If you're struggling to staff your restaurants, know that your operation isn't alone. The U.S. is facing a critical labor shortage, particularly hourly restaurant and hospitality workers. "The Great Resignation" that ramped up over the summer saw more than 706,000 food service workers leave their jobs in restaurants, dining facilities, bars, and hotels during May alone.
An inordinate number of eateries are closing early or altogether because of the severe labor shortage; there aren't enough workers to keep the doors open. It's not just impacting small franchises or mom-and-pop outfits. Even well-funded university dining halls are closing their doors. Vanderbilt University charges roughly $80,000 in tuition annually and still had to shut down its largest dining hall for dinner service.
It's time for restaurant operators to look hard at why their servers aren't showing up and solve that issue for the short and long term.
The Real Reason Servers Aren't Showing Up
Many believe the real issue is people not wanting to work driven by the extended, pandemic unemployment benefits that supported workers for the past year. Recent labor reports prove this isn't true. Workers have left the restaurant industry to find work elsewhere, not collect unemployment. Thirty percent of former restaurant workers are now in office positions, while many others have found employment in high-growth areas (and recently increased hourly wages), like warehouse and logistics jobs.
It turns out that many of your former staff are still working, just not in the restaurant industry. So what pushed them to leave?
- Pandemic pressure: After more than a year of working in an environment fraught with uncertainty and panic, front-of-house staff got fed up with the lack of employee rewards, high risks, long hours, and low pay.
- Low pay: Restaurants have an unfortunate history of underpaying and overworking their employees. The average server salary in the U.S. is just $19,076 per year, while the living wage for a single adult is almost $32,000.
- Reduced tips: As workers who rely primarily on tips, the pandemic was devastating for server income. When indoor dining shuttered, many restaurants transitioned to curbside pickup. Despite etiquette experts encouraging patrons to stick to the 20 percent tip rule, pickup customers typically left an average of $5 or even nothing at all.
- Diminished earning power: Before the pandemic, servers felt they had at least a limited degree of control over their income. Improving their tableside service or picking up extra tables allowed them to increase their tip-based take-home pay. That's near impossible now, with many restaurants operating on reduced hours or running on a skeleton crew.
How Tight Profit Margins Prevented Solutions
In the best of times, restaurants have operated on thin margins to offer competitive menu pricing. These already narrow margins were made even tighter by pandemic dining restrictions, and with rising food and utility costs, they're likely to remain slim.
Restaurant operators recognize that server compensation must improve to attract workers but feel their hands are tied. How can they invest in attracting staff when their revenues have taken such a hit?
Some operators are taking the financial risk, offering wage increases for front-of-house staff. Portillo's, the fast casual chain known for its hot dogs, increased hourly rates in a handful of markets and extended $250 hiring bonuses. Despite these actions, Jodi Roeske, Portillo's vice president of talent said, "We are absolutely struggling to get people to even show up for interviews."
If signing bonuses and hourly wage increase aren't enough, what else can operators do to attract and retain a workforce that will support their bottom line and keep them running?
Employee Rewards Offer the Best Chance of Server Acquisition and Retention
Employee rewards programs are arguably one of the most valuable tools the restaurant industry can invest in to attract labor and expand profit margins. Making sales incentive programs a standard operating procedure creates an empowering environment where servers will want to work. When restaurant revenues are linked to employee rewards, servers feel greater control over their income potential and quality of life. They understand that ringing up larger tickets will ultimately benefit them and the restaurant they work for.
Restaurants that want to launch sales incentive programs will find they are most successful when using a campaign management platform specifically designed to reward workers. When evaluating potential platforms, here are three important things to consider:
Does it integrate into my existing POS system? To run campaigns in real-time, you'll need an employee rewards delivery platform that seamlessly plugs into your current POS system. No one has time for clunky interfaces or integrations that don't sync up with the tech already in place.
How does it communicate with employees? Servers are busy and have little time to look at a phone during shifts. Look for employee reward platforms that deliver campaign alerts and post-campaign rewards via SMS versus an app that could be distracting. That ensures servers spend more time selling and less time scrolling and swiping.
How can I measure the success or failure of reward campaigns? Choose a platform that helps you quickly identify and understand why specific campaigns worked well, and others didn't. Look for one with an easy-to-use interface that can organize performance data by server, menu items and more. That data will help you build out future campaigns using winning elements from past ones.
In today's challenging labor market, employee rewards platforms can fundamentally change the restaurant sector's workforce economics, addressing historically low retention rates. Restaurant owners require a workforce that's engaged, not just showing up to clock in and out. Offering employee rewards and incentives is a much- needed approach to compensation that can increase restaurants' profit margins while motivating and improving the quality of life for workers.