The employee shortage might be temporary, but there are ways that your business can attract talent now and retain a competitive advantage in the future.
There are more jobs than ever before, yet restaurants are struggling to attract employees. The number of workers quitting their jobs in April reached new highs of four million, with 5.6% of restaurant workers quitting their jobs. At the same time, restaurant job openings hit a new high of 1.34 million job openings in April.
We are now in a market that favors employees and that means that restaurant owners will need to get creative to attract top talent.
High Turnover Rates Have Real Costs
Traditionally, the restaurant industry has a significantly higher turnover rate than other industries. A study in 2018 found that the average restaurant has a turnover rate of 74.9 percent compared to the private sector average of 46 percent. In fast food, the picture is even worse, with turnover rates of 130 – 150 percent annually.
This has a very real impact on your restaurant's bottom line. The average restaurant loses $150,000 annually due to staff turnover. Losing a front-line employee, the category of worker most likely to quit, costs around $5,864.
Rising food prices and staff shortages mean that there is a huge financial incentive for restaurant owners to minimize turnover. To do that you need to understand why employees are quitting and why hiring now is so difficult.
Restaurants Need to Adapt to Shifting Demands
The knee-jerk reaction to the labor shortage is that people simply “don’t want to work”. There is anecdotal evidence that boosting unemployment benefits means that people don’t see low-paying restaurant jobs as worth their time. Both of these reasons create a convenient narrative — that it’s laziness causing the crisis — but they miss the real problem.
There are many reasons that restaurants are struggling. Many restaurant workers have found positions in new industries during lockdown. This shift has also coincided with a demand for remote work: 60% of applicants would now prefer a position where they can work remotely.
Some employees want to work but can’t due to childcare disruptions. In the second half of April, a US census survey found that nearly 1 million households had at least one adult who could not look for work because they needed to look after their children.
This childcare dilemma is compounded by the fact that bars and restaurants are all hiring at the same time, effectively competing for a smaller labor pool than they were pre-pandemic. In effect, we are in an employee’s market. Many restaurant owners are not used to a situation where employees hold better cards and it will require a shift in hiring practices.
Restaurants May Need to Offer Higher Salaries
Even as unemployment benefits are phased out, restaurants may find that they can’t attract talent with pre-pandemic salaries. The US workforce has become increasingly mobile and the more opportunities for remote work means that restaurants are competing with more industries for employees, many of which may offer higher salaries with more flexible work.
This migration means that restaurants offering lower salaries may find themselves ignored by workers, a theme that has been picked up by many of the big players in the restaurant industry. McDonald’s is now offering entry-level workers $11 an hour and the company is seeking to increase the average salary in its restaurants to $15 an hour by 2024.
To remain competitive, restaurant owners will need to ensure that their offering is at least competitive with local competition — particularly bigger players who may offer worse employment conditions.
Another key will be to ensure smooth hiring processes. Applicants, even those you reject, should receive quick responses. The process you use should also ensure that the people you hire are a good fit for your restaurant culture.
Creative Benefits Can Set a Restaurant Apart
While you need a competitive salary to get interviewees through the door there are additional ways to attract talent. The exact approach each restaurant takes will depend upon the kind of staff they’re recruiting — and their unique problems.
For many restaurants, the lowest-hanging fruit will be childcare. Women in particular face unique challenges when juggling a restaurant career and childcare. If a restaurant offered free or reduced childcare this could provide a unique draw for prospective employees.
This isn’t just a theory and it has been done in practice. The New York restaurant west~bourne offered to subsidize all of its employees' childcare, enabling them to take on later shifts than they normally would. This benefit is uncommon among restaurants and could provide a way for restauranteurs to set themselves apart from the competition.
Restaurants have also tried ambitious, if unorthodox, attempts to attract and retain new talent. One McDonald’s restaurant has offered workers who stay for 6 months an iPhone and Chipotle has expanded its debt-free education offering.
Improving Employee Retention Will Be Key
The other side of this challenge is employee retention. That’s not simply because hiring is getting harder, but it’s also because high turnover can damage the atmosphere at your restaurant and make your team feel like they are temporary additions, rather than essential components to the restaurant’s success.
The key to improving retention is making the team feel like they’re valued. Part of this is regular salary reviews, to ensure that jobs remain competitive and part is creating team cohesion. An easy way to do this is to formulate an employee referral program for your staff. A bonus like this will ensure that new hires are already connected and a close-knit team is more likely to work well together.
Hard Work Now Will Give You an Edge in Easier Times
A restaurant is only as good as its staff. While it is difficult to attract talent right now, it isn’t impossible if thoughtfulness is applied. Restaurants who put in the hard work now will find it easier to attract and retain talent when things return to normal in the future.