Now, with labor shortages and with growing economic strains, operators are forced to rethink their operational models yet again. The National Restaurant Association conducted a recent survey and found 85% of operators say their restaurant is less profitable now than it was before the pandemic, due to rising food and labor costs.
It’s right to pivot again and focus on how to increase revenue. We’ve found restaurants typically lose 10–25% of gross revenue per store when they cannot staff properly against demand, as seen in the countless stories of restaurants having to reduce hours in response to labor shortages.
Attracting and retaining employees is the right place to start. Operators can adapt and succeed in this labor-challenged market by considering these three keys to winning the battle for talent.
1. Hire Fast and Hire Well
Remove top-of-funnel friction to reduce drop off and increase applicant flow
Trust your managers - Stop having them review every application and support their hiring decisions
Deploy smart technology to keep the momentum
When demand is greater than supply, the competition for labor is fierce. So hiring must be about reducing friction and making the process of applying, interviewing, and hiring faster, smoother, and easier than ever. Phone calls and drop-ins are a thing of the past. Most applicants crave quick communications via text and aren’t willing to jump through too many hoops. Increasingly, we tell our clients that in today’s battle for talent, they need to decrease the time from first contact to offer by 90%.
One way to begin is to reduce the top-of-funnel friction. With the right technology, operators can greatly accelerate this process. For instance, 95% of hourly workers use a mobile device for their job searches. Meaning, communicating via text or email – all through an applicant tracking software – reduces the application process time and improves engagement with the candidate.
In addition, managers can speed up the application process by relying on technology to do the heavy lifting for qualifying candidates. With a few pre-determined questions, the system can easily select who moves on to an interview and managers can schedule them with a click of a button! Once it’s time to make an offer, managers communicate in real time without running back to their desktop to respond or send an offer letter.
With this technology, the candidate’s experience flows seamlessly, and the manager isn’t spending hours sifting through applications, scheduling, and onboarding. In a tight labor market, these tactics keep the momentum required to attract candidates away from competitors and set the stage for success once they become employees.
2. PUT EMPLOYEES IN THE DRIVER SEAT
Real-time team member communication and feedback
Real-time access to pay and goal-based savings
Leverage data to minimize turnover
Restaurants can use a lot of great technology to engage and connect with their customers in order to serve them better and provide the best experience possible. But how do restaurants match the same passion they have for their customers’ experience with their employees?
When employees don’t feel like their needs are being met or fairly considered, employee turnover rises – quickly. We’ve seen some restaurant chains with a 300-400% churn rate with their hourly staff, and it wreaks havoc on their operations and profitability.
Engaging and connecting with employees is vital, so that they can better manage their life. How easy is it to drop, pick up, or swap a shift? How long does it take to get a manager’s approval? Are their availability needs being considered? How fast are they getting paid?
By providing employees with consumer-grade technologies for scheduling, they have a two-way feedback mechanism with their managers – and they can pick up or swap shifts – all from an app. And managers gain more predictability and better communication with their team members so they can effectively run their business at maximum throughput.
Earned wage access (EWA) is another strategy that is increasingly important, especially as the cost of living continues to squeeze most households. If employees are paid as they work, versus waiting two weeks for a paycheck, they are less likely to let financial stress impact work performance. EWA also equips them with new tools to set goals and manage their finances, ultimately creating more financial freedom.
It’s a true win-win.
Employees have greater financial control, and operators can proactively target high churn rates. By paying employees on demand and giving them personal financial management tools, managers create an environment where team members want to stay. In fact, 85% of employees said they’d stay with their current employer if they had access to their earned wages. We also found that employees who have earned wage access pick up more shifts.
By equipping employees with the tools and resources they need to feel valued and heard, managers also benefit from a predictable labor pool so they can effectively run their business.
3. More Predictability Leads to Higher Profitability
Maximize throughput - apply analytics to determine optimal operating hours
Maximize revenue - use data to deploy best team members against highest revenue shifts
Demand forecasting empowers managers and staff to do what the love best – excellent customer service
There is nothing more frustrating to a restaurant manager or employee than having a restaurant full of staff standing around waiting for customers. Or conversely, a restaurant of paying customers, and not enough staff to serve them – a situation that many operators have been grappling with in recent months, as they have been forced to reduce operating days and hours due to understaffed shifts. Resulting in the question: how do they deploy limited labor resources against the best opportunities for revenue? Or asked another way: how do they know which are the best opportunities for revenue?
To answer this and maximize restaurant throughput, operators need to know when to open, when to close, and how to maximize revenue by optimizing team member deployment. Managers can’t simply copy schedules from one week to the next if they plan to survive in this new labor model.
With the right business analytics, managers can now draw on an accurate demand forecast and match the number of employees to the predicted volume of customers. This data helps operators know when they have the best opportunity to bring in revenue and then staff their team against those opportunities. With these advanced tools at their fingertips, they make the most of their labor pool, without the risk of over or understaffing.
A sophisticated demand forecasting tool factors in data like last year’s sales, the previous eight week's, weather, local and national events and more, to generate a detailed prediction into eight weeks in the future. With this information, managers can schedule teams to work in the right place at the right time, enabling the best and most attentive service possible.
We believe that demand forecasting is the fundamental starting point to building a schedule and culture, resulting in increased sales, happier customers, and engaged employees.
Final Thoughts
There’s no shortage of challenges for restaurants today and no single solution that can solve each one. Addressing labor shortages requires an integrated and layered strategy. The restaurants that figure out how to do this will ultimately come out on top.
By taking advantage of technology solutions to improve how employees are hired, scheduled, and paid, operators can create the stability they need to focus on recapturing lost revenue. Plus, by embracing what makes employees happy with smart solutions, managers win the hearts and minds of the very people who keep their customers coming through the doors!
If these past few years have taught us anything, it’s to expect the unexpected. That’s why we’re passionate about building layers of predictability and efficiency where possible. As we pivot again, instead of concentrating on surviving its time to focus on utilizing the right tools and technology to thrive in a new era of labor management.
