There’s been front-line chatter in recent months about one tenet of the labor challenge potentially easing: Has applicant flow begun to pick up? Federal data suggests it has. According to Bureau Labor of Statistics numbers released Friday, food services and drinking establishments added 60,000 jobs in September. The hospitality sector now employs 11.8 million people, or about 500,000 jobs short of pre-COVID levels.
Darden CEO Rick Cardenas said in September the Olive Garden and LongHorn parent’s staffing “has returned to normal levels.” During Q1, the company fully staffed and opened nine locations. Thanks to a new talent management system, which allows applicants to automatically schedule their interviews, Darden is even looking at ways to “maybe slow that down,” Cardenas said. “Our turnover, our manager retention is much closer to pre-COVID levels,” he said. “It's pretty close to pre-COVID levels and well better than the industry average, our manager retention. And our team member retention is also well above the industry, but it's not quite back to pre-COVID levels.”
While September’s upward movement is a welcomed sign, the industry has a lot of ground to cover compared to the rest of the country. The economy added 263,000 jobs last month and the overall unemployment rate is 3.5 percent. Also, restaurant industry wage growth climbed 0.3 percent versus August and is 8 percent higher over the past year.
It bears asking where the recalibration of the workforce settles in foodservice. Is it fewer employees per unit given the cost of labor? Will turnover slow or accelerate with this fresh wave of hires? Are new consumer-facing roles ready to replace task-driven ones that can now be automated? More AI? How will the shrinking of new builds and off-premises growth influence any of these topics?
QSR caught up with Oliver Staehelin, chief strategy and development officer of Harver, a hiring solution deployed by more than 1,300 of the globe’s largest employers, like AB InBev and McDonald’s, to chat about the state of the labor market and evolving dynamics, and what hiring leaders can anticipate in the coming months.
How would you characterize the state of the labor market? It is getting easier for restaurants to hire?
Generally speaking, the labor market has experienced extreme volatility over the last 24–36 months. During that timeframe, we’ve seen the highest unemployment rates since the Great Depression, followed very quickly by one of the tightest labor markets on record. In fact, it took just 30 months for the US labor market to get back above its peak employment mark set in February 2020. To put this into perspective, this most recent labor market crisis was more than twice as acute—in terms of percentage of jobs lost—as compared to the 2008 global financial crisis, yet recovered in less than half the amount of time (30 months compared to 77 months). Dealing with such extreme labor market distortions has not been easy for restaurants looking to hire, and has required significant agility in their HR processes.
We continue to hear from our customers across the restaurant industry that hiring remains a challenge. And in some parts of the country, even requiring them to close, or redirect traffic to another location for certain meal periods, due to staffing issues. This has obviously had a profound effect on the employer—employee power dynamic, with the balance shifting over the last couple of years towards the latter. This has ushered in a renewed focus on minimum wage among hourly workers, as well as employee benefits and collective bargaining agreements. An example of this includes Starbucks workers unionizing at record speed. There is even legislation being passed in some parts of the country like the California “Fast Food Bill.”
What do you think hiring leaders should anticipate in the coming months?
Hiring leaders should be prepared to face extreme inflationary pressure as the Federal Reserve has embarked on an aggressive cycle of monetary policy tightening. With rising interest rates, we are likely to see declining consumer spend/demand, which will dampen growth and reduce some of the need for aggressive hiring and take pressure off labor demand, as well as higher unemployment, which should increase the size of the labor supply from which restaurants can hire from and potentially slow down rising wage expectations. The next 12 months will be interesting. The key for hiring managers is being able to anticipate changes on the horizon, and adapting quickly.
In terms of what workers are looking for from employers, has this settled in a bit?
A byproduct of the pandemic is that employees are looking for greater flexibility today. According to our customers, this is no less true in the restaurant industry, although much more challenging to deliver on. Similar to other segments of the market too, increasing wage expectations persist, along with demand for better benefits and recognition. In response, restaurants are exploring better healthcare offerings, and even differentiated add-ons like pet care, etc. At the end of the day, workers want to feel appreciated and valued by their employer. We hear a lot about culture too. Employees want to work for a company they can connect with and grow in.
What are some key tactics now to recruit? How can restaurants go beyond pay to attract the right employees?
The days of recruiting off of stale, bullet pointed job descriptions are largely over. Today’s competitive hiring landscape requires restaurants to think of their job postings of more as a marketing tool, focused on highlighting the most compelling reasons to come work for them. Having a presence at local events, and doing what one of our clients calls “purposeful and relentless networking” are key. Like in most industries, people are attracted to new jobs by other people. Every hire brings with them access to a new and expanded network. The most competitive hiring managers are working that network, and working it hard.
Restaurants need to offer competitive pay, which is table stakes, but it’s no longer enough to be competitive. Oftentimes workers are myopically focused on base or hourly compensation, so it’s the hiring manager’s job to really emphasize and spell out the total rewards and benefits programs that are in place as part of the total package. Additionally, we hear more and more from candidates that they are looking for more than a job. They are looking for growth potential, and to join organizations with a clearly defined culture. Shining a light on some of these important intangibles is a great way to differentiate from other restaurants hiring in the same market, and help the right candidates connect on a more personal level with the role and organization.
One thing I heard recently from an operator was that their GMs had not had to manage labor like this over the past two years (were always understaffed). What are some important things to keep in mind to optimize workflow?
This speaks to the first question above, and the extreme hiring environments GMs have had to navigate over the last two years. Maintaining strong and deep relationships within the market helps a lot, and hopefully keep your talent pipeline healthy. Using software in smart ways is also becoming critical. For example, automating parts of the hiring process in order to reduce friction and avoid candidates falling into black holes with no communication, and inserting job relevant assessments or situational judgement tests. This all helps to identify best “fit” talent and allows you to maximize the human time spent on those most valuable potential hire relationships.
Above all, the main chorus we hear from the GMs we speak with is pretty much the same: Always be hiring, always be looking for new talent to bring on and once hired, train and promote from within constantly and do it in a visible way so others can see a clear path, not just to a job, but to a meaningful (and engaging) career.
Is “quiet quitting” something restaurants should be concerned about? How can they handle it?
Yes, but although this is a new term, it is not a new phenomenon. Perhaps more than most, restaurant operators and GMs understand the strain quiet quitting can have on the organization, the team, and ultimately the customer. So, minimizing it as much as possible should be a focus. How do you do that? Well, we’ve spent a lot of time analyzing those who do it best and have identified three key things they do:
1. Hire right—The temptation is understandable to try and fill the role quickly. However, this often leads to suboptimal outcomes, and in many cases quiet quitting. Building a replicable process to hire the right person is one of the best ways to reduce voluntary turnover, absenteeism or quiet quitting. Optimize your process for quality/fit also, not just for speed.
2. Lean on culture—People work with people and for people, not companies. Now more than ever, they seek purpose in their work. Organizations that build authentic, strong, and inclusive cultures, and that promote those cultures, see dramatically higher engagement rates, and lower incidences of quiet quitting.
3. Talk to your employees—One simple, yet effective approach is to conduct stay interviews. These are similar to exit interviews, but seek to hear from employees before they leave. They focus on understanding what they enjoy most about the company/workplace, and ideas they have for improvement. Inviting your employees into this process has a doubly positive impact in that: one, it engages your employees, and makes them feel heard and empowered, and two, hearing directly from them what keeps them engaged and excited to come to work every day will inevitably lead to better solutions than guessing.
What’s a labor topic nobody is talking about today that will be on everybody’s minds a year from now?
I think a lot depends on where the market is a year from now. Has inflation abated? Is the Fed still tightening? Are we in a recession, or already out of one? If so, how acute is/was it? There are just so many moving pieces right now. One thing that we believe everyone should be talking about a year from now (or sooner) is how to engage the younger generations to see the restaurant/hospitality industry as a real career and not just a job. Several of the restaurant CEOs I speak with want to see more engagement at the high school and college level, promoting the industry and finding new and creative ways to excite the next generation of leaders. This is one of the oldest industries in the world, and in an increasingly digital age, perhaps becoming more purposeful than ever before. The ability to impact someone’s day, through food or drink, and create a moment of delight, is not something all jobs can offer. But the restaurant industry can.