Five Tips to Minimize Super-Sized Labor Costs

Restaurants are feeling the bite of high labor costs, thanks to increased minimum wages, staff shortages, and high employee turnover that is outpacing other industries. Luckily, there are a number of strategies owners can take to minimize the amount payroll gobbles up. 

1. Invest in Technology

The simplest way to reduce labor needs in any business is to use technology to streamline and automate processes. Replacing manual tasks and having employees do more in less time can help QSRs reorganize their teams to reduce hand-off delays and combine similar tasks to eliminate redundancies. 

One smart idea is investing in software that can schedule employees’ working hours, manage HR processes, prepare payroll, analyze labor data, and monitor employee attendance. In addition to reducing the number of hours management would have to spend attending to all these tasks, software can help increase employee satisfaction, such as eliminating “clopens” (when an employee closes at the end of the business day and then opens the next morning) and reducing overtime.

Smart fryers and ovens can automate food preparation and cooking, eliminating the need for numerous workers in the kitchen while still ensuring consistent quality and faster service. Introducing automated dishwashers and robotic floor cleaners will save employees from washing dishes and mopping floors. These machines will save time and usually do a more thorough cleaning than their human counterparts.

Self-service kiosks can maximize the number of on-premise orders while mobile apps or websites allow customers to place orders directly without staff intervention. These options also offer contactless payment solutions and integrated point-of-sale systems which can track sales and eliminate the need for manual cashiering.

2. Enhance Retention

The Cornell University Center for Hospitality Research estimates that losing a front-line employee costs fast-food venues an average of $5,864 per person. These expenses include money spent on recruiting, hiring, and training new staff, and lost productivity. The restaurant industry has the highest employee turnover rates, with an average of 6.1 percent compared to other industries’ rate of 4.9 percent. Put those two statistics together and you have an expensive revolving employee door costing thousands of dollars each turn.

One of the key drivers of employee churn is low wages, so providing competitive salaries and other benefits is a good place to start. However, money isn’t everything and some employees are more concerned with a work environment where they feel valued for their efforts. Management can create a positive work culture with a balance between personal and professional lives with these steps:

• Providing opportunities for professional development

• Listening to feedback
• Involving workers in decision-making processes
• Avoiding micromanagement
• Offering flexible work arrangements 

4. Train Employees

Training increases service speed and instills multitasking skills in employees, maximizing productivity without needing to hire additional staff. For example, a worker who usually serves 15 guests an hour could attend five more after training. If a franchise needs four employees to serve 60 customers per hour, they’ll require only three skilled staff to complete the same task.

The hospitality sector is among the leaders in the skills-based revolution currently reshaping different industries, making QSR employees open to upgrading their skills at some point in their employment life cycles. With training, employees are more likely to be considered for promotions or better-paying opportunities in the future, making them less inclined to job-hop.

A well-trained workforce is also less prone to mistakes, reducing rework and saving costs of correcting errors. Proper training enhances safety and reduces costs that could have otherwise gone into lost workdays, medical expenses, and workers' compensation.

The short-term costs of a comprehensive training program may be high but the investment will pay handsome dividends in the long run.

5. Hire Temporary Workers

Employing temporary staff can significantly save on staffing costs while maintaining peak productivity in several ways. Working with a temp agency gives QSR owners access to a wide pool of skilled individuals available to work immediately, without investing in hiring processes, saving on the costs of advertising the job opportunities, screening and interviewing candidates, dealing with bad hires, and any possible resulting legal issues. 

Temporary staffing helps save on training costs as the staffing agencies are responsible for designing, delivering, and reviewing training programs. The costs of learning and improvement are also the agencies’.

Franchises can hire temporary workers with the help of staffing agencies or third-party providers. These workers are considered employees of the staffing agency, not the client company ie the restaurant, thus relieving the QSR of the burden of the temporary workers’ payroll, benefits, and taxes.

3. Hire EB-3 Workers

Four years have passed since COVID-19 shook the labor market, but the hospitality industry still struggles to fill vacant positions, with nearly one million openings as of July 2024.

Data from the Bureau of Labor Statistics shows restaurateurs have little control over the national or local labor force, meaning they may have to hire from outside the country. One effective way of accessing a long-term and consistent supply of entry-level, motivated foreign workers is through the EB-3 visa program, a government program helping employers recruit skilled or unskilled workers from other countries.

Sponsoring an individual to live and work in the United States builds trust and loyalty, encouraging retention and reducing frequent employee replacement costs. Additionally, hiring EB-3 workers aids in solving the costly issue of understaffing due to the labor shortage.

Qualifying for the EB-3 visa program requires employers to meet certain eligibility criteria and obtain a labor certification from the Department of Labor demonstrating that, currently, there’s no qualified US worker for the position.

Next is submitting an I-140 Immigration Petition for Alien Worker on behalf of the person who wants to apply for an EB-3 Visa. Once approved, the employee files to become a lawful permanent resident, enabling them to work for the sponsoring company for an indefinite period.