Last year, we experienced The Great Resignation, which hit the hospitality industry especially hard. In November 2021, a record 4.5 million Americans quit their jobs — and 1 million of those were restaurant and hospitality workers. While approximately 3.0% of the total workforce quit their jobs, that figure was double for hospitality employees. Hospitality is the lowest-paid industry, with average hourly earnings of $19.20 as of late 2021. Some tipped restaurant workers earn a subminimum wage as low as $2.13 an hour federally.
While many restaurant workers have quit their jobs, they aren’t necessarily leaving the workforce altogether. In many cases, they’re leaving for higher paying jobs in other industries. The high resignation rates in the low-wage restaurant industry — combined with significant job openings and hiring — indicates that our economy is facing a wage shortage, rather than a labor shortage.
If the most effective way to get staff to keep restaurants open is to meet higher pay demand, then restaurants must better manage controllable costs, including food and labor, to increase margins. To meet the need for higher wages, restaurant owners must rely on tech tools to reduce expenses, boost efficiencies, and save money.
With that in mind, restaurants should:
- Use modern, integrated tech tools. Even in today’s digital world, some restaurants are still relying on ineffective manual processes to run their businesses. Or they’ve pieced together a disjointed tech set-up that doesn’t work together seamlessly. Unfortunately, these approaches don’t provide a holistic view of performance metrics, so it’s impossible to track costs, like food and labor, accurately. Modern, integrated tech tools make it easier, faster, and more accurate to gather intel to guide better decision-making.
- Rely on data – not instincts. Many operators don’t collect data and are relying, instead, on gut instincts. This is a mistake that could be quite costly. It’s much wiser to make more informed decisions backed by data. For instance, operators will be better able to better manage labor costs through integrated software, which provides a centralized place to track information about employee hours, wages, tips, and performance. Tech tools can also inform decisions about food purchasing, inventory, etc. to reduce waste and save money.
- Make a wise investment in tech. After two years of COVID related disruptions, restaurant operators may be hesitant to purchase anything new, which is understandable. But an investment in technology will benefit your business significantly, as it will provide insights to help you save money on your biggest expenses – labor and products. Tech systems are affordable and scalable. Just be sure to get an integrated system that can grow with your business.
- Cut down on food waste and inventory costs. Food has always been a large expense that can become excessive without careful management. Use technology to help keep food costs down. Predictive prep lists reduce waste from overprepping and spoilage, better inventory management solutions stop inexperienced employees from over or under ordering, and smart reporting lets operators spot variances that could indicate theft or overportioning. Even seemingly small savings can add up to a hefty amount over the course of a year.
- Use restaurant labor technology. Restaurant labor technology allows you to review forecasted sales and historical data, determine which days and times are your busiest, and optimize your schedules to ensure you’re never over or understaffed. For instance, a labor report could show that you’re often overscheduled on Tuesday’s lunch shifts, and you could operate with fewer employees, for cost savings that will increase over time.
- Train your staff. Ensure they are empowered to do their jobs correctly and efficiently while providing exceptional service. As part of this effort, educate employees on how to use your tech tools properly and consistently. As they learn (and use) your technology, you’ll experience numerous benefits, including greater productivity and cost savings. Training should be an ongoing endeavor, not just a one-time effort when employees are hired.
- Boost staff retention. Restaurants have been historically plagued by high turnover rates, but resignations within our industry have recently reached record highs, which is disruptive for businesses. High employee turnover is costly for restaurants, who must invest time and money into attracting, hiring, and training new staff. Reduce staff turnover by offering competitive salaries, bonuses, and growth opportunities within your company. Empower employees to take more responsibility and ownership of operations, which will help them feel more invested in your restaurant and its successes. Additionally, show appreciation for existing employees. Thank them, sincerely, for their work. Spotlight them on your website and social media platforms. And don’t underestimate the power of simple gestures, like giving them gift cards or handwritten notes praising their performance.
- Examine, improve, and automate processes. Shift from manual processes, such as time clocking, scheduling, and inventory management. Instead, use digital tools to improve efficiency, boost accuracy, and optimize business operations. For example, instead of manually managing employees’ schedules, use a digital solution to simplify the process, saving time, money, and hassle. Digital tools will help reduce time spent on monotonous administrative tasks and allow your staff to focus more on the fun parts of the job, like preparing amazing food and providing exceptional customer service. Allowing your employees to have more fun and spend less time on tedious administrative tasks will also help you improve retention rates. It’s a win-win.
To help your restaurant thrive during these exceptional times – and give you the ability to pay your beloved employees more – use tech tools to better manage your controllable costs. Even small, incremental cost savings will add up over time, improving your bottom line over the long-term.
Greg Staley is the CEO of SynergySuite, a back-of-house restaurant management platform. Greg focuses on facilitating better visibility and increased profitability for restaurant chains through the use of intelligent, integrated back-of-house technology. For more information, please contact Greg at greg@synergysuite.com.