A Simmering Restaurant Reality

The winds of change are blowing (and have been for some time) in the restaurant world.  Having grown up in a family that owned and operated restaurants, I can vouch for just how much has changed in the past few decades for this industry.  Much like meal courses, restaurant challenges come in multiple servings.  In many ways, these changes are positive, and it’s up to us to seize the opportunities available for our operations.

Appetizer: Restaurant Labor Shortage

A challenge we continually hear from our clients is the difficulty of hiring and retaining employees. According to the Bureau of Labor Statistics, the employee turnover rate for the foodservice industry comes in at a whopping 75% annually.  Additionally, the average cost of turnover for one hourly employee is $1,800.  This comes as no surprise for restaurant owners and managers who know workforce trends can have a huge impact on an establishment’s success.

In a tight labor market, most businesses pay employees more.  With low profit margins across the industry and 20 states raising the minimum wage (since late December or plan to in 2019), restaurants are having to find other ways to attract and hold on to workers.

Main Course: Daily Payroll

I recently had a conversation with a restaurant client about opportunities to increase retention and be more competitive in recruiting talent.  We discussed a need many restaurant employees have – a desire to be more in control of their financial wellbeing.  As a result, some restaurant operations are shifting from the traditional bi-weekly paychecks to daily paychecks.  Yes, I said daily.

Dessert: Increased Employee Retention

Employers who have implemented daily paychecks have boasted multiple benefits, including decreased turnover and a competitive recruiting advantage over other restaurants who aren’t. With 67% of restaurant operators citing staffing concerns as a key cost driver, increasing employee retention and boosting recruitment competitiveness sounds pretty good.  One may even say it’d be the cherry on top!

A Mint for the Road: Rethinking Opportunity

These trends are forcing operators to rethink how they recruit and retain workers in addition to investing in technology alternatives.  Nationally, restaurants have been quick to adopt new technologies.  The top areas of tech investment that operators are focused on in 2019 include third-party delivery integration, mobile payments, digital ordering, tableside ordering, predictive analytics, and interactive kiosks.

How will you approach the evolving workforce and find the right combination of traditional hospitality and technological innovation?  The winds of change are blowing, and the choice is ours – get blown ashore or set sail and seize the opportunity.