parts of the city as of now, an Amazon spokesperson said that there are plans for expansion in the coming days. And Amazon is likely to expand the service to other cities as well. Delivery service is live for Prime Members, who pay a $99 annual subscription fee, at no additional charge for a limited time in Seattle, and the food delivery will be done by the same Prime Now drivers who deliver other Prime Now products.