Restaurant operators foresee the labor market loosening somewhat in 2023, although hiring and retention will remain challenging for the industry overall.
The December Business Conditions Survey from the National Restaurant Association reported that 89% of operators said labor costs are a significant challenge, and 62% don’t have enough employees to support existing demand.
The survey found that operators are actively looking to boost staffing levels, with 87% saying they will likely hire additional employees during the next six to 12 months if there are qualified applicants available. However, 79% of operators said they have job openings that are difficult to fill.
Operators contacted by NRN said they are approaching the tight labor market with a focus on providing a rewarding experience for their employees, while at the same time streamlining operations to minimize their labor costs. They are leveraging technology solutions and process redesign that not only have the ability to enhance the guest experience and drive increased sales, but also can remove some of the pain points that workers encounter in the course of performing their jobs.
These operators are optimistic about their prospects for attracting and retaining labor in the year ahead.
“I think some of the impacts of the COVID environment — the stimulus checks, the remote work — will start to go away, and we’ll start to see some normalization of the labor market,” said Joth Ricci, president and CEO of Dutch Bros Coffee. “I’m actually a little more bullish on the labor market for the industry this year than the last few years.”
Dutch Bros, one of the fastest-growing concepts in the foodservice industry, has navigated the tight labor market with minimal disruption thanks to its strong corporate culture, a promote-from-within philosophy and enjoyable work environment, he said.
The company has what Ricci described as one of the lowest turnover rates in the industry and is very selective in its hiring — bringing on board only about one in every 25 job applicants, he said.
“You have to be a high-quality employer that takes care of their people, and that pays very competitively in each marketplace,” said Ricci. “You've got to treat your people well, and you have to empower them to make decisions.”
Part of the appeal of working at Dutch Bros is that every employee can do every job in the restaurant, so workers tend not to get bored doing the same tasks every shift. In addition, the company takes pains to ensure that the environment in the restaurant is enjoyable, with music playing plus free apparel and free drinks available, as well as the ability to earn tips on top of their hourly wage.
“You get to be part of something at Dutch Bros,” Ricci said. “I think that's an environment that the company has fostered for the last 30 years.”
Even so, the company still has to pay competitive wages, he said, noting that as of Jan. 1 the company implemented a $10 minimum wage in all states that don’t have a minimum higher than the federal rate of $7.25.
Maintaining open communication at Smokey Bones
Likewise, Hal Lawlor, chief operations officer at Smokey Bones Bar & Fire Grill, also said that investing in being an employer of choice has helped Smokey Bones navigate the labor environment of the last few years.
The company has found that maintaining ongoing communication with workers has helped fuel the success of its labor strategy. For the past several years Smokey Bones has been engaging with its employees at its restaurants and its restaurant support center with Great Place to Work surveys, which has helped the company glean actionable insights from employee feedback.
In addition, since the second week of the pandemic, the company has been conducting “town hall” meetings for managers every Thursday, providing business updates and soliciting feedback through question-and-answer forums.
“We've found that it's been very beneficial,” said Lawlor. “We provide a safe forum for people to ask questions and even push back on initiatives within the organization in a safe way.”
The company also encourages back-and-forth dialogue in other ways, such as through informal, one-on-one “coffee chats” in which workers are asked what they enjoy about working at Smokey Bones and what they would like to see changed.
The company is also in the process of evaluating new training platforms for both management and hourly workers, Lawlor said, with a goal of having them in pilot tests or in rollout by the second half of the year.
Monigo Saygbay-Hallie, chief people officer at Checkers & Rally’s, also said her company’s culture has been key to its success in attracting and retaining workers. That includes opportunities for advancement within the company, which can include progression from hourly worker to manager and eventually store owner. She cited multi-unit franchisee Bruce Ong, one of the most successful operators in the Checkers & Rally’s system, as an example.
“We offer a seamless path from team member to general manager in less time than it takes to graduate from a four-year college,” she said.
Other employee-focused incentives offered at Checkers & Rally’s include immediate benefits for all part-time employees for as little as $15 a month for employees and their families, free English classes for non-first language speakers, and free GED classes and certain college courses. The company also rewards its top-performing general managers with a Caribbean cruise.
“While the past year has posed its challenges, we’ve seen an improvement in our ability to find and retain store-level workers,” said Saygbay-Hallie.
Technology that improves the worker experience
Technology that helps automate some processes is also helping improve the labor experience at Checkers & Rally’s, said Saygbay-Hallie. The company’s rollout last year of voice-activated ordering using artificial intelligence at company-owned stores stands to improve the worker experience by streamlining the order-taking and fulfillment processes, she said.
“In addition, with a 96% accuracy rate, the system has alleviated stressors and other pain points that can come along with multi-tasking in the restaurants, allowing team members to have more meaningful interactions with guests and making their jobs more doable and enjoyable,” she said.
Technology implementations have also been an integral aspect of Smokey Bones’ efforts to attract and retain the best workers, Lawlor said. These include both labor-management tools, such as HotSchedules, and tech solutions that can make workers’ lives easier and more rewarding, he said.
HotSchedules, for example, which the company introduced about two years ago, allows frontline employees to be more involved in their own scheduling, with features such as the ability to swap shifts with co-workers.
“It helps you engage with your frontline employees at a higher level, and also helps drive your labor productivity,” said Lawlor.
In addition, Smokey Bones has begun using Wisely, which provides reservation and wait-list management that serves to not only enhance the customer experience with tools such as text-based communication, but also improves the dining-room management experience for workers, he said.
Labor management in the kitchen has been an important element of Smokey Bones’ approach to handling the labor crunch. The company has taken a multi-pronged approach, leveraging technology to drive efficiency while at the same time driving increased sales using existing labor. That includes growing the chain’s catering operations, for example, as well as its collection of four virtual brands, which are prepared alongside its in-house menu using the same production line.
Late last year, the company launched a “virtual food hall” called BiteHall that includes The Wing Experience, The Burger Experience, Bowl Market and Tender Box virtual concepts, in addition to the Smokey Bones menu.
The company also expanded its kitchen display system (KDS) functionality to include off-premises orders, which has helped the company minimize its error rates and reduce job complexity for back-of-house workers, Lawlor said.
Likewise, Dutch Bros workers have also embraced technology at that chain, Ricci said, especially the company’s mobile app.
“Our teams love it, and that’s the reason it’s been so successful,” he said. “Our people know that it helps them do their job better for the customer.”
Streamlining operations and design
Operators are also investing in operational and design changes intended to yield better experiences for both workers and guests.
For example, last year, Checkers & Rally’s introduced its Restaurant of the Future concept, which included the launch of “FIT Kitchen,” a back-of-house redesign initiative that is seeking to foster a more comfortable work environment, easier order taking and more efficient service.
“The new layout now saves Checkers & Rally's crew members a combined 1.5 miles of walking every hour,” said Saygbay-Hallie.
In addition, the company is revamping several pieces of kitchen equipment and improving its cooking processes — replacing flattop grills with clamshells, for example, expanding the capacity of fry and grill stations and removing the final frying processes on most products for faster service.
“Through these advancements, the Checkers & Rally’s team has leveraged technology, advanced equipment, and layout to improve the comfort and ease of the employee experience,” Saygbay-Hallie said. “Everything truly starts with our teams. If our people are happy, invested and productive, our guests are more likely to enjoy their experience as well. This is top of mind for the year ahead.”
Smokey Bones has also revamped some of its kitchen processes to save hours and is in the process of optimizing its menu with an eye on containing labor costs while at the same delivering a better experience for customers, Lawlor said.
“This year is really going to be a year of improved execution,” he said. “We've spent the last 18 to 24 months responding to the pandemic. We’ve invested in platforms like BiteHall, and now we’re looking at leveraging that to maximize the returns.
“There is opportunity in how we execute food production in the restaurants and making sure that we utilize people more cross-functionally in the kitchens when it comes to food production,” he added. “We still believe there's more efficiency to be founded in that area specifically.”