Article
Heading off a labor crisis
Faced with a shrinking young labor force, the restaurant industry needs to take steps now.
September 17, 2009
The restaurant industry, particularly the quick-service segment, has long relied on 16 to 24 year olds to fill its entry-level positions. But industry forecasters see a gloomy picture ahead. Not only is the youth labor force shrinking, but fewer teens and young adults are interested in foodservice jobs.
According to data from the Bureau of Labor Statistics, restaurant industry employment needs will increase 14 percent over the next 10 years. However, the youth labor force will shrink 7 percent.
Kacy Oden, director of membership relations at People Report, a research and consulting firm specializing in restaurant labor-force trends, said operators must act now to stave off the crisis, even though turnover rates improved during the recession.
"We have repeatedly encouraged members to seize the opportunities present by the soft labor market and emerge from this downturn with a stronger and more engaged team," she said.
People Report is already seeing that the soft labor market is tightening. In the third quarter of 2008, voluntary terminations across the industry were at 66 percent but improved to 47 percent by Q1 2009. But by the end of Q2, for example, voluntary terminations were up nine points to 56 percent.
Yet, there is plenty operators can do to keep employees from leaving for other jobs, especially once more opportunities become available. One area is employee job satisfaction.
Costs and margins have overshadowed staffing concerns during the recession, but operators need to draw the connection between employee satisfaction and customer satisfaction, Oden said.
"They are inherently one in the same," she said. "You're not going to get that customer satisfaction unless your people are happy, regardless of whether they're an hourly employee or a manager."
Oden said some chains are focusing on driving employee satisfaction by creating a company culture. "That's how they differentiate themselves from one company to the next."
It's also important to draw a clear path of advancement, so that employees see a future beyond operating a cash register. And when employees know there are opportunities for growth, they are more likely to stay with a company, she said.
Operators who don't focus on employee morale and retention will be faced with high turnover rates as employees jump to more attractive jobs and likely other industries.
Focus on careers, entrepreneurship
Dawn Sweeney, president and CEO of the National Restaurant Association, is well aware of the crisis. The association's five-year strategic plan includes an emphasis on jobs, careers and entrepreneurship. Its goal is to improve tenure and employee satisfaction as well as improve the public perception of foodservice careers.
"We need to help (teens and young adults) see that incredible opportunities are available in this industry," she said. "Where else can you be 26 years old and run a $1 million business?"
The association is encouraging operators to begin with screening applicants to select employees who are likeliest to succeed in the industry. Like People Report, the organization also is pushing companies to create career ladders for their staff.
"Those things can really help capture the talent and keep them from going to other industries," Sweeney said.
Wendy and Tommie Reno, Checkers franchisees based in Brooklyn Center, Minn., are well aware that career advancement plans and employee satisfaction are growth drivers.
The couple, who previously ran a construction company, opened their first store with the help of three financial partners in November 2007. Earlier this month, they opened their second and plan 13 more in the Minneapolis/St. Paul market.
Most of their shift managers were victims of other industry's downsizing. They've taken a cut in pay, but Wendy Reno expects them to stay around even after the economy improves.
"As a corporation, we're making sure to share our goals and objectives as well as the career path," she said. "At some point, we will need area managers, more general managers. The future is, we are a new company and we will need all those positions filled. And we will fill from within."
Reno said she is glad that the NRA is focusing on strategy to attract more employees and leaders to the industry. She sees her franchise company as doing its part.
"What we're doing it providing a future for people, giving them jobs and an income," she said. "It's a great feeling for us as a company, as individuals. We're now a part of someone's life..
Andrew Puzder, CEO of CKE Restaurants Inc., the parent company of Carl's Jr. and Hardee's, said the industry needs more such business owners. He also believes the NRA's emphasis on encouraging entrepreneurship comes at an important time.
"If we have a few more entrepreneurs out there trying to create businesses and create jobs and create wealth and economic growth, I think (the economy) would be in much better shape," he said.
Puzder said his company makes an effort to instill those entrepreneurial values in its general managers. The role itself provides invaluable experience, from managing a staff of 25 or more employees to overseeing $1 million-plus facilities.
"It's an opportunity for people who otherwise can't go and get an MBA or can't get a degree in college, or even get that level of experience and still work a job," he said. "So it's an incredible opportunity for people that I don't think is understood — or appreciated."
*This article is part of a series on issues being addresses by the NRA in its five-year strategic plan. The series concludes Monday with a look at the plan's final three imperatives.
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