Over the past 25 years, we’ve had the pleasure of working with countless restaurant groups from QSR and casual dining, to cafes and pizza. We know in today’s information environment, finding signals in the noise can be challenging. So, to help restaurant leaders identify and focus on the things that matter most, every month our team reviews top industry trade journals and marketing information sources to identify emerging trends in restaurant marketing and operations.
In this quarter’s Restaurant Trend Report, we’re focusing on recruiting and retention challenges in the restaurant industry, and highlighting brands implementing out-of-the box solutions for surviving in a tight labor market.
Labor shortages are a top concern, especially for QSR.
Good help is hard to find, and even harder to keep – especially in a tight labor market.
In a recent survey from the National Restaurant Association, operators cited “recruiting and retaining employees” as two of their top challenges. This comes as no surprise to those in Quick Serve Restaurants who have been struggling to find talent in a rapidly expanding industry. Progress typically signals success, but when an industry grows too quickly, operators can end up opening locations they’re unable to staff. This is exactly what’s happening in the dining sector, which has been growing at almost twice the rate of the U.S. population, according to a report from Deloitte.
Expansion isn’t the only issue. The unemployment rate has plummeted to its lowest point in nearly 50 years, which means fewer Americans are looking for jobs. The rate of employees quitting is also the highest it’s been in 17 years. According to TDn2K, 40% of hourly employees terminate within the first 90 days of their employment and approximately 35% of managers terminate within the first year.
With more open jobs than available candidates, applicants have options, the ability to shop the market, and the freedom to change jobs quickly. If they’re not happy with their current positions, they can simply go elsewhere. And as a result, operators are perpetually understaffed, constantly interviewing and on-boarding, and continually managing teams that are short-tenured and partially trained.
In this environment, it’s almost impossible for restaurants to deliver on customer satisfaction — which ultimately affects sales and traffic. Between time spent hiring and training, loss of productivity, and damage to customer satisfaction, TDn2K estimates the average cost of turnover is $2k per front-of-house hourly employee, $1,902 per back-of-house hourly employee, and $14,036 per manager.
Employers who find themselves short-handed may be tempted to hire any willing applicant. But a bad hire can be extremely costly. An employee without the right skills or experience will need additional training. Other team members may need to jump in to help, or take on additional responsibilities until the new hire can pull his or her own weight. As a result, the productivity of the entire team suffers, again making it difficult to focus on the customer experience. And lower service levels naturally cause a decline in traffic and sales.
The U.S. Department of Labor estimates that a bad hire can cost an employer as much as 30 percent of that person’s total annual compensation. As important as it is to fill staff openings, it’s just as important to hire employees who have the right skills for the job, and who can be productive assets to the team.