The statistics on American wealth are ugly: Most Americans are living paycheck to paycheck. More than half of all Americans have less than $1,000 in their bank accounts.
Things are especially hard for people who earn at or just above minimum wage, a segment that includes many fast-casual and quick-service workers. Add to that the fact that the jobless rate in the U.S. this year hit a 49-year low, and you get a difficult market for limited-service restaurants to recruit and keep talented workers.
But some brands are recognizing these challenges and responding with new tools for expedited pay that allow their employees more flexibility around when they access their wages. And there are some signs that these new tools are helping improve important measures like employee retention and morale.
One such tool, called DailyPay, has been growing in popularity with many big-name brands, including Captain D’s, Burger King, Taco Bell, and KFC, DailyPay spokesman Karl Pawlewicz says. He describes the technology, which can be accessed as a phone application or on the computer for employees, as an “ATM for employee earnings.”
“Through an automated data feed with an employer’s payroll and time-management system, DailyPay creates a real-time earnings calculation for each employee,” Pawlewicz says, adding that if an employee transfers funds from their available balance, they pay a one-time fee—$2.99 for an instant transfer or $1.99 for a next-day transfer. The money is transferred to that employee’s bank account, prepaid card, or paycard.
Captain D’s recently rolled out the DailyPay service to all 290 of its corporate-owned stores, says Ann Sizemore, vice president of human resources for Captain D’s.
She says she’s heard from employees who think it helps them better manage their finances. “There’s a variety of things they’re taking out money for. … Certainly people have taken advantage of it to catch up on bills,” Sizemore says. “We have seen it used for medical expenses, including for their children—that’s a big one—and we’ve also had some employees talk about having their eye on a purchase that they hadn’t been able to afford before.”
Sizemore adds that she believes DailyPay has helped Captain D’s reduce the turnover rate of its employees. By all accounts, the turnover rate in most restaurants in the U.S. is very high, with the hospitality sector’s turnover rate topping 70 percent in 2016, according to data from the Bureau of Labor Statistics.
That employee turnover comes with a real cost. DailyPay’s Pawlewicz cites a 2016 survey from the Society for Human Resource Management suggesting that the average cost-per-hire for a company is $4,219, which goes out the window when an employee leaves.
Paulewicz also points to data from the second wave of Captain D’s stores that had implemented DailyPay, which found that the 30-day turnover rate at those Captain D’s stores that had DailyPay was roughly 66 percent lower than the average turnover rate for other stores.
Sizemore also believes that DailyPay has led to employees being more willing to pick up extra shifts because they can check their balance using the app regularly, and more accurately consider the cost-benefit of picking up that shift.
Church’s Chicken is preparing to roll out a similar suite of technology to all of its locations from an Atlanta-based company called Instant Financial. Dan Krieger, vice president and controller at Church’s Chicken, explains that the program is designed to allow employees to receive half of their earned pay immediately on the day after their shift. There’s no extra cost to employees to utilize this service.
Karen Viera, vice president and chief people officer at Church’s, says the technology is important to Church’s because it allows employees “flexible access” to their pay. “Access to their pay matters when they need additional funds for any reason—a car breaks down, unexpected medical expenses, a security deposit to move into a new apartment, tuition or school expenses, any number of real-life situations,” she says.
She adds that the practice of using this technology can help cut down on some employees’ potential need to utilize pay-day or other high-interest loans.
“The ability to avoid pay-day loans and cash advances at interest rates that only worsen financial difficulties is a positive step forward for workers in this field,” Viera says.
Captain D’s and Church’s leadership teams both find that the use of payment-timing technology is a booster for attracting more potential hires.
“We do view this service as a competitive advantage,” Viera says. “People want to work at a company that implements programs that provide services that employees find beneficial and that incur no cost to them. These types of initiatives offer flexibility and control, both of which enhance morale and can make life just a little easier.”
Pawlewicz says a 2016 DailyPay study found that a job ad offering “daily pay” saw almost twice as many applicants for a job ad offering “weekly pay.”
A case study highlighted two Captain D’s stores in Panama City, Florida, that were destroyed by hurricanes Irma and Michael in 2017 and 2018. “As businesses rushed to renovate and reopen, it created a sudden influx of job availability,” the study found. “This recruiting crush, coupled with a reduced applicant pool … created a hyper-competitive job market.”
Captain D’s used DailyPay to help market itself to potential employees. At its first big job fair after the hurricanes, Captain D’s ended up with 391 applicants and hired 89 new employees, the case study states.
“When it’s a benefit that only we offer, employees think twice before walking out the door. Leaving their job means leaving their daily payment option,” Sizemore says.