It’s no secret that in the wake of the Great Resignation and the pandemic, the quick-service sector underwent growing pains. And, one could argue, contractions. This is not simply a matter of basic employee dissatisfaction and fatigue, nor is it just dollars and cents. Issues of diversity, equity, and inclusion have become key components in this current paradigm, especially when it comes to employee retention.
The National Restaurant Association’s State of the Industry report for 2022 found 78 percent of operators felt they did not have enough employees to support customer demand, with 70 percent noting they lacked mission-critical staff. And with increasingly high employee turnover rates, recruiting and retaining employees would be their top challenge.
A report issued last January, entitled DEI Initiatives for Miniat Companies, shined a further light. Incorporating data from different sources, the report made the case DEI is not just good for organizational health, but that it impacts a company’s bottom line. Companies that focus on DEI see improvements in work engagement, higher market valuation, increased profits, and yes, employee retention.
“I think the Great Resignation, COVID, social unrest, and gender inequality have given the opportunity for employees to have a voice,” says Kim Rubenstein, cofounder/research and product of Compatibility LLC, a company that aggregates data to match business mentors and partners for mutual success. “While companies really looked at employees to be loyal, I think now companies are being forced to become more human centric and really explore their loyalty. And making what's important to the employees important to them and figuring out there's a lot of dynamics. There’s a lot that we missed.”
As Rubenstein points out, some people look back at the seemingly “good old days” of employee and company unity before the pandemic. “I think they are fantasies of when we experienced where we were connected with people we felt were in our jam, doing our thing,” she says. “It may have been great individually. I don't know that collectively we've ever really seen it. Do I think economic times have been good and people have been employed? Yes. Did they have jobs or careers? When you look back, some people want jobs, some people want careers, and it really depends upon the lens of the person being asked.”
The tide is turning. Traditional Western corporate hierarchy previously tended to favor white male dominance to a one-size-fits-all model, but people are more diverse and have different strengths and needs. Racial, gender, and cultural diversity is a more critical issue now. The restaurant arena is also different than some other types of companies that have a private corporate environment—it also has a very public face involving daily customer interaction.
“I think the definition of value is shifting dramatically,” says Compatibility CEO John Kutac. “As we see the inability to hire, regardless of price point and retain, we're seeing a lot of private investment go into [quick service] and into glomming up a large number of what might have been franchise owned, or even company owned that might be struggling. But those basic value principles are not necessarily compensation driven. They're driven by a lot of other factors, and I think most companies need to make that breakthrough.”
Kutac was happy to see the commitment of larger corporations like Chipotle to becoming pioneers by “integrating DEI a part of their systematic policies and procedures internally,” he says. “They offer Employee Resource Groups, mentorship, and other programming to ensure a culture of an integrated community where employees feel equal opportunities for upward mobility, while fostering a sense of belonging. They are also incorporating DEI as a part of their brand, able to meet the diverse preferences of their consumers, and offering training to franchise owners, [and] this all translates down to the consumer facing community. From executive compensation to employee engagement and customer experience, they are industry leaders.”
He adds some smaller quick-serve businesses are doing a great job by focusing on driving more female ownership and leadership. They are also building stronger partnerships with suppliers and ensuring they share similar values and best practices toward recognizing DEI as necessary to improving innovation and growth.
“The [quick-service] world faces a very different challenge than full service dining establishments,” Kutac elaborates. “The low price points that the consumer has been used to for decades has led to operating level decisions that has resulted in a lot of what we are talking about. The need for change—and quite frankly the consumer needs to adjust as well. So that comes from leadership, that comes to equity of pay. Here's what I always like to ask people: What are we as a society willing to pay? Do we really expect a 99-cent burger still? We shouldn’t. Not from the treatment of animals, not from the methane emission leading to carbon change, not to the treatment of the employee. There's a massive way to make this change, and we as consumers can make that decision with our wallets. Corporations need to make sure they're focused on the future not today, and we as consumers need to make decisions on what we think is responsible.”
Having a consistent workforce that is more invested in their jobs because they feel invested in is important.
“When you look at all the statistics on retention and why people leave, people don't say ‘because I couldn't do my job,” Rubenstein adds. “The resume got them in the door, but it's not like they left. People leave people, they don't leave jobs. For the most part, it's that basic human need that we all have to feel seen, valued, and heard, and it's more important than a company might realize. So for a company, when you are making important to you what's important to your employees, you really are increasing the likelihood that they'll stay.” She points out that while an older employee can mentor a younger one, the reverse scenario is also possible where a younger employee can bring a fresh perspective to a company.
Rubenstein says companies with highly diverse executive teams and workforces tend to be more profitable, and she stresses that DEI is not a separate topic yet gets treated that way.
“It's woven through the fabric of every decision that is made in the company, from who to hire to where we invest our resources,” Rubenstein says, adding “belonging” should be included in DEI discussions. “Those terms together are so comprehensive they really need to be a part of everything that we do. If we're going in saying, ‘hey, we need to go run these two DE&I programs,’ you're missing the mark. You have to integrate it, and it has to become a part of your culture.”