The debate over raising minimum wage has been revived through renewed talks over the Raise the Wage Act that would bring the national minimum wage up as high as $15 an hour. While minimum wage increases have always been a hot-button topic in the restaurant industry, it’s become more divisive than ever with restaurants still working to recover from the COVID-19 pandemic.
This is why many operators are looking at what they can do to optimize and modernize their labor management practices. Even if the minimum wage does not hit $15/hour nationally, more cities and states are looking at increases and you can only benefit from getting the right tools in place now.
What does this modernization look like and how will it help address labor increasing your prime costs? I see minimum wage hikes driving innovation and modernization in three key ways.
Cloud-based, Predictive Scheduling Software
Many restaurants are still working off written schedules, where shift swaps or time off requests are handled via text or sticky note. For those who’ve adopted technology, it’s often traditional software that employees can’t access on their phone and requires regular IT intervention to stay up to date. Neither of these scheduling methods will be as effective as you need them to be as wages continue to go up.
Both of these more antiquated methods of writing a schedule leave a lot up to your manager’s gut when it comes to how many employees are needed and when. They also leave you particularly vulnerable to overscheduling with new managers who don’t know the store as well. Modern labor management software will use historical data to create sales forecasts and predict optimized labor levels based off the forecasts.
This not only helps prevent your labor costs from ballooning due to overscheduling but allows you to schedule in ways that avoid overtime. You can also receive alerts when employees are close to reaching overtime, so you can work to avoid paying time and a half or double time with an increased minimum wage.
As a bonus, you will have far greater adoption of labor management tools if you make them available in the same way everything else your employees use is. Modern labor management software allows employees to pick up and drop shifts, set availability, request PTO, swap shifts and get manager approval all through a cloud-based app.
Visibility Into Data
One of the challenges restaurants face is they have nearly endless data they can collect, but most do not have the tools to parse this data into information that would be relevant to improving their operations. True visibility doesn’t simply mean the ability to find a certain data point, but an easy way to collect and understand it.
With minimum wage hikes on the horizon, you will need to have a better handle on things like fluctuations in labor, employee retention, overtime management, break compliance and more. Being able to see and use this information allows your managers to make more informed decisions about who to schedule and when, as well as be confident they are not violating labor regulations about hours minors can work or mandatory break rules.
Modernizing labor management is a must to achieve these goals. Manual processes make both collecting and analyzing data difficult, and outdated software lacks the integrations to the rest of your tech stack, so any data you see is siloed. Modern labor systems effortlessly collect and compile the data in a dashboard so you can immediately see the metrics that matter most.
Greater ROI
Investing in new technology can seem like the last thing you want to think about after surviving 2020 but implementing a modern labor management system is going to feel even more impactful when the minimum wage increases. Optimizations that save a restaurant $500 a week now could easily double or triple the savings when a higher minimum wage goes into place.
Restaurants using modern labor software will save money either way, but the impact of the optimizations will be exponentially higher. And those who do not switch will see the costs of any mistakes rise as well. Ultimately restaurants will reach a tipping point where their labor margins will disappear without the help of a more effective labor management system.
Restaurants are still struggling to find the way forward after a disruptive year, and minimum wage increases will only contribute to that struggle. Successful brands are looking to modern labor management software to help them navigate the challenges that the Raise the Wage Act may pose for their business.
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.
