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Italian Restaurant Business Plan - Market and Industry Analysis Page 8

The chart above shows a very important part of the problem facing our industry – the shortage of labor.  Here we have analyzed over a period of 20 years the unit labor costs index versus the actual labor compensation index for the full service restaurants industry.  What these two lines on the chart above clearly denote is that while the unit labor costs in this industry have been rising steadily over the past 2 decades, the total labor compensation paid to the labor in this industry has been rising at a much higher pace. The average annual change in the unit labor costs index between 1987 and 2006 (the most recent year for which the data is available) is 3.8% where as the average annual change in labor compensation during that same period is 6.6% almost twice the rate.  Further we find that this trend began in the mid nineties and has shown no signs of changing with fewer and fewer workers opting for the part time jobs that the full service restaurant industry has been able to offer. 

The current debate around undocumented workers filling jobs in this food service industry dovetails into this exact argument and hiring and keeping good labor at A Taste of Tuscany will be a key element of our strategy.

4.13  Industry Analysis: Westchester business patterns for full service restaurants

The two tables presented in this section of our industry analysis take a close look at the business patterns of full service restaurants in Westchester County.  In the first table above which covers the years from 1998 to 2006 (the last year for which data is available) we find that there has been a growth of 21% in the number of full service restaurants in the county, with a 32% increase in the total number of employees employed by these restaurants.  The average number of employees in each establishment has gone from 11.37 to 12.42 representing an almost 10% increase.

The second table once again shows the pressures on labor costs in our market place as indicated by the 22.76% jump in the annual average employee compensation but an increase of 62.75% in the average annual payroll expenses.  We strongly believe that this discrepancy is due to the shortage of good chefs, cooks and managers in our industry.  With restaurant owners like ourselves having to pay up to find the key quality personnel in our industry the total payroll for full service restaurants like ours have gone up substantially.

We have already addressed the issues about chefs given that two chefs that we have worked together with in the past 7 years will be joining us at A Taste of Tuscany.  Jack Gordon and Carmen Hernandez will be managing the restaurant by themselves.

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