Happy New Year and welcome to 2025 in hospitality! I hope you had a joyous and successful holiday season. As we enter this new year, I thought I would put together some thoughts about what we can expect.
1. COMING TO A CITY NEAR YOU – ARE YOU READY TO ENGAGE?
Over the last two years, we’ve seen cities like Renton, Everett, Burien and Olympia either increase their minimum wage or make major noise about it. Based on our projections for 2025, we’re likely to see another seven to 10 cities join the setting-labor-policy-at-the-city-level movement.
Here’s what we know: Even with our resources as a state organization, we would be diluting ourselves to fight battles in 10 additional cities. The only way the industry’s voice will be heard is if you get involved.
So, in cities where we can’t afford to send in lobbyists to every council meeting, we are going to focus on how we can prepare you and make it easy for you to engage your local city council. The benefit of telling your own story is it is the best way to get local lawmakers to pay attention.
I will be doing a 20-city tour and coming to your community in February or March. Please attend so you can put together the strategy to help protect your community. Contact your territory manager to learn when and where I will be near you.
2. NEW LEADERSHIP IN OLYMPIA – THIS WINTER WILL FORESHADOW THE REST OF THE DECADE
Washington state will have new leadership in Olympia as Bob Ferguson takes the keys to the Governor’s Mansion. While Gov. Jay Inslee’s main focus was the environment, Ferguson’s main priorities are consumer protection, public safety and housing.
He will have a strong Democratic majority as the Democrats increased their lead in the House and the Senate, falling just short of supermajorities in both chambers.
This legislative session will likely set the tone for how the next four years in Washington state will move forward. It will be important for us to lead the conversation and have the Legislature understand that hospitality is still struggling post-COVID with record low margins in the industry.
It’s more important than ever to participate in Hill Climb 2025 on Jan. 27 – check your email next week to learn how to register and meet with your lawmakers.
3. CHANGE IS NO LONGER OPTIONAL, IT’S SURVIVAL
And speaking of record low margins, 1.5% is the average margin for full-service restaurants in Washington, and it simply must change this year. Operators will try all types of ideas, technologies and business models to improve this profit margin and try to fight back to a margin that can sustain businesses and the industry, and the association can help you with examples of ideas that work.
This is a great year to meet your peers, expand your network and find fellow operators you can bounce ideas off. Learn what is working; learn what is not working. Commit to change and learn with and from others.
If there was ever a time to think creatively and work together it is 2025.
4. IS THE ONLY WAY UP TO GO DOWN?
If hospitality businesses are not able to bounce back. If we don’t change or are unable to find the kind of change Washington consumers will accept, expect the industry to shrink by five to 10%. These margins are simply unsustainable. More hospitality businesses will close. But with chaos comes opportunity.
Keep an eye out for the opportunity to secure events, new regulars, great employees and usable equipment from our fellow operators who don’t make it. Repurposing, while not always sexy, is sometimes very effective.
5. OH, MAGIC 8 BALL, WHERE WILL INFLATION GO IN 2025?
The last four years have certainly represented an inflation rollercoaster for the industry. Starting in 2020, inflation was at 3%. In 2021 it was 4%, and in 2022 it shot up to 10%. In 2023, inflation slowly came back down a bit, landing at around 6%. The inflation rate for 2024 is expected to be lower (when the reports come out), but we will still need to keep an eye on food costs in 2025. The 2020s have been rocky to say the least.
The industry and economic analysists are split on what we’re going to see in food and other inflation in 2025 with smart people varying between two and 8%. Make sure that your kitchen manager keeps a regular eye on food prices before you suddenly get stuck and priced out of profitability.
LASTLY, HAVE YOUR TERRITORY MANAGER ON SPEED DIAL
Most importantly, stay engaged with your territory manager. The association will work hard throughout the year to help you identify ways you can save revenue or protect and enhance your business climate.
And always it's an honor to serve you,
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