Restaurant operators know that turnover is just part of the service industry, but today’s market is increasingly competitive. Ask any general manager and they’ll tell you hiring, training, and retaining restaurant staff is their number one pain point in 2019.
There’s a massive labor shortage, and service industry workers are bouncing from job to job. With a national unemployment rate around 3.5%, service industry workers are using those numbers to their advantage. The National Restaurant Association estimates total industry sales will peak at $863 billion in 2019, up 3.6% year-over-year, according to CNBC. While it’s obviously good for the country, restaurants are struggling to keep up with high demand from customers amid staffing shortages.
According to Bloomberg, food sales rose 1.3% in July 2019 to $61.6 billion. We haven’t seen an uptick like that since 1992. The Bureau of Labor Statistics projects 14% growth for “food and beverage serving and related workers,” and the restaurant industry is poised for a 6% growth over the next decade. While these numbers are high, the turnover rate is at a staggering 75%. According to The Bureau of Labor Statistics, the restaurant industry will need somewhere around 150,000 more cooks by 2026 than we have in today’s market.
In the past, a manager had the teen workforce at their disposal, but the number of teens in the labor force is predicted to drop by 660,000 over the next decade. Thanks to Internet culture, kids are trying to go into business for themselves and are stacking up volunteer opportunities and community service gigs that look good on college resumes.
Another challenge to the hiring pipeline is the slowdown of immigration entry. It’s no secret that a huge percentage of restaurant workers are foreign-born, and the cap on the number of HB-2 visas approved equates to longer lines. Baby Boomers who are bored post-retirement are picking up some part-time jobs to get out of the house, but not enough to offset the labor shortage set up by the two other contributing factors.
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Finding new ways to hire and, more importantly, retain is essential. There will be ups and downs for restaurants moving forward, but it’s all about how management can steer the ship through troubled waters. In 2020 and beyond will be an era of change for the restaurant service industry, and it’s best to get ready as soon as possible.
There are smaller steps that a restaurant can take to invest in its people. Retention is obviously the goal. Churn affects profitability but also throws a wrench in the gears of culture.
Are you running a restaurant where people actually want to work? Are you managers compassionate leaders instead of taskmasters? Are you open to new strategies to get the best out of your team? Most people don’t want to be managed; they want to be led. There’s a critical difference. Leaders must find ways to solve problems rather than attacking people when something isn’t going right.
By investing in a mentoring culture, one that sees all employees as valuable members of the success of the restaurant, people will grow. A restaurant staff works best when experienced people are locked in and care about one another and the business. This can only happen if management is transparent and willing to accept they have to do their part in keeping employees engaged and happy. As many business books have cited, “people don’t quit jobs, they quit managers.”
Managers who are passionate and caring demonstrate energy and create enthusiasm. When someone new joins the team, it’s essential to give them a warm and informed first day. Onboarding isn’t just something for corporate America. Give people a full view of what success looks like by being a manager that cares, one that people love to work for.
If there’s a restaurant that’s killing it with retention and profits, find out what their secret is. Make a list of the places that are routinely doing well and ask the competing manager to sit down for a drink; they might have a strategy you’ve never thought about. Most people love to talk about their successes, and they might learn something from you as well. It can’t hurt to ask and you’ll be surprised how many people say yes.
Servers want to work where they’ll make money. Cooks are typically driven by experience and prestige. One of the smartest things a restaurant can do is offer above minimum wage so the server can rely on steady cash for their check while living off their nightly tips. Right now, minimum wage for tipped workers is between $2.13 and $12.00, depending on the state.
Investing in employees from the ground up will give them a sense of loyalty. If people are leaving at an alarming rate, it might be a culture issue. But don’t wait around until people are quitting to tighten things up. Ask the current staff what’s going on and how you can improve things. It might be something small, but being armed with that information is valuable for the long haul. They’ll appreciate the transparency and willingness to see growth.
People really like health insurance; the same thing goes with paid time off. It’s cheaper to invest in existing staff than it is to lose someone, advertise new jobs, and work at a deficit, which results in ultimately losing money. Year-end bonuses, shift meals, profit-sharing, all of these perks show employees you care.
Some restaurant managers even take transparency a step further and implement open-book management, which creates a culture of ownership by showing how the restaurant is doing and how they impact results. This again fosters a team mentality and places a different kind of emotional value on the work getting done.
If you’ve tried everything and there’s still a shortage of good help, you’re not alone. We’ve talked about the worst-case scenarios, but it doesn’t have to be that way. In the past, restaurants had to rely on unreliable staffing agencies. Adia is an on-demand staffing platform that’s helped a lot of restaurant managers when they’re short-staffed and need help ASAP.
Traditional staffing is a flawed process. They cast a huge net and hope to snare a few decent workers. With Adia, everything is app-based, there are no contracts, no red tape: it’s an immediate relief for a restaurant manager. GMs set the hours, the pay, and have visibility into the roles being filled in real-time. Because of the current market economics, the gig economy is thriving. People who don’t want to be tied to an everyday job are working when they want, but also helping out companies in the process. This is good for the service industry because if you’re short a bartender or server, there are experienced service industry professionals ready to pick up gigs.
2020 is going to be interesting for the service industry. Only time will tell how the market and the restaurant industry adjust to moving forward. Until then, restaurant managers will have to get creative to keep business moving.
How can you train and retain your restaurant staff? Learn everything from training to compensation to engagement with this comprehensive guide. The best part? Performance will improve with this process.Download The Guide
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