July 29, 2019 Introductions Colby Hutchinson Jennifer Swan - - PowerPoint PPT Presentation

July 29, 2019

Melissa Doolin-Koehne

TDn2K @loverofguac

melissa.doolin-koehne@tdn2k.com

Jennifer Swan

First Watch Restaurants

@swanstyle1 JSwan@firstwatch.com

Colby Hutchinson

Best Western Hotels & Resorts

Colby.Hutchinson@bestwestern.com

Introductions

G U E S T F E E D B A C K P E R F O R M A N C E

61,000 units 200 brands

Founded 2013 F I N A N C I A L C A P I T A L P E R F O R M A N C E

31,000+ units $72 Billion Sales Founded 2009

Powered by:

H U M A N C A P I T A L P E R F O R M A N C E

Powered by:

2.6 million employees 193 Brands Founded 1995

Powered by:

272 Brands 230 Companies 43,000 Restaurants

State of the Industry Workforce Trends Trends in Training

90 Minutes of Fun

What do you think?

Respond at:

PollEv.com/chart19

Poll Everywhere

What do you feel your company is winning in?

CFOs Forecasting a Recession

38%

PREDICT

67%

PREDICT

84%

PREDICT

Recession Q1 2020 Recession Q3 2020 Recession Q1 2021

Source: CFO Global Outlook- Duke University

Average guest check grew more than visits

53% 50% 56% 54% 48% 64% 22% 5% 30% 15% 27% 21% Total Industry Quick Service Fast Casual Family Dining Casual Dining Upscale Casual

% with positive comp sales % with positive comp traffic

Source: Black Box Intelligence

Source: TDn2K

The Game is Changing

Industry Average Performance 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2

Comp Sales 0.6% 1.1% 1.4% 0.9% 0.2% Comp Traffic

• 1.8%
• 1.4%
• 1.6%
• 2.0%
• 2.9%

Comp PPA/PTA Growth 2.5% 2.6% 3.0% 2.9% 3.1% Comp Food Sales 0.8% 1.5% 1.6% 0.8%

• 0.2%

Comp Beverage Sales

• 0.8%
• 1.0%
• 1.0%
• 2.9%
• 3.2%

Comp Dine-In Sales

• 1.3%
• 1.3%
• 1.9%
• 2.5%
• 3.3%

Comp To-Go Sales 7.5% 8.0% 9.2% 10.1% 9.5%

Source: TDn2K Black Box Intelligence

Customize your delivery offerings Be ready for high volumes of delivery orders Make necessary staffing changes

How to Prepare for 3rd Party Delivery

• Ended in September 2018
• Down in June ‘19
• Driven by Avg. Daily Rate

Source: Smith Travel Research

Flattening occupancy predicted in 2020

Chain Scale Occupancy % change ADR % change RevPAR % change

Luxury

• 0.2%

2.4% 2.2% Upper Upscale

• 0.3%

2.2% 1.9% Upscale

• 0.3%

1.8% 1.5% Upper Midscale

• 0.2%

1.8% 1.6% Midscale

• 0.2%

1.7% 1.4% Economy

• 0.3%

2.1% 1.8%

Total U.S.

• 0.2%

2.2% 1.9%

Source: STR Chain Scale forecasts, June 2019

Training to Maximize ADR & Average Guest Check Basic Revenue management training for managers is essential Make necessary staffing changes

How to Prepare for Declines in Traffic & Occupancy

Domination by parent companies

JD Power guest satisfaction rankings | Economy

668 756 797

650 700 750 800 850 900

Knights Inn Howard Johnson (Wyndham) Rodeway Inn Motel 6 Econo Lodge Extended Stay America Economy Average Red Roof Inn Super 8 (Wyndham) Days Inn (Wyndham) InTown Suites America's Best Value Travelodge (Wyndham) Microtel (Wyndham)

Source: JD Power, July 2019

JD Power guest satisfaction rankings | Midscale

782 810 846

650 700 750 800 850 900

Ramada (Wyndham) Quality Inn (Choice Hotels) Baymont (Wyndham) Midscale Average Hawthorn Suites (Wyndham) AmericInn (Wyndham) Best Western (BWH) Sleep Inn (Choice Hotels) LaQuinta (Wyndham) * ^ Candlewood Suites (IHG) * Wingate (Wyndham)

Source: JD Power, July 2019

JD Power guest satisfaction rankings | Upper Midscale

797 835 876

650 700 750 800 850 900

Clarion (Choice Hotels) Comfort Inn (Choice Hotels) Holiday Inn (IHG) Comfort Suites (Choice Hotels) Wyndham Garden (Wyndham) Country Inn & Suites (Carlson) Best Western Plus (BWH) Upper Midscale Average Holiday Inn Express (IHG) TownePlace Suites (Marriott) Fairfield Inn (Marriott) Home2 Suites (Hilton) * Hampton Inn (Hilton) Drury

Source: JD Power, July 2019

840 862

650 700 750 800 850 900

Four Points (Marriott) Radisson (Jing Jang) * Crowne Plaza (IHG) Doubletree (Hilton) Wyndham (Wyndham) Residence Inn (Marriott) Upscale Average Homewood Suites (Hilton) Staybridge (IHG) Courtyard (Marriott) aloft Hotels (Marriott) Hyatt Place (Marriott) Springhill Suites (Marriott) Hyatt House (Hyatt) Hilton Garden Inn (Hilton) AC Hotels (Marriott) * Cambria Hotels (Choice Hotels) * Best Western Premier (BWH) *

JD Power guest satisfaction rankings | Upscale

Source: JD Power, July 2019

829 847 866

650 700 750 800 850 900 Sheraton (Marriott) Hotel Indigo (IHG) Delta Hotels (Marriott) Westin Hotels (Marriott) Omni Hotels Autograph Collection (Marriott) * Embassy Suites (Hilton) Upper Upscale Average Hyatt Regency (Hyatt) Hilton (Hilton) Renaissance Hotels (Marriott) Kimpton (IHG) Marriott (Marriott) Gaylord (Marriott) * Hard Rock Hotel *

JD Power guest satisfaction rankings | Upper Upscale

Source: JD Power, July 2019

841 861 881

650 700 750 800 850 900 Conrad (Hilton) * Andaz (Hyatt) * Sofitel * Trump Hotels * Intercontinental (IHG) W Hotels (Marriott) Waldorf Astoria (Hilton)

• St. Regis (Marriott) *

Grand Hyatt (Hyatt) JW Marriott (Marriott) Luxury Average Fairmont (Accor) Four Seasons Park Hyatt (Hyatt) * Lowes Hotels Ritz-Carlton (Marriott)

JD Power guest satisfaction rankings | Luxury

Source: JD Power, July 2019

New Brands Emerge

Active Room Count Properties In Pipeline Rooms In Pipeline

Marriott International 1,269,288 2,790 471,000 Hilton Worldwide 886,994 2420 371,000 InterContinental Hotels Group 784,678 1,828 267,000 Wyndham Worldwide 705,043 1,400 176,000 Jin Jiang International 680,000 3,161 345,000 Accor 648,998 1,031 184,000 Choice Hotels 564,828 1,050 85,500 Huazhu (formerly China Lodging Group) 379,675 924 90,000

Source 10k from SEC Financial Reporting

Robust pipelines indicate future growth

Workforce Trends

Biggest Challenges & Opportunities in 2019

3.6% national unemployment rate (May 2019) 38 states have unemployment rates of 4.0% or lower

Source: Bureau of Labor Statistics

Staffing pressure is real

Bureau of Labor Statistics

Open Positions: 900,000 per month

Restaurants report they are understaffed

Source: TDn2K

93%

hourly BOH

69%

hourly FOH

Severe management understaffing reported in restaurants

19%

General Managers

52%

Managers (non-GM)

Source: TDn2K

Increase in GM Turnover from 2016 Up to GM Turnover for new hotels * Estimated Current Open postions

* Source: Bill Crawford, American Hotel & Lodging Assoc. Travel Weekly Jan, 2019

Turnover in lodging has reached critical levels

105% 94% 40% 52% 53% 28% Front of House Back of House Unit Level Manager

Restaurants Lodging

Turnover Remains Extremely High

Voluntary Terminations Increasing

67% 63% 69% 75% 77% 67% FOH Hourly BOH Hourly Manager* Percentage Of All Terminations That Were Voluntary

2017 2018

Source: TDn2K People Report

Hourly Staff Are Leaving Quicker

Source: TDn2K People Report

19% 43% 25% 50%

0% 20% 40% 60%

Less than 30 days Less than 90 days Hourly Front-Of-House 2017 2018

17% 42% 29% 53%

0% 20% 40% 60%

Less than 30 days Less than 90 days Hourly Back-Of-House 2017 2018

Cost Of Turnover Per Employee

$1,816 $10,361 $13,996

Per hourly employee Per restaurant manager

(excluding GM)

Per General Manager

Source: TDn2K People Report

5 min - Table Activity

How are unemployment and turnover impacting your training?

Why are your employees leaving and what can you do about it?

Why are employees leaving?

Hourly employees

Job abandonment Personal Reasons Higher Paying Job

Management

Higher compensation Immediate promotion at another company Poor Work/Life Balance

Source: TDn2K People Report

Old ‘Seasoned’ is the New Orange

Work-Life Balance is important

11%

• f General Manager’s

strongly agree that their job allows them to spend enough quality time with family and friends

Source: GM Connect – powered by Gallup and TDn2K Source: GM Connect – powered by Gallup and TDn2K

Restaurants Offering More Money To Attract Talent

Source: TDn2K

Source: TDn2K People Report

23.5% 28.6% Best Rest Genereal Manager Turnover

The Best Have Better Servers & GM’s

48% 17% Best Rest Net Sentiment for Server Knowledge

(Sales & traffic)

• 5.1%

+31%

What is Working to Increase Retention

Most Effective Retention Measure Improved selection/recruit.

Non- managers

2nd Most Effective Improve growth & development 3rd Most Effective Flexible scheduling Improve growth & development

Managers

(excluding GM) Increase Pay Improved training Increase employee recognition

General Managers

Improved training Improved selection/recruit.

Source: TDn2K

5 min - Table Activity

Why did you pick what you did?

2019 Results

Trends in Training

1.10% 1.50% 1.75% 2014 2016 2018

Investments in Training & Development Increasing

(Investment as % of sales)

One-Third of Companies Increased Training Headcounts

Restaurants Lodging

67% 75% 2017 2019

Use of External Resources is Increasing

(percentage of companies)

39% 39% 75% 25% Increased Spend vs. Prior Year Expect a Spend Increase Next Year

Restaurants Lodging

Many Companies Increasing External Training Spend

Training Reporting to Human Resources More Often

Use of E-Learning Solutions is increasing

91% 33% Restaurants Lodging

Most Restaurants Planning Investment in E-Learning Next Year

9.9 Hours a Day

6.3 hours 3.6 hours

Source: 2019 Brand Internet Trends Report

72% 68% 36% 86% 29% 43% Desktop / laptop computer at work Tablets provided by the employer at work Employees' smart phones Restaurants Lodging

Most E-Learning Still Done Through Desktops at Work

(Percentage of companies offering each option)

5 min - Table Activity

How do companies handle e-learning on/off clock for non-exempt staff?

Investment in Leadership Development for Managers lowers turnover

81% 87% 108% 122% BOH Turnover FOH Turnover 10% or more of total training Less than 10% of total training

• 27%
• 35%

Investments in HR Training for Managers lowers turnover

86% 74% 111% 103% BOH Turnover FOH Turnover 10% or more of total training Less than 10% of total training

• 25%
• 29%

Restaurants Where HR Spends More Time Involved in New Hire Orientation Have Lower Turnover

77% 67% 99% 94% BOH Turnover FOH Turnover 1.5 or more hours of orientation Less than 1.5 hours of orientation

• 22%
• 27%

Restaurants With Higher Use of Written Manuals/Books for Hourly Training Have Lower Turnover

85% 74% 112% 103% BOH Turnover FOH Turnover Used in 5% or more of all training Used in less than 5% of training

• 27%
• 29%

Restaurants Allocating More “On the Job” Training to New Hourly Hires Have Lower Restaurant Level Turnover

88% 84% 32% 115% 113% 48% Front of House Turnover Back of House Turnover Unit Manager Turnover 60% or more of all training Less than 60% of all training

• 27%
• 29%
• 16%

Restaurants Allocating More In-Person Training During New Hire Orientations Have Lower Unit Level Mgr Turnover

29% 64% Unit Level Manager 50% or more of all training Less than 50% of all training

• 35%

Restaurants Allocating More Instructor-Led Training to Existing Managers Have Lower Turnover

63% 65% 27% 109% 95% 39% Front of House Turnover Back of House Turnover Unit Manager Turnover 25% or more of all training Less than 25% of all training

• 46%
• 30%
• 12%

You Make an Impact

Final Thoughts