The labor market is tight for many reasons. The pandemic, of course, is the primary reason, but if we’re truthful with ourselves, the labor market has been shrinking for years. The pandemic has just accelerated the trend. Now it isn’t just that operators can’t find skilled qualified labor; they can’t even find semi-skilled.
Restaurant work used to be stable, but no more. The pandemic showed employees how vulnerable the industry really is. No one imagined anything like this happening; how could we? Now operators cannot fathom where they will find that much-needed server, cook or dishwasher.
I recently read an article on how restaurant owners drove out their employees because of the way they treated their teams. While I know firsthand that this can be an issue, it’s only a small percentage of owners who mistreat their employees to the point of mass exodus. The article did a huge disservice to the majority of owners out there doing right by their teams and their guests. Still, owners, management and the corporate executive teams need to take a hard look at what their actual culture is vs. what they want it to be. Until they realize that the two aren’t aligned, this issue will persist.
All too often those who set the intention for the culture that will drive the guest experience quickly lose touch with reality, which is the day-to-day operations. They develop mandates in their “ivory tower” without the understanding of how it impacts those who will execute it. Many executives have lost touch with the nuances of running a restaurant day to day. I have worked for and with many executives over the years who forget that the best way to run an organization is through the upside-down triangle where the owners/executives are on the lowest section of the triangle and they exist to support their team, not the other way around. Those who spend time in their restaurants and speak with and solicit information from those who interact with their guests are the companies that will thrive on all levels.
Decision makers focus on the bottom line (which they should and need to) but are penny wise and pound foolish all too often. I was speaking with a client recently who had a valued leader in his kitchen ask for a $1 per hour raise. The client said no, that he couldn’t afford it. When he asked me if he made the right decision, I said absolutely not. He looked at me with disbelief and asked why not. I asked a series of questions:
“What is the financial commitment?” He responded $40 per week plus company taxes.
“Are they valued?” Yes absolutely.
“By whom?” By the client and the team the employee works with.
“Are they good at what they do?” Yes, he’s great.
“Do you trust him?” Yes, without a doubt.
“How much money does he save you?” The client said it was too much to quantify without sitting.
“How much will it cost to recruit his replacement?” Dead silence.
“How will you replace him?” Continued silence.
“Once you hire his replacement, what is the cost of training that person?” He didn’t know.
“Most importantly, how many people will it take to replace what he contributes?” At least two, and the minimum cost of that second employee would be around $600 per week.
“Is $40 plus taxes worth hesitating or not doing it?”
The employee received a raise retroactive two weeks.
The impact of the labor shortage has forced many operators to identify, foster and implement new technology in order to offset not being able to recruit and retain staff. POS suppliers have provided solutions to online ordering, pick-up and delivery that replaced staff, especially during the pandemic. These systems increase functionality and efficiencies in restaurants and minimize mistakes, which lowers cost of goods sold, which increases profitability. Other back-of-house systems streamline operations, which lowers the need for an office manager, reduces monies spent with bookkeepers and accountants and lowers cost of goods through comparative pricing tools that allow for purchasing ingredients at the best price. All of these activities combat the labor shortage and increase profitability through careful management of cash flow.
All of that is good and well. But these measures will only replace certain individuals within your organization. Operators still need to focus on their recruitment and interview plans; they have to ask themselves if they have a plan and whether it’s clear and concise. Getting in front of potential candidates is becoming more difficult and more expensive. The difficulty, in part, is due to online recruitment companies charging large fees to drive resumes to the company by sponsoring the jobs. Algorithms decide how many potential people need to see the ad in order for one to meet their hiring needs. I’ve seen recommendations for 30 people a week at $25 per resume — that’s $750 just to see a resume. There are no guarantees that the person meets the criteria or is a valid candidate. This is a huge investment for many and becomes a huge obstacle, because without sponsoring, it is likely that a company’s post will get buried.
Building a team is no easy feat; keeping a team intact is even harder. Owners, corporate executives, and managers need to foster the change they want to see. They need to understand the culture they seek to maintain is not done on a piece of paper or in a manual. It requires hard work. They need to be in their restaurants working alongside their teams, understanding what challenges they face each day. They need to speak with and learn from those who are on their front lines. They cannot be afraid to reward dedication and hard work or terminate an employee who will not perform regardless of the training and guidance that employee was given. A poor performer lowers team morale and efficiencies. Just because that poor performer is a “body” that fills a role doesn’t mean they should be there.
In order to recruit and maintain the best possible employees, be true to your culture, be faithful to your team, be there for them every day, get your hands dirty, never say “that’s not my job,” and understand that an extra percentage point or two in higher labor cost can and will lead to a better guest experience — which, in turn, increases revenue and profitability.
By combining improved communication, modern technology and first-hand experience on the frontlines, your restaurant can find long-term growth and continued viability.
Mark Moeller is founder and president of The Recipe of Success, a national restaurant consulting firm. For more information, visit recipeofsuccess.com.