This was a prediction from Kona Grill Inc. CEO Marcus Jundt in 2019. Sure he didn’t know about Corona to come but he was spot on.

Marcus Jundt stept down as CEO at the end of 2019 but the reasons for failure and danger to hospitality he spelled out well using his company as example and the business models like Franchising that shaped the hospitality industry for the last decades.

His statements should make us think:

‘With the debt out there and the competition, I believe in the next recession we will have a tremendous amount of tip-over of restaurants failing,”

The main reasons he saw effecting the business:

“Labor pressures and competition are the two significant headwinds for restaurateurs, Jundt added, and many restaurant brands have turned to franchising to help navigate them.

About Franchising he said what many don’t dare say:

“Basically, what you are doing with franchising, you are getting mom and pops working for free, working below the minimum wage,” Jundt said in a question-answer session. “It may be a dirty little secret that no one want to talk about, but that’s what’s going on.

As one of the other reasons he mentioned the loss of company culture and values. Values and culture is what the next generations will look for.

Kona Grill – facing bankruptcy got sold out as a result.

Author: Stephan Busch, Academic Director at the State University for the Humanities Moscow RGGU, Faculty of Tourism & Hospitality and the Swiss International University earned his Master Certificate in Hospitality Management from Cornell University, USA. He has a diverse experience in launching operations, business development and service training- for hotel and cruise companies in Asia, Europe, Canada and Russia.

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