Restaurants face their demographic dilemmas.

There’s no question that the U.S. economy has been on a roll the past two years. And yet, we’re not seeing similar momentum in the restaurant industry.

What gives?

As it turns out, the challenges that restaurants face are due to forces and factors that are a lot more fundamental than the shape of the economy.

It’s about demographics.  More specifically, two things are happening: Baby boomers are hitting retirement age … and millennials are having children.  Both of these developments impact restaurants in consequential ways.

Baby boomers – the generation born between 1946 and 1964 – total nearly 75 million people. They’ve been the engine driving the consumer economy in this country for decades.  But this big group is eating out less as they age.

The difference in behavior is significant. Broadly speaking, Americans spend ~44% of their food dollar away from home.  But for people under the age of 25 the percentage is ~50% spent away from home, whereas for older Americans it’s just 38%.

Moreover, seniors spend less money on food than younger people. According to 2017 data compiled by the federal government, people between the age of 35 and 44 spend more than $4,200 each year in restaurants, on average.  For people age 65 and older, the average is just $2,500 (~40% less).

Why the difference? The generally smaller appetites of people who are older may explain some of it, but I suspect it’s also due to lower disposable income.

For a myriad of reasons, significant numbers of seniors haven’t planned well financially for their retirement.  Far too many have saved exactly $0, and another ~25% enter retirement with less than $50,000 in personal savings.  Social security payments alone were never going to support a robust regime of eating out, and for these people in particular, what dollars they have in reserve amount to precious little.

Bottom line, restaurateurs who think they can rely on seniors to generate sufficient revenues and profits for their operations are kidding themselves.

As for the millennial generation – the 75 million+ people born between 1981 and 1996 – this group just barely outpaces Boomers as the biggest one of all. But having come of age during the Great Recession, it’s also a relatively poorer group.

In fact, the poverty rate among millennials is higher than for any other generation. They’re majorly in debt — to the tune of ~$42,000 per person on average (mostly not from student loans, either).  In many places they’ve had to face crushingly high real estate prices – whether buying or renting their residence.

Millennials are now at the prime age to have children, too, which means that more of their disposable income is being spent on things other than going out to eat.

If there is a silver lining, it’s that the oldest members of the millennial generation are now in their upper 30s – approaching the age when they’ll again start spending more on dining out.  But for most restaurants, that won’t supplant the lost revenues resulting from the baby boom population hitting retirement age.

Reuters: In 2019, publishers will experience “the biggest wave of layouts in years” … and massive burnout among the journalists who remain.

The bad news continues for the publishing industry in 2019.

I’ve blogged before about the employment picture in journalism, which has been pretty ugly for the past decade.   And just when it seems that news in the publishing industry couldn’t get much worse … along comes a new study that further underscores the systemic problems the industry faces.

The results from a recent Reuters survey of publishers worldwide point to declines that will only continue in 2019.  In fact, Reuters is predicting that the industry will experience its largest wave of layoffs in years, coming off of a decade of already-steadily shrinking numbers.

The main cause is the continuing struggle to attract ad revenues – revenues that have been lost to the 600-lb. gorillas in the field – particularly Facebook, Google and Amazon.

Growing subscription revenue as opposed to a failing attempt to attract advertising dollars is the new focus, but that will be no panacea, according Nic Newman, a senior research associate at Reuters:

“Publishers are looking to subscriptions to make up the difference, but the limits of this are likely to become apparent in 2019.”

In addition to boosting subscription revenue, publishers are looking to display advertising, native advertising and donations to help bankroll their businesses, but advertising is the main focus of revenue generation for only about one in four publishers — a far cry from just a few years ago.

Putting it all together, Reuters predicts that it will lead to the largest wave of publishing job layoffs “in years” – and this in an industry where employment has been shrinking for some time now.

With yet more layoffs on the horizon, it’s little wonder that the same Reuters research finds employee burnout growing among the employees who remain. As Newman states:

“The explosion of content and the intensity of the 24-hour news cycle have put huge pressure on individual journalists over the last few years, with burnout concerns most keenly felt in editorial roles.”

A major reason why:  Even more is being asked from the employee who remain – and who are already stretched.

Journalism salaries are middling even in good times – which these certainly are not.  How many times can an employee be asked to “do more with less” and actually have it continue to happen?

Even the bragging rights of journalists are being chipped away, with more of them relegated to spending their time “aggregating” or “curating” coverage by other publishers instead of conducting their own first-hand reporting. That translates into perceptions of lower professional status as well.

In such an environment, it isn’t surprising to find editorial quality slipping, contributing to a continuing downward spiral as audiences notice the change — and no doubt some turn elsewhere for news.

Last but not least, there’s the bias perception issue. Whether it’s true or not, some consumers of the news suspect that many publishers and journalists slant their news reporting.  This creates even more of a dampening effect, even though in difficult times, the last thing publishers need is to alienate any portion of their audience.

How have your periodical and news reading habits changed in the past few years? Do you continue to “pay” for news delivery or have you joined the legions of others who have migrated to consuming free content in cyberspace?

(For more details from the Reuters research, you can sign up here to access the report.)

How disruptive will artificial intelligence be to the jobs we know?

With artificial intelligence seemingly affecting everything it touches, one might wonder what AI’s impact will be on the employment picture in the years ahead.

It’s something that AI expert and author Kai-Fu Lee has thought about in depth. Lee is the former president of Google China and the author of the best-selling book AI Superpowers:  China, Silicon Valley and the New World Order.

Recently, Lee published a column in which he described ten job categories that he feels are “safe” for human workers – regardless of how the AI world may develop around us.

His list is predicated on several fundamental weaknesses Lee sees with AI in handling certain aspects of job performance. Those weaknesses include:

  • An inability to create, conceptualize or manage complex strategic thinking
  • Difficulty handling complex work that requires precise hand-eye coordination
  • An inability to deal with unknown or unstructured spaces
  • The inability to feel empathy and compassion … and to react accordingly
Kai-Fu Lee

In short, Lee discerns a particular weakness in AI’s ability to perform “humanistic” tasks – ones that are personal, creative and compassionate.  Hence, the type of jobs that rely on such qualities will be safer from disruption, he believes.

As for career categories that Lee singles out as generally safe from AI disruption, he cites these ten in particular:

Computer Science – Lee predicts that a substantial portion of computer engineers, IT administrators and technology consultants will continue operate in job functions that aren’t automated by technology.

Criminal Law – The legal profession won’t be adversely affected, considering the persuasive powers that are needed to sway juries with legal arguments.  However, some paralegal tasks such as document review will likely migrate to AI applications.

Management – Simply put, there are too many “moving parts” to management – and aspects that require human interaction, values and decision-making – to make it a field that’s amenable to AI.  Of course, if a manager is more along the lines of a bureaucrat carrying out set orders, that type of job may be more susceptible to AI disruption.

Medical Care – Lee envisions a symbiotic relationship between humans and AI — the latter of which can help with the analytical and administrative aspects of healthcare but cannot handle most other healthcare responsibilities.

Physical Therapy – Dexterity is a challenge for AI, which makes it unlikely for AI to replace jobs in this field (also including massage therapy).

Psychiatry – Positions in this category, which encompass social work and marriage counseling in addition to strict psychiatry, require keen emotional intelligence which is the domain of humans.

R&D (particularly in AI-related field) – While some entry-level R&D positions will become automated, increased demand for R&D talent will likely outnumber the jobs replaced by AI.

Science – According to Lee, while AI will be of tremendous benefit to scientists in terms of testing hypotheses, it will be an amplification of the discipline rather than taking the place of human creativity in the sciences.

Teaching – While AI will be a valuable tool for teachers and schools, instruction will still be oriented around helping students figure out their interests and providing mentorship – qualities that AI lacks.

Writing – Specifically fiction and other creative writing, because “storytelling” is an aspect of writing that AI has difficulty emulating.

So, there you have it – Kai-Fu-Lee’s fearless predictions about the job categories that will remain safe in an increasingly AI world. Can you think of some other categories?  Please share your thoughts and perspectives with other readers.

Successful marketers reveal the keys to more effective content marketing.

What differentiates B-to-B companies who carry out successful content marketing initiatives compared to those whose efforts are less impactful?

It isn’t an easy question to answer in a very quantitative way, but the Content Marketing Institute, working in conjunction with MarketingProfs, has reached some conclusions based on a survey it conducted in June and July of 2018 with nearly 800 North American content marketers. (This was the 9th year that the annual survey has been fielded.)

Beginning with a “self-graded” question, respondents were asked to rate the success of their company’s content marketing endeavors. A total of 27% of respondents rated their efforts as either very or extremely successful, compared to 22% who rated their results at the other end of the scale (minimally successful or not successful at all).

The balance of the CMI survey questions focused on this subset of ~380 respondents on both ends of the spectrum, in order to determine how content marketing efforts and results were happening differently between the two groups of marketers.

… And there were some fundamental differences discovered. To begin with, more than 90% of the self-described “successful” group of B-to-B content marketers reported that they prioritize their audience’s informational needs more highly than sales and promotional messaging.

By comparison, just 56% of the other group prioritize in this manner — instead favoring company-focused messaging in greater proportions.

Other disparities determined between the two groups of marketers relate to the extent of activities undertaken in three key analytical areas:

  • The use of primary research
  • The use of customer conversations and panels
  • Database analysis

Also importantly, ~93% of the respondents in the “successful” group described their organization as being “highly committed” to content marketing, compared to just ~35% of the respondents in the second group who feel this way.

Moreover, this disparity extends to self-described skill levels when it comes to implementing content marketing programs.  More than nine in ten of the “successful” CMS group of respondents characterize themselves as “sophisticated” or “mature” in terms of their knowledge level.

For the other group of respondents, it’s just one in ten.

Despite these differences in perceived skills, it turns out that content marketing dissemination practices are pretty uniform across both groups of companies. Tactics used by both include sponsored content on social media platforms, search engine marketing, and web banner advertising.  It’s in the messaging itself — as well as the analysis of performance — where the biggest differences appear to be.

For more information on findings from the 2018 Content Marketing Survey, click here.

Sears Holdings’ bankruptcy filing: the worst-kept secret in the business world.

Reports that Sears Holdings is filing for Chapter 11 bankruptcy have to be the least surprising news of the week.

Paralleling that announcement came the one about the pending closure of nearly 200 stores by the end of the year.

Who’s surprised? It seems as though this retail dinosaur has been on its last legs for years now.  Even when Sears merged with Kmart in the early 2000s, I recall one of my business colleagues remarking that it was “one dog of a company buying another dog of a company to create this really big bowser enterprise.”

“Most. Useless. Merger. Ever.” was how another person I know described it.

Indeed, it seems as though Sears’ biggest contributor to its financial bottom-line in recent years has been its real estate holdings. Sales of Sears commercial properties have contributed mightily to the company’s balance sheet, while retail sales seem almost like an afterthought.

Even as the National Retail Federation is forecasting holiday sales to rise nearly 4% this year – a hefty jump in comparative terms – Sears was destined to share in precious little of it.

According to MediaPost columnist Laurie Sullivan, everyone should have seen the handwriting on the wall when Adthena released its latest online retail activity reporting.  Tellingly, Amazon and Walmart collectively account for nearly 45% of all online retail clicks.

“Old school” department store firms such as Macys and Kohls do significantly worse, typically taking between 3% and 4% of clicks apiece.

But Sears has been a poor performer compared even to the weak showing of traditional department stores; Adthena reports that Sears accounts for just 0.7% of online retail clicks.

To add the final nail in the coffin, anyone looking closely at what’s been happening with Sears’ print and online display advertising expenditures can see that the company was busily rearranging the deck chairs on the Titanic. Media measurement firm Statista reports that Sears/Kmart decreased the dollar amount it spent on such advertising from ~$1.5 billion in 2013 to just ~$415 million in 2017.  That’s more than a 70% drop during a period of economic recovery.

When the numbers between market growth and advertising decline cross like that, you know exactly where things are headed …

Will Sears or Kmart even be brand names in another decade? It’s difficult to see how.

Print vs. online newspaper readership behaviors don’t look promising at all for media properties.

New York Times CEO Mark Thompson

From the New York Times on down, leading publishers are telling us that print versions of their newspapers will eventually disappear.  The only question is how soon it will happen.

But what are the implications of this pending shift to all-digital? Will online news consumers be as strongly engaged as they have been with the print newspaper product?

We now have a window into answering this question by looking at the experience of The Independent, a UK national daily paper.  Two years ago, The Independent made the shift to become an online-only publication.

And the result was … no measurable increase traffic shifting from offline to online. That finding comes from a before/after analysis of the publication’s performance as conducted by European communications industry researchers Neil Thurman and Richard Fletcher.

What they learned is that shutting down the print property didn’t drive those news consumers to print-like consumption habits on digital devices.

Instead, these customers became like other digital readers. That is to say, in the words of the researchers, “easily distracted, flitting from link to link, and a little allergic to depth.”

Let’s drill down a little deeper. At the time it ceased publishing a print edition of its newspaper, The Independent had a paid print circulation of approximately 40,000, along with ~58 million monthly unique visits on its digital platform.

That a humongous chasm … but the researchers found that the publication’s relatively small number of print readers were responsible for more than 80% of all time spent consuming all of The Independent’s news content – print and digital.

That is correct: Considering engagement on all of its digital platforms, all of that added up to fewer than 20% of the time collectively spent reading the print publication.

The chart below shows what happened to readership. All of the time The Independent’s print readers spent with the paper seems to have simply disappeared when the company ceased publishing a print version.  It didn’t transition to independent.co.uk.

Even more telling, the researchers found that half of print recipients had read the newspaper “almost every day,” whereas online visitors read a news story in The Independent, on average, a little more than twice per month.

While print readers typically spent from 40 to 50 minutes reading each daily edition of The Independent, online readers spent, on average, just 6 minutes over the entire month.

Here’s the thing: Whereas print newspapers usually have few if any competitors in their immediate space, online there are an unlimited number of competing sites to attract (and distract) the reader – all of them just a mouse-click away.

Even if we discount a measure of exaggeration on the part of respondents in terms of how much time they actually expend on their reading consumption versus what they reported to survey-takers, the print/online dynamics reveal stark differences. As researcher Thurman reports:

“By going online-only, The Independent has decimated the attention it receives. The paper is now a thing more glanced at, it seems, than gorged on.  It has sustainability but less centrality.”

There is one silver-lining of shifting to an all-digital platform, at least in the case of The Independent.  That shift has resulted in increased international reach by the publication.

But The Independent is a national newspaper, unlike most of America’s leading papers, and so that sort of positive aspect can’t be expected to apply very easily to those other media properties.  How many people outside of central Colorado can be expected to read a digital edition of the Denver Post?

The main takeaway from The Independent’s experience is that for any paper choosing to go all-digital, chances are high that the audience isn’t going to follow along – certainly not at the level of loyal, in-depth time once spent with the print product.

Sure, the very real costs of printing and delivery will now be a thing of the past. But a significant – even dramatic – decline in reach, influence and impact will be the new reality for the publishers

Baby, meet bathwater.

China-bashing is taking its toll.

Over the past year, Americans have been fed a fairly steady stream of news about the People’s Republic of China – and most of it hasn’t been particularly positive.

While Russia may get the more fevered news headlines because of the various political investigations happening in Washington, the current U.S. presidential administration hasn’t shied away from criticizing China on a range woes – trade policy in particular most recently, but also diverse other issues like alleged unfair technology transfer policies, plus the building of man-made islands in the South China Sea thereby bringing Chinese military power closer to other countries in the Pacific Rim.

The drumbeat of criticism could be expected to affect popular opinion about China – and that appears to be the case based on a just-published report from the Pew Research Center.

The Pew report is based on a survey of 1,500 American adults age 18 and over, conducted during the spring of 2018.  It’s a survey that’s been conducted annually since 2012 using the same set of questions (and going back annually to 2005 for a smaller group of the questions).

The newest study shows that the opinions Americans have about China have become somewhat less positive over the past year, after having nudged higher in 2017.

The topline finding is this: today, ~38% of Americans have a favorable opinion of China, which is a drop of six percentage points from Pew’s 2017 finding of ~44%.  We are now flirting with the same favorability levels that Pew was finding during the 2013-2016 period [see the chart above].

Drilling down further, the most significant concerns pertain to China’s economic competition, not its military strength. In addition to trade and tariff concerns, another area of growing concern is about the threat of cyber-attacks from China.

There are also the perennial concerns about the amount of U.S. debt held by China, as well as job losses to China; this has been a leading issue in the Pew surveys dating back to 2012. But even though debt levels remain a top concern, its raw score has fallen pretty dramatically over the past six years.

On the other hand, a substantial and growing percentage of Americans expresses worries about the impact of China’s growth on the quality of the global environment.

Interestingly, the proportion of Americans who consider China’s military prowess to be a bigger threat compared to an economic threat has dropped by a statistically significant seven percentage points over the past year – from 36% to 29%. Perhaps unsurprisingly, younger Americans age 18-29 are far less prone to have concerns over China’s purported saber-rattling – differing significantly from how senior-age respondents feel on this topic.

Taken as a group, eight issues presented by Pew Research in its survey revealed the following ranking of factors, based on whether respondents consider them to be “a serious problem for the United States”:

  • Large U.S. debt held by China: ~62% of respondents consider a “serious problem”
  • Cyber-attacks launched from China: ~57%
  • Loss of jobs to China: ~52%
  • China’s impact on the global environment: ~49%
  • Human rights issues:  ~49%
  • The U.S. trade deficit with China: ~46%
  • Chinese territorial disputes with neighboring countries: ~32%
  • Tensions between China and Taiwan: ~21%

Notice that the U.S. trade deficit isn’t near the top of the list … but Pew does find that it is rising as a concern.

If the current trajectory of tit-for-tat tariff impositions continues to occur, I suspect we’ll see the trade issue being viewed by the public as a more significant problem when Pew administers its next annual survey one year from now.

Furthermore, now that the United States has just concluded negotiations with Canada and Mexico on a “new NAFTA” agreement, coupled with recent trade agreements made with South Korea and the EU countries, it makes the administration’s target on China as “the last domino” just that much more significant.

More detailed findings from the Pew Research survey can be viewed here.