Staffing
Quelling QSRs' labor pains: Why things must radically change
In this second of a two-part series on the restaurant industry labor crisis, restaurateurs and industry experts pinpoint the answers all feel are urgently needed for brands to successfully navigate the new employment landscape.
May 18, 2021 by S.A. Whitehead — Food Editor, Net World Media Group
Editor's note:This is the second of a two-part story on the causes, fallout and possible answers to the current labor shortfall in the restaurant industry.
In the first part of this series published last week, restaurant industry leaders not only underscored the severity of the current worker shortage, but also tended to line up under two very different headings as to what they feel is causing the industry's current labor pains.
Some, like the CEO of restaurant brokerage company, We Sell Restaurants, Robin Gagnon, said too few people are taking restaurant jobs because, as she put it, they can make more money obtaining the enhanced government unemployment benefits that have kicked in since the pandemic.
But, others, like &pizza CEO Michael Lastoria, believes restaurant workers are leaving the industry in droves because the rate of pay for frontline workers is, and has been, far too low for far too long.
While we're not about to settle that argument in this second segment, we do at least want to shed some light on some of the possible solutions to the problem that has sunk its teeth into this belabored industry just as it appears to be emerging from the pandemic-era ravages of the last year. After all, as Black Box Intelligence most recently reported April marked the second straight month that the industry's two-year same-store sales growth was positive, with restaurant sales "posting growth rates not seen in many years … now consistently better than they were at the beginning of 2019," the company said in its most recent industry data report. In fact, it added that at 6.8% growth in same-store sales in April, the month's growth was "by far the strongest in the last three years."
"In our experience, the employers encountering the most difficulties have not stopped to take the labor market's temperature. Wages are up, benefits have increased and if you're unwilling to meet that bar, it is going to be very tough for you, frankly, to get team members in the door."
-Landed CEO Vivian Wang
The flip side to that very shiny face of the restaurant industry coin, however is that analysts at Black Box Intelligence said the data also indicates that in March the median limited-service chain staffed each of its restaurants with about one less employee per location on average than it did back in 2019. In short, just when the business is really coming physically able to come back through restaurants' doors, there's hardly any employees to attend to it.
The hiring game has changed … dramatically
As we asked restaurateurs and industry experts who help them meet their business goals about their answers to this current predicament, we got a lot of different responses. But if there is a central running theme it's that any restaurant brand still approaching recruiting, retention and employee engagement the same way they always have is setting themselves up for a fail. In fact, as Vivian Wang, the CEO of hourly worker jobs platform, Landed, told us, brands should be looking around at their labor pool competitors and re-strategizing their employment strategies "yesterday."
"In our experience, the employers encountering the most difficulties have not stopped to take the labor market's temperature," Wang said in an interview. "Wages are up, benefits have increased and if you're unwilling to meet that bar, it is going to be very tough for you, frankly, to get team members in the door. …
"Shorten your interview process as much as possible and spend time selling the candidate on why they should choose you and your culture to be their next employer. Also, don't give up if you can't reach a candidate the first time — re-engagement and follow-ups are key."
Additionally, from Wang's point of view, employers at fast food brands may be in the dining sector that most needs to widen its ideas about who is suited for frontline restaurant work. She said the most successful hiring managers have learned to recognize potential in-store talent, even in individuals with no previous restaurant experience.
At another employment platform, Joblist, CEO Kevin Harrington continued along that theme, based on what he said he is seeing across the foodservice hiring landscape. In his view, restaurant employers need to get real about whether they're actually still giving people the kind of employment packages (yes, even at the entry-level restaurant worker stage) to help them actually remain on the job for a reasonable length of time and actually come to work daily with a sense of commitment.
In this regard, he said restaurant companies and their leadership are wise to compare what their brand is offering versus what their competitors and even other similar businesses outside the industry are doing. The goal for restaurant operators is to make sure they're really giving workers at every level something worth showing up for. Increasingly, he said, that means benefits.
"Providing good workplace benefits is critical to attracting workers in this tight labor market.," Harrington said. "In a recent survey, we found that 76% of job seekers said that benefits were 'important' or 'very important' to them when considering a new position. Fifty-five percent responded they would even accept a lower paying job if it came with better benefits.
"Employers, including restaurants, would be well-served to formulate their compensation and benefits strategy with this is mind moving forward. Job seekers agree — in our survey, we found that 74% of job seekers believe that employers need to re-evaluate the workplace benefits that they offer post-pandemic. And according to out survey, the most important benefits to workers right now are healthcare (67%), flexible schedule (60%) and paid sick and parental leave (50%). Introducing and/or expanding these types of benefits could help restaurants lure workers back to open roles."
Paths to QSR hiring success now
One QSR franchisee who opted to do just that and step-up benefits for employees at his franchised locations of brands like Auntie Anne's and Cinnabon is Dustin King. In fact, King deployed technology created by the software company, zignyl, to build benefits and incentives into his employment packages across his stores. The tech even allowed him to make the increased employee rewards — in the form of higher wages, for one — tied to a store team's success in hitting designated sales goals. King said the move has repaid him and his employees equally.
"My stores have always offered competitive wages, but once we began offering additional incentives to hourly employees to give them an opportunity to earn more, we've become even more competitive in attracting and retaining a strong labor force," King told this website. "I can now tell a potential employee that they're guaranteed to earn a certain hourly wage, but that as the restaurant earns more, they can, too. They have a stake in the restaurant's success and share in the revenue.
"Essentially, if everyone on the team excels, they are profit-sharing. It's a win-win and now hourly employees have a way to get bonuses, which is unheard of. I continue to see operators struggling to run their businesses because of the lack of employees, but this, fortunately, has not been the case for me."
Another brand that has achieved higher-than-average recruiting and retention success is White Castle. In fact, the QSR recently obtained quite a notch in its belt for its success with giving workers what they want and keeping them happy when it earned coveted Best Place To Work certification. Since
 |
| White Castle employees at the brand's most recently opened store in Orlando.(Provided) |
that certification comes by way of the workers at a certified company itself, it speaks well of how happy White Castle's workforce actually is. So QSRweb dug a little deeper into why and how that came about with White Castle Chief People Officer John Kelley, who relayed that today more than one-fourth of the privately owned brand's employees have actually been employees for 10 or more years. That compares with an industry average for time in any one restaurant industry job of less than two months.
"The most important thing we can do when we hire someone new is make sure they know why we exist. … We believe that provides a chance to connect the different parts of the specific job to a larger good and ultimately gives some permission to be creative and have fun along the way, too."
-White Castle Chief People Officer John Kelley
Kelley attributed the brand's relative success in this arena to a commitment to three main themes that he said have served the 100-year-old burger chain well.
"Be authentic: Today's team members want the news you have, even if it's imperfect," he said. "The more you share with everyone — not only the successes, but the challenges — the more credibility you gain.
"Be purposeful: At White Castle, the most important thing we can do when we hire someone new is make sure they know why we exist. … We believe that provides a chance to connect the different parts of the specific job to a larger good and ultimately gives some permission to be creative and have fun along the way, too.
"Have fun: We work in a business that is tough and demanding. It's also a high-energy space where you make friends that last a lifetime. … There's unity in community, and the community we provide for our team members is worth fighting for."
Why the 'wage thing' won't go away
But other restaurateurs and industry organizations and experts suspect there's still more to solving the current labor pains in the industry than those mentioned here alone. Namely that the hourly wage many restaurant brands are paying their frontline workers is insufficient to keep them on the job or in the industry. For instance, One Fair Wage, an organization which advocates for a higher federal minimum wage, said in their most recent worker survey, 78% of those saying they had or were leaving the restaurant industry reported that the rate of pay was simply too little.
"It's time for systemic change. The purpose of raising the minimum wage isn't to make the lives of business owners difficult, it's to lift millions of Americans out of poverty and create opportunity for the government to spend its time moving the country forward instead of leaving a significant portion of our country behind. Right now, nearly 32 million workers — over 21% of the entire workforce — earns less than $15 an hour. It's time to act in good faith not just to protect their business but to protect their workforce. When this happens, job shortages will cease to exist."
-&pizza CEO Michael Lastoria
There's some evidence to back up this argument since the federal minimum wage was last raised in mid-2009 from $6.55 to 7.25 per hour. And before that the wage nationally was stalled at just $5.15 per hour for 10 full years. In essence, moving the needle on this wage benchmark just doesn't happen very easily or often.
 |
| &pizza CEO Michael Lastoria. (Image via LinkedIn) |
Granted, some of the battle around higher wages is being fought on the state level where dozens of states have mandated higher minimum wages over the last 10 years. But analysts and economists point out that even in most raised-wage areas, the minimum hourly wage is falling far short of keeping up with cost-of-living increases.
For instance, according to analyses reported by the Massachusetts Institute of Technology, last year the living wage in the U.S. — or that needed to meet a family's basic needs in 2020 — came to $16.54 per hour. With the federal minimum level at less than half that amount, many, including &pizza CEO Michael Lastoria, believe restaurant brands just need to do what the federal government has not for the last 12 years: Pay a higher hourly rate. In fact, in Lastoria's view, longtime quick-service chains have been some of the biggest forces standing in the way of such pay increases.
"There isn't a day that goes back that we aren't further exposed to the atrocities of legacy QSR putting their lobbying arm and dollars behind killing the minimum wage provision, adding surveillance on their employees' attempts to unionize all the while ignoring the pressing concerns of their workers regarding COVID-safety," he recently told QSRweb.
"It's a wake-up call to the industry — it's time for systemic change. The purpose of raising the minimum wage isn't to make the lives of business owners difficult, it's to lift millions of Americans out of poverty and create opportunity for the government to spend its time moving the country forward instead of leaving a significant portion of our country behind. Right now, nearly 32 million workers — over 21% of the entire workforce — earns less than $15 an hour. It's time to act in good faith not just to protect their business but to protect their workforce. When this happens, job shortages will cease to exist."
Signs of movement
Intensifying the urgency for some solid solutions to the current restaurant labor shortfall are facts like recent reports that just in the first quarter of this year alone, restaurants gained 442,000 jobs, according to the U.S. Bureau of Labor Statistics. And now with the masks coming off and more vaccinated diners heading out, some quick-service brands are making moves to change their hiring and retention "business as usual." For instance, among the biggest chains in the fast casual sector, Chipotle made one of the first moves on wages on May 10 when it announced it would increase its minimum pay to $15 an hour by June.
About a week later, the fast food sector showed some movement on the mega-chain front, when on May 13, McDonald's leadership said the chain would increase its hourly minimum wage 10% for company-owned store employees. And these follow many similar pay and benefits boosts that have been happening at smaller brands, like the aforementioned &pizza, over recent months and years.
 |
| We Sell Restaurants CEO Robin Gagnon.(Provided) |
The question now is whether these and other industry actions are going to be enough to woo workers back to foodservice and/or attract new talent to the table? The stakes are incredibly high, with so many individual stores and operators already cutting hours and closing stores because they simply haven't got enough warm bodies to do business. After all, the pandemic taught us that — though Americans aren't fond of it — we will cook for ourselves if we can't get our restaurant food when, where and how we want it. It's a thought that likely keeps a lot of industry leaders up at night, but that will also ultimately decide which brands remain and which fade into obscurity.
As restaurant brokerage firm We Sell Restaurants CEO Robin Gagnon told us, "The brands that are doing this wrong are the ones who are doing the same thing they did two years ago. A single online ad or putting applications and a sign near the door will not cut it today. You are going to have to give employees a reason to join your team, raise the wage overall and provide incentives for working with your brand."
About S.A. Whitehead
Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.
Related Media
Subscribe
Get the latest news and resources from QSR Web.
