Is the Labor Shortage a Wage Shortage?

COVID-19 has transformed the restaurant industry in so many ways, from shutdowns to supply chain issues to accelerating the move to off premise dining. Now we are in the middle of The Great Resignation, which saw record numbers of Americans quitting their jobs.

These resignations, 4.5 million Americans in November 2021, ultimately have seen 3% of the workforce quit their jobs, with that figure estimated to be double in hospitality. Hospitality is the lowest-paid industry, and many employees saw opportunity in the workforce disruption to move to higher paying jobs in other industries.

It may be that restaurants are not facing a shortage in labor, but a shortfall in wages necessary to keep employees at a time of high disruption. However, in an industry notorious for thin margins, how are operators supposed to compete?

Restaurants must focus on better managing controllable costs, including food and labor, to increase their margins and stay competitive with increased wages. Restaurant technology can help operators use data to reduce expenses and find efficiencies to stay profitable in this new normal. 

Build Actionable Information with Data

Many operators are not collecting data, instead relying on their managers’ gut instincts. Among those who do collect data, it is often collected manually on clipboards, which are then transcribed to spreadsheets, which are then compiled into regional or brand-level data weeks, or even months, later.

For all the talk of data-driven decisions in restaurant technology, that data needs to be easy to collect, easy to access and easy to understand to be actionable. One way operators can do this is by looking into modern, integrated tech tools. Ensure the tech stack talks to each other and the data is going into a centralized data warehouse.

With well-built reports, restaurant operators will be able to see real-time data from across their tech stack and get the key information they need to be proactive, catch problems early, and run a profitable restaurant.

Make Inventory a Best Practice, Not an Afterthought

It’s one thing to know you should be doing daily inventory on your top 10 items and a full weekly inventory, and it’s another thing entirely to actually do it. Far too many stores let inventory slide when there’s a crunch, which is a recipe for spiraling food costs.

I have talked to operators who didn’t realize how much food was walking out the back door until they did regular inventory. Or a client who didn’t realize why food costs were off in one store until they took a closer look and saw that store’s employees were significantly overportioning a popular item. It’s only through making inventory a regular practice, rather than eyeballing the shelves, that you’ll uncover things like this.

Cut Your Food Waste

No one wants to be wasting food, but without consistent, easily accessed inventory data, many operators don’t know how much is going to waste. Better inventory ensures each location can order more accurately for their needs.

And restaurant tech can help cut waste in other ways. Predictive prep tools take the guesswork out of how much of each item needs to be prepped and when. This helps avoid food spoiling, as well as having too much prepped food left at the end of the night that will just get thrown out.

Paired with good reporting, a strong inventory system lets operators spot variances between restaurants that may indicate training problems or theft.

Build Schedules on More than a Gut Feeling

No matter how good your managers, there’s still too much guesswork involved in manually creating schedules. Instead, a strong labor and scheduling system will help the manager automate scheduling by using sales data to predict needing staffing.

This is not just helpful for long-time managers, but also avoids the inevitable spike in labor costs every time a new manager starts and doesn’t know the store well yet. Even with managers that have been in the industry for years, I see stores able to save hundreds each week on labor once they start making data-driven decisions.

Automate Where Possible

It’s easy to get comfortable in what’s been done for years. But it’s not always what’s best for your bottom line. Automating processes that were previously done on spreadsheets or with pen and paper not only gives you more accurate data but makes those processes easier and simpler in the long run.

Operators don’t have to abandon a system that works well but bringing those systems up-to-date and optimizing them with technology will pay off in the long run.

After two years of pandemic disruption, many brands are just rebuilding their technology budgets and may be hesitant to purchase something new. However, effective restaurant technology should pay for itself in business insight gained and costs saved on food and labor. This will allow operators to maintain their margins while staying competitive in a tight market.