As the restaurant industry rides up the recovery wave, a delta remains between pent-up demand and the ability for brands to cash in. The sector has posted 14 consecutive positive same-store sales weeks, according to Black Box Intelligence, with every state climbing into the black in the period ending June 20—a sign restrictions continue to slide as this odyssey evolves from a regional comeback to a national one.
And yet, the industry still boasts 1.7 million fewer jobs filled than pre-COVID-19—the highest on record. This despite wages climbing sector-wide and nearly a million job openings posted in March alone.
It’s led to some frustrations on the part of returning customers. For the second consecutive quarter, net sentiment based on “speed of service” dropped across segments, Black Box said. Except for casual and family dining, the declines in “speed” and “service” sentiment were far larger in Q2 than Q1. Fast casual reported the biggest dip, followed by fine dining and quick service.
Meanwhile, in a recent study conducted by Revenue Management Solutions, a growing number of respondents feel restaurant prices have gotten higher, moving from 34 percent in November 2020, to 35 percent in February 2021, to 46 percent in May.
Indeed, according to the Bureau of Labor Statistics, restaurant prices rose 4.04 percent in May 2021 versus grocery, which stabilized at just 0.45 percent increases.
So it’s becoming clear that labor is where restaurants are going to separate as diners rush back. Respondents in RMS’ study (late May) reported dining in at least once a week increased by 20 percent, led by Gen X and Boomers. In total, 62 percent dined out at least 1X a week.
There’s little question concerning demand. Yet can restaurants keep guests beyond that trial visit? That might boil down to who’s on the front line. As BTIG analyst Peter Saleh pointed out recently, price increases aren’t likely to dissuade consumer as much as you might imagine. Simply because it’s going to be a uniform tactic from thousands of restaurants. Saleh said he would not be surprised to see operators take multiple price hikes this year, leading to effective pricing near 4 percent. Between 2015 and 2019, the average menu price lift across the industry, according to Knapp-Track, was 2.4 percent.
However, where restaurants will not blur is “speed” and “service” and the staff needed to get there. Brands that satisfy guest frustrations while still navigating the labor challenge.
And for that, Liliana Esposito, the chief corporate affairs and sustainability officer at Wendy’s, says we can start at the beginning.
For the last five years, the burger chain has administered a “Voice of Wendy’s” employee engagement survey for all company workers (it’s also made available for franchisees).
Wendy’s didn’t take a COVID break; it received feedback from nearly 50,000 team members across its system—an increase among all populations (franchise employees, corporate, support). And all three groups’ engagement scores outperformed industry benchmarks.
Wendy’s was named a Global Best Practice winner in the quick-service segment by Black Box as well, an award based on turnover rates relative to peers.
“It was important for us, even in a very challenging time—even more important—that we made sure we stayed connected,” Esposito says.
In addition to the engagement poll, Wendy’s conducted constant “pulse checks,” hosted employee gatherings at the corporate level, restaurant level, and made sure lines of communication stayed open amid the many ebbs and flows of 2020.
But Wendy’s communication efforts and efforts to be a “people business” would have fell flat without strategic weight, Esposito says. In 2020, the chain announced a host of enhancements to its benefits.
Effective at the start of 2021, these include:
Wendy’s expanded its paid-sick time policy to provide paid sick time to all eligible part-time hourly employees on a permanent basis. Accrued sick time can be used for absences due to illness, injury, and any other medical condition, including medical, dental, and vision appointments, whether for treatment or preventive care. Employees and applicable family members can tap in. This also extends into employees getting the COVID vaccine.
In Saleh’s workplace study, 4 percent of unemployed people surveyed cited “lack of childcare” as a reason to stay home. Surprising to some (including Saleh), it was a point higher than “earning enough from unemployment income.”
Wendy’s addressed this, too, enhancing its parental bonding leave for all eligible company employees following the birth or adoption of a child. Wendy’s will also support working mothers, it said, by reimbursing the cost of shipping breast milk during overnight business travel.
Also in Saleh’s study, “high pay,” at 54 percent topped the list of factors that would motivate someone to accept an hourly position. Right behind “good benefits, 47 percent” was “more flexibility with the hours or days I work.” That chimed in at 45 percent and directly reflects a shifting landscape where remote opportunities and gig options have become commonplace. Not to mention, personal safety concerns and the aforementioned childcare troubles.
Throughout 2020, many of Wendy’s restaurant support center and field office employees worked remotely.
And going forward, the chain devised a Flex Work Program that provides eligible office-based employees with options for flexibility in work schedules and locations.
This might not sound radical, all things considered, but you just need to turn back to March 2020 to realize how much this corner of the labor arena has shifted.
On March 2 to be exact (Esposito still has the note in her calendar), Wendy’s leadership met to discuss the notion of a flex-work policy. It was something that came up in its employee engagement survey; it wasn’t tied to the pandemic just yet.
“And candidly,” Esposito says, “we came to the decision that we weren’t ready for it.”
Within a week, Wendy’s didn’t have a choice. The entire above-restaurant group went remote as crowd avoidance became table-stakes. “That won’t all bounce back,” Esposito says. “We found we don’t need or want it to all come back to exactly how it was before.”
Beyond the pressing task of finding hourly employees, this decision helped Wendy’s recruit talent at the corporate tier, Esposito says. She calls the ability to list remote jobs a “game-changer in terms of the talent and the people we could attract.”
“But I think it just showed us over the last year that we don’t have to work in the same way, and we can still be productive and effective and to support people in what they need in their lives.”
Back in the trenches, Wendy’s invested in training and development programs across 2020. Employees completed nearly 5 million hours of foundational training systemwide, including mix of online and hands-on training in the restaurant.
Wendy’s has a program where it recertifies every employee annually in food safety training. Team members dedicate an additional 700,000 training hours each year, the company said, to support the introduction of new products and procedures. Restaurant managers and multi-unit operators also have the option to participate in “Wendy’s University,” which includes targeted training intended to develop management and leadership skills. The program provides programming for company management, such as diversity training, people manager training, leadership dialogues, and the opportunity to participate in third-party conferences.
One thing that’s interesting to consider is Wendy’s breakfast launch. The brand planned to go full-tilt in early March. And one of the ways it wanted this effort to differ from past attempts was on the labor front. Namely, the chain launched a massive hiring campaign in 2019 to bring in roughly 20,000 new workers to support the daypart expansion.
With COVID restricting mobility and hampering breakfast in particular, Wendy’s worked last year to reduce breakfast breakeven by about 35 percent to help operators. It cut labor requirements and chose not to collect marketing fund contributions on breakfast sales.
Yet the good news, Esposito says, is the ramped-up campaign helped Wendy’s identify plenty of interest among candidates. And breakfast, from the hours to the drive-thru focus, gave the chain some flexibility in what it can offer.
All of this isn’t to say Wendy’s doesn’t have its work cut out in 2021. Esposito says the labor challenge isn’t subsiding. And creating an attractive workplace isn’t the task it once was. People not only have ample options to browse, but they’re also concerned with joining brands that reflect their value system. It doesn’t have to just be a place that pays and offers solid benefits; it needs to be a tribe they want to join.
Why exactly? It’s not a complicated premise: If you consider the applications versus actual hires gap, workers today don’t need to take a job simply to take one. They can search past the general perks commonly found. So the same marketing efforts brands spend on trying to appeal to like-minded guests, from sustainability to culture, have to apply to recruitment.
Wendy’s is fast pouring resources into this notion. It created a “Diversity, Equity, and Inclusion” function, led by a newly created position of chief diversity, equity, and inclusion officer. The brand hired Dr. Beverly Stallings-Johnson in early March 2021. She previously served as chief diversity officer for the city of Columbus.
One of the key internal efforts, though, is Wendy’s “Employee Resource Groups,” which have grown to six different fields.
Each ERG has a senior leader tied as the executive sponsor. They enable employees to learn, share, and network, Esposito says, and yet also help Wendy’s corporate get a grip on what’s happening throughout its worker base.
While the resource groups originated at Wendy’s Dublin Restaurant Support Center, remote work expanded participation to company field-based employees.
- Women of Wendy’s
- Wendy’s Equality Resource Group (WeQual)
- Wendy’s Young Professional Resource Group
- Wendy’s Veterans Resource Group
- Wendy’s Black Employee Resource Group
- Wendy’s Cultural Diversity Resource Group
In 2020, Wendy’s also launched the Parents & Caregivers Support Group, providing a forum for informal discussions focused on family and caregiving challenges, as well as information to ensure employees can take full advantage of Wendy’s Employee Assistance Program. This group created a “Having a Baby Guide,” which provides information for employees before or after the birth or adoption of a child.
Esposito calls the ERG program one of Wendy’s true “shining stars of 2020” and one of those things that won’t ever return to how it was before COVID. Chiefly, in the way it’s spread outside of Wendy’s support center, and also in the broader issues it now addresses.
The Black group, for instance, was formed out of the racial injustice issues that took center billing last year. CEO Todd Penegor is the sponsor. “We also found that it’s a tremendous opportunity for leadership for the employees that get involved. They might not yet be in a role where they’re leading people but through the employee resource groups they can get that experience of developing a plan, leading a team, identifying it and allocating resources to make that all come to life,” Esposito says.
Again, it’s a direct way for Wendy’s to create a herd people connect with. “We’re finding that some of our most promising talent within the organization is coming up through these employee resource groups. Couldn’t be more excited about those and what they’ve offered for this company,” she says.
On the flip side, it’s kept senior executive connected up and down the company ladder.
In 2021, Wendy’s set a goal to increase the representation of underrepresented populations among company leadership and management, as well as the diversity of its franchisees; to support that goal, Wendy’s will “focus attention on representation by ethnicity and gender by addressing what has been referred to as the ‘broken rung’ of leadership.”
The “broken rung” in this instance concerns the step of moving from restaurant manager to district manager. Essentially, Wendy’s believes it’s diversity passes the test up until that level. It then falls off.
Wendy’s said it wants to increase diverse representation by gender and ethnicity in management and leadership, from entry to senior level. It also wants to boost representation of franchisees who identify as female and persons of color.
Here’s a look at the present breakdown:
And you can see the “broken rung” comment in action:
“It’s an important distinction. And it’s a really critical path,” Esposito says. “And particularly in this last year, we’ve seen all of the reports coming out of the disproportionate impact that the COVID pandemic has had on women, on people of color, and so those efforts to continue advancing people through the ranks of the company are even more important now post COVID than they were before.”
There are three steps Wendy’s has in place to get there.
Education and training
The brand offers foundational diversity training for all company managers at its support center and across field support team. Wendy’s training focus, it said, is on developing leadership competence and manager skills that promote diversity and foster inclusions. All new managers are automatically enrolled in this training as part of their onboarding. Quarterly sessions are provided, too.
Recruitment and hiring
Wendy’s said it’s working to minimize the potential impact of implicitly bias through its training and consistent use of standardized selection processes. In 2019, the chain announced a partnership with the Thurgood Marshall College Fund, which has since expanded, to support educational and career opportunities for Black students. In Columbus, Wendy’s partnered with the YWCA of Columbus and the Columbus Urban League.
The agreement with the Thurgood Marshall College fund, specifically, complements Wendy’s recruitment efforts with diverse student organizations on other campuses. It’s also partnered with minority-owned recruitment agencies.
More recently, Wendy’s unveiled a new community-based giving program, which supports the commitment it made last June to donate at least $500,000 to support social justice, youth, and education in the Black community. Wendy’s company field-based employees were eligible to apply for charitable grants on behalf of local charitable organizations, with a total grant pool of $100,000 available in 2020. An internal committee of Wendy’s Company employees reviewed the applications and selected 23 organizations to receive grants in 2020.
Talent development and retention
Wendy’s struck a partnership with McKinsey & Company to offer employees the opportunity to participate in the organization’s Black Executive Leadership Program.
And the brand’s WeCare program, established in 2017 to provide short-term financial assistance to employees negatively affected by federal -or state/provincial-declared natural disasters and emergencies, continues to go strong. Since inception, it’s provided more than $120,000 in financial assistance to 250 Wendy’s family members.
“People will always be central to the work of the company and the brand and I think it’s a great time to be at Wendy’s,” Esposito says.