There’s been front-line chatter in recent months about an improving labor market. Restaurants added about 62,100 jobs in November, which brought the total to 11.9 million. While still 400,000 or so short of February 2020 figures, there’s no question this is an up-spin from 2021 and, for certain, 2020. For a good while, restaurants navigated a force that was about a million jobs shy of pre-COVID levels. Early on during the pandemic—in April 2021—5.5 million jobs vacated in one month alone.
All said, however, it’s hardly a simple dynamic. The country’s unemployment rate in November was 3.7 percent. The cost of hiring and retaining continues to climb, leading to higher menu prices and, ultimately, more investment in automation. Lisa Skelly, VP of sales, franchise and affiliations at online payroll and HR solutions provider ADP, says many restaurant operators have avoided firing employees at all costs given the vast number of job openings available. Are restaurants “hoarding workers?” And how will that impact restaurants in terms of operators and profits.
QSR caught up with Skelly to discuss this latest labor topic and where the sector heads next.
Let’s start with this concept of “hoarding workers.” What are you seeing industry-wide?
Industry-wide, we’re seeing different levels of this concept of “hoarding workers,” stemming from post-pandemic recovery. Through the pandemic, organizations were challenged with appropriately staffing, retaining and attracting new candidates to keep up with customer volume. As workers’ priorities shifted around work life integration and the meaning of job security, franchises definitely experienced challenges in retaining talent. Now, many franchises are making a heavy investment in keeping their people longer-term by implementing recruiting and retention practices and strategies to develop talent.
What are some of the pitfalls when it comes to restaurants doing so and trying not to fire people?
By hoarding workers, restaurants can unintentionally cause a decline in customer service quality and standards. It is crucial, now more than ever, for managers at each franchise location to have strong, cohesive training methods and tools to strengthen company culture as well as retain top talent. Hoarding workers without giving them the tools and opportunity to succeed can contribute to increased turnover, potentially harming the employer’s brand. Hoarding talent can limit employees in exploring new opportunities for personal and career growth.
I’ve heard some operators stress they’d rather have fewer, higher-paid employees than simply fill their staff to pre-pandemic levels? Is that something you’re noticing as well? And is it easier said than done at times?
Although there are some operators who voice this concern, in the multi-unit operator market, I often see a big focus on the retention of their staff. They are looking to ensure that compensation is aligned, and that they are offering strong benefits compared to competitors as well as maximizing the impact of their culture. Employees want more than just compensation; they want flexibility in their schedule, flexibility in how they receive their pay and opportunity for advancement through meaningful work.
What are some recruitment tactics operators can deploy now to counter the challenge? Is speed the name of that game?
Reducing the time to hire is an important recruitment tactic operators can use to counter the challenges they might be facing. By reducing time to hire, organizations can attract and retain top talent from the beginning. By offering simplified application processes—some employers are even offering comped ride services to interviews—and evaluating compensation practices, employers can ensure their offerings are competitive. Information on pay analytics can offer valuable insights in that regard.
What about training?
For organizational success, training must be offered and applied on both the ground and leadership level. For new employees, training should be easy to navigate and accessible in order for them to get acclimated quickly. For managers and operators, training needs to go beyond day-to-day operations. Leaders need to be trained on driving development, culture and results. With potentially a low tenured workforce in the coming months, investing in a learning management system that can centralize training, improve agility with associates and empower them to act can help drive productivity and retention.
Just looking forward, where do you see the labor conversation headed in the next year? What will everybody be talking about?
Over the last year, we saw that restaurants were still in recovery mode after experiencing a significant impact from the pandemic. Seating capacity, high demand for takeout, outdoor seating availability, and safety protocols shifted restaurant and labor operations. The restaurant industry has always had a high turnover rate, but recent data shows turnover has slowed as wages have increased to match the rate of inflation. However, menu prices have also had to increase, fluctuating the rate of spending. In the next year, conversations on labor will most likely focus on navigating these challenges. To learn more on the challenges restaurants faced the past year, click here.
