Representing its state’s nearly $100 billion food service industry, the Texas Restaurant Association has faced many of the same challenges and obstacles that cinemas confronted during the pandemic. As the world turns a corner from the Covid-19 disruption, Boxoffice Pro speaks to Kelsey Erickson Streufert, the association’s chief public affairs officer, ahead of her participation at CineShow 2023. She discusses the lessons restaurants (and cinemas) have learned from the experience.
Domestically, the movie theater industry is working at getting back to its pre-pandemic $11 billion mark. The restaurant industry, however, in Texas alone, is talking about a significantly larger number—especially when what we define as a “restaurant” is evolving.
Very much so. In fact, the line between movie theater and restaurant has blurred, if not disappeared outright in some instances. At the Texas Restaurant Association, we represent the state’s $95 billion food service industry. That encompasses more than 54,000 locations and a workforce of over 1.4 million employees. We represent about 11 percent of Texas’s total employment. What makes us unique is that, while we collectively represent such a large segment of the economy, our industry is very much made up of small, independent operators. We represent over 51 percent of the food dollar in Texas—a big economic engine and part of our social fabric.
There’s an adage we hear often in exhibition: “Everybody has a kitchen, but people still go out to eat.” We’ve been hearing it a lot more often coming out of the pandemic, as cinemas continue working to get back to 2019 attendance levels. How has the restaurant community in Texas recovered from the disruption of the last couple of years?
Much like movie theaters, the restaurant industry was decimated practically overnight because of the Covid-19 pandemic. We faced statewide shutdowns and lost just about half of our employment overnight, which, when you’re talking about 1.4 million employees, that’s a lot of people out of work very suddenly. Workforce shortages were our biggest challenge before that happened. So it’s been a struggle, to say the least.
Today, fortunately, our employment has fully recovered. We have more employees working in Texas restaurants now than we did before the pandemic. It took about two years to fill that gap, but we’re there now. Now we are back to the workforce challenges we had before the pandemic, in terms of keeping up with the growing demand. Texas’s population boom is both our biggest opportunity and biggest challenge.
We’re blessed with a strong overall economy in Texas. We led the way in reopening during the pandemic by developing what we called the Texas Restaurant Promise, which was a first-of-its-kind blueprint of protocols to make dining out as safe as possible for our customers and employees. It was all about finding a way to operate in the safest manner without having to close for an undetermined amount of time. I believe that helped us rebound more quickly than many other states after reopening.
Aside from the immediate and obvious impact of the shutdowns, restaurants continued to suffer from supply chain shortages and cost increases stemming from inflation. We have operators that tell us that despite having stronger sales and revenue numbers than ever before, they’re somehow making less profit because of these disruptions. I would say that’s the biggest challenge our industry still has because of the global consequences of the pandemic.
What have been the most effective ways that your members have tackled these lingering challenges?
Technology has been a huge part of it. We’ve seen new automation technology like delivery robots or artificial intelligence give us improved predictive analytical data. Innovation has been at the heart of creating new revenue streams. The idea that a restaurant is just a place where you come to grab a bite and then leave, that’s becoming antiquated. We now have restaurants in movie theaters, family entertainment centers, and new revenue streams like a robust delivery and to-go service. Catering and events are a huge component of many of our restaurants’ operations. Many of our restaurants have closed the gap on the increased cost of food through a larger focus on profit generators like alcohol sales. Restaurants today need to piece together different revenue streams in order to be successful.
The other thing we’re seeing is restaurants leaning into what they do best. If you’re a fine dining award-winning, chef-driven, farm-to-table concept, lean into that space—maybe to-go isn’t going to be the best thing for your business. You may be better off introducing a wine program, seasonal menu, or special. Some of our members were doing really cool monthly events, where they would bring in a guest chef or highlight a seasonal ingredient. On the other side, you have so many quick-service restaurants that are booming and expanding across all different sorts of culinary sectors. In that space, you’re seeing a lot more use of technology, fewer employees—especially in the front of house—and a real focus on convenience and expediency.
I think we’re going to keep seeing that specialization because the value your consumer is seeking looks different depending on what type of experience they want. If I’m going to a quick-service restaurant, I value my time more than anything else. If I’m going to a fine dining restaurant, I really value the experience and interaction with professional servers. That’s the biggest trend we’re seeing: restaurants investing in where their strengths are.
It’s hard to tell which consumer behaviors are specific to the pandemic era and which are new habits. From QR codes to online ordering, has there been a paradigm shift for the restaurant industry?
Online ordering, third-party delivery, to-go, all of those trends have remained incredibly consistent, even as dine-in traffic has rebounded. That tells me those advancements and evolutions are here to stay. Coming out of the pandemic, we all value our time even more than before, and you see that reflected in the to-go sales—I think those are absolutely here to stay.
What will be interesting to see is how the financial model works, especially for third-party delivery. Some of these technology solutions, they’re still figuring out what that revenue model looks like and how it works. But there’s zero doubt that consumers want [third-party delivery], so I expect it to stick around in some shape or form.
QR codes, for example, are a fascinating case study. People have very strong opinions about them. My take on the QR code is, they work really well in certain situations, and they’re a complete failure in others. Take a beer garden concept: QR codes are thriving in that space. If I want to order another drink or get an extra appetizer, I don’t need to really interact with anyone. You put in the order on the phone so it gets to your table as quickly as possible. When you’re done, you close out on the phone and leave. At family restaurants or fine dining spots, interacting with a professional server, bartender, or sommelier—someone who can walk you through the night’s specials and what their favorite entrée is—that’s such an important part of the experience. A QR code totally flops in that situation.
QR codes are a great case study of how you can apply technology and innovation and get completely different results depending on your type of business. You can’t make a square peg fit in a round hole. At the end of the day, people come to full-service restaurants because they want that personal interaction. They want that experience. They want that service. We have not found a way for technology to replace that, in terms of what people seek out when they come to a full-service restaurant.
I don’t have the hard data to back this claim, but anecdotally I can tell you that Texas is the global capital for dine-in cinemas. You rarely see that concentration of them anywhere else. What role do dine-in cinemas play in the very large pie of the Texas Restaurant Association?
The dine-in cinema concept continues to grow and change here in Texas. I think the entire segment is representative of larger trends, in terms of how people are rethinking what kind of experience they want to have when they leave the house. The emphasis is definitely on having an experience. It’s really exciting to see the growth in that space, to see people try new things. The fact that both movie theaters and restaurants have been so resilient through such a difficult period, I think it illustrates the fact that you cannot replace the power of a communal experience. That is going to be something we continue to value as a society. We had our Texas Restaurant Awards this past weekend, and one of our recipients started his acceptance speech by saying, “If we’re ever going to have world peace, it’s not going to be negotiated in a conference room. It’s going to be negotiated at a dinner table.” I think that really encapsulates why experiences like movie theaters and restaurants have such strong cultural power.
If the experience economy is at the center of this recovery, marketing to distinguish your brand or business from the rest will make all the difference between a successful venture and a struggling one. Cinemas are actively navigating that marketing challenge—what lessons can they take from what you’ve seen in the restaurant space?
It’s a huge challenge—and very difficult because there’s so much noise and so many options for consumers right now that it’s easy to get lost in the shuffle. Social media is crucial. It’s so important to be authentic to your restaurant concept and know who your customers are. Are your customers on TikTok and Twitter? If not, then don’t waste your advertising dollars there. If they are, then think about how to have an authentic and effective presence on those platforms.
Staying fresh—whether it’s updating your menu, offering specials, or special events—anything to keep you towards the top of people’s radar, is super important. You’ve just got to keep moving forward, keep evolving, keep trying new things. Otherwise, it’s easy to get lost in the shuffle of everyone else who is innovating.
Cinemas and restaurants are also complementary businesses. A restaurant next to a movie theater helps both businesses. What do you think the future holds for out-of-home entertainment and leisure destinations like ours?
When you talk to restaurant operators and employees, I think two things become very apparent. One, they’re exhausted. I think for those of us who were running one of these businesses day in and day out, the physical toll, but also the emotional and psychological toll, of not knowing if you were going to be able to stay in business and keep your employees on payroll: Those things have really taken a toll over the past three years. I think we need to be really cognizant about burnout and work-life blending. Family leave and mental health are issues that, frankly, our global industry has not always led on, in terms of employee well-being, health, and safety. We need to acknowledge the toll the last three years have taken, and we need to be proactive and honest with ourselves as an industry about how we’re going to do better.
The second is a sense of optimism and pride in the grit that this industry has shown. We all remember those days when no one knew if the leisure, hospitality, and retail sectors were going to make it. The fact that we not only have made it, but rebounded as strongly as we have, there’s a lot of pride in that. There’s a lot of, “If we can make it through that, then we can endure a lot.” That’s not to say that it’s going to be easy, or that there aren’t going to be additional changes. But we definitely feel some wind in our sails.
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