Employee Engagement and Retention Will Win the Restaurant Future

The labor shortage facing operators isn't going to look the same forever.

May 24, 2021 Danny Klein

The question on a lot of restaurateurs’ minds today is how to brace for the so-called “pent-up demand” hopefully on deck for restaurants in the coming weeks. Namely, can operators staff up to welcome a rush of business?

The industry’s struggle to hire workers has been well documented, and it continues to take on fresh layers as unemployment benefits, gig/remote work, and higher wages all stir debate. This as some of the country’s largest markets prepare to drop restrictions and fully reopen.

According to Black Box Intelligence, at the national level, the sector has yet to see current staffing pressures translate into an acceleration in wage growth for hourly employees in limited-service restaurants. Median national hourly wage has remained essentially flat for the last three quarters.

At the state level, there are significant differences, however, and wage acceleration has begun to pick up for quick-serves. In full-service, hourly wages have accelerated at a much larger pace over the last year, Black Box said.

What this suggests is the labor battle can't be won on a single front for restaurants, although wages remain a central theme.

What New Restaurant Tipping Regulations Could Mean for the Industry

Let’s step into the workings of one organization to get a feel for how dynamic this challenge has become.

Multi-concept operator Cameron Mitchell Restaurants adopted a multi-pronged approach, the company said. For background, CMR always touted a unique company culture that puts employees first and holds to a “Yes is the Answer, What is the Question,” philosophy that’s also the title of founder Cameron Mitchell’s autobiography. It’s resulted in industry-defying retention rates for hourly workers (50 percent), as well as full-time team members, and helps counter the toxic environments many complain of the industry, CMR said.

Yet still, the company hasn’t skirted the current labor shortage. So here’s what it’s doing:

Incentives:

Referral bonus incentives
50 percent off discounts
Closed seven major holidays
401K, health benefits
Relocation benefits
Competitive wages for non-tipped associates based on their experience, anywhere from $15-$25-plus/hour depending on the position and location
$500 signing bonus at select locations

Cultural benefits:

CMR’s culture is a leading factor in why associates grow with the company, a brand spokesperson said.

It believes in open and honest communication and putting associates first, which has been the foundation of every decision, from hourly associates to general managers all the way up to the executive team, including:

President’s roundtable
Cabinet meetings (hourly associates’ meeting with General Manager)
Pulse Surveys
Onboarding surveys and exit interviews.
Culture Club events company wide, including hosting an annual Taco Throw Down at the Home Office where all associates are welcome to come with their families for a fun event full of eating, drinking and music, Holiday Parties, team outings.
Leadership conferences throughout the year for every level of management, these are thee-day events filled with training, food, drinks and team building.

Job Growth

CMR boasts a “Pass the Plate” program that enables associates to try different positions out within the company. For example, a line cook could shadow a GM for a day.

CMR is growing with several new restaurants opening in 2021 and 2022, the company said. And doing so won’t be possible without employee development.

CMR tries to promote from within before it looks externally. It also has a relocation program that gives managers an opportunity to experience new cities across the country in the 14 states CMR operates in.

“We are so pleased to see more Americans being able and feeling comfortable dining out, which reinforces more than ever that reconnecting in person with friends and family is great medicine for the soul," founder and CEO Mitchell says. "While we are not alone in the labor shortage issue, we believe our family culture is one of the biggest incentives to offer. Since the founding of the company 28 years ago, we have always offered a culture that puts our Associates first. This has resulted in industry high retention rates. In fact, our culture has led to many long tenured Associates who have been with us from nearly the beginning of our company over 28 years ago. From hourly associates to general managers all the way up to the executive team.”

Rewards Network, a provider of marketing and financing services to the industry, which has more than 12,000 restaurants in its base, offered operators some tips to navigate the labor climate from a broader view.

Calculate the value of adding staff:

This has become a vital reality for restaurants. Do you need as many workers? Do you need more? It comes down to an obvious question—is my current model working? While nobody really knows what post-COVID dining trends look like, it is clear off-premises will remain viable. Some restaurants are most successful offering only takeout and delivery, or a limited dine-in plan. Take stock of the other establishments in your area, Rewards Network said. If they aren’t seeing long waits and multiple turns of full rooms, do you believe you will?

If the answer is “maybe” or definitely “no,” consider keeping a tight staff and reducing the store’s lowest-earning hours to increase profitability. On the other hand, if wait times are climbing, leaving money outside the four walls isn't an option. “Don’t put out the sign just yet,” Rewards Network said. “Before you begin hiring in an employee market you need to develop a cost of acquisition threshold. In other words, you should have a good grasp on the value each staff member brings to the business and what you can afford in terms of acquiring and retaining them as an employee.”

Promote from within:

As CMR mentioned, building a base from the bottom up is a powerful lever. If your restaurant is in a position to hire, it’s essential to assess current staff and evaluate potential for promotion.

Doing so has two major benefits, Rewards Network said—the individual already knows your business, which not only means that there would be less training and staff disruption, but also he/she feels a sense of connection and personal responsibility toward the brand.

Consider employees for roles different than their current positions based on individual strengths, Rewards Network noted. For instance, your food runner might not have experience as a server. Yet they already have an in-depth knowledge of the menu, table numbers, and will likely make the switch much faster than an outside hire. “You may also find that promotion from within widens your options for hiring. It is much easier to find and hire entry-level employees as opposed to more skilled staff positions,” the company said.

Referrals and bonuses:

It’s hard to recruit. No way around that. Leveraging your current network and staff for referrals might actually be easier. But you have to sweeten the deal. It will be worth it in the end.

Creating a strong bonus offer using a restaurant’s cost of acquisition threshold is a good place to start. An example—a restaurant could offer every referral and resulting new hire a $100 bonus after the first month and another $250 after six months.

While these seem like large numbers to fork up, if you consider that bonuses are being paid over the course of a 30-hour work week, then you’re increasing the cost of an employee by less than $1 per hour if they stay the full six months. That extra cost will also decrease every shift after the initial six months, Rewards Network said.

Bonuses can be especially effective to bring qualified back-of-house employees into the fold, those who typically don’t receive tips. “The goal in hiring for any particular position is longevity—high staff turnover can be disruptive and may cost you money in the long run. To avoid this, make sure that your bonuses are drawn out over time, which keeps your risk low and the employees’ opportunity to continually earn more, high,” the company said.

Sell the job:

We’ve all seen this lately. You can’t just list a job and expect people to take it because it’s a job offer and they’re looking. They might just be browsing, and there are options aplenty. Not just from other restaurants, but also from rival sectors, like retail, and remote work in general.

While bonuses are great clickbait, Rewards Network said, writing an engaging, clear job description is more critical than ever. State clearly how you value and reward current staff when writing/updating ads, the company suggested.

Do you give free meals during each shift? Offer flexible schedules or the ability to work overtime? Consider asking your staff why they love working at your restaurant and incorporate the best responses into your posting.

If the open spot includes tips with pay, a smart move would be to include the average tipped value that people in those positions make weekly, the company said. While their base pay might be minimum wage, severs, hosts, and even bussers tend to make much more at the end of the day. Don’t take that reality for a given. Putting it front and center could separate one job posting from the other. Say $5 per hour plus tips (just an example) versus “our servers make $20 per hour on average.”

Pay for placements:

Once you’ve written a great job listing, you may post on sites like Craigslist, Indeed, ZipRecruiter, and Facebook, Rewards Network said. “Consider investing extra to promote your listing, which ensures that your ad receives top billing when candidates perform related searches. Ideally, you want the most eyes possible on your posts—a helpful way to build a large, diverse candidate pool. Posting on other, lesser-known sites may also help,” it added.

Here are three hospitality-focused job boards:

Poached Jobs

Restaurant Careers

Hospitality Online

Of course, operators can post to their own websites and social media as well. “A customer who loves your brunches may just be your next hire,” Rewards Network said.

Cameron Mitchell Restaurants

Cameron Mitchell Restaurants has always led with a strong employee-value proposition.

Tim Chatfield, the CEO of Jitjatjo, a staffing marketplace that supports recovery by finding talent and reimagining labor models for organizations in hospitality, education, healthcare and facilities, chatted with FSR about the current landscape and what to expect.

We’ve all heard a lot about this “labor crisis” of late. What are you hearing or seeing?

The hospitality industry is seeing a labor shortage across the board, whether that’s restaurants, hotels, etc. The jobs are there, but there is a lack of talent ready and willing to fill them in cities across the country. Businesses are seeing similar patterns and are working through the same issues - the demand is there and is increasing as the country reopens, but workers are not rushing back to their previous jobs (or jobs in general) as businesses expected.

What do you think is causing the shortage? Do you buy into the idea that it’s related to expanded unemployment, or is there more going on here?

While unemployment benefits are certainly a major cause for the labor shortage right now, the root of the issue is far deeper than that. We believe that over the past year, people have taken the time to reevaluate their career paths and many workers have transitioned out of the hospitality industry. Others have ongoing requirements to care for their loved ones (children not back in school, sick/elderly relatives etc.) and/or they are temporarily relocated. Some have started their own businesses during quarantine or time being furloughed and have carved out other paths for themselves.

How do you think all of this will reimagine the labor model? In other words, will there be a lasting effect from the current shortage?

Pre-COVID there was already movement towards more flexible labor models and we are seeing momentum accelerate and be validated through independent research firms such as Gartner and McKinsey. There is also an expectation of a more equitable employment relationship, sense of shared purpose, and need for deeper connections, or as Gartner calls it, the "New Employment Deal.”
So yes, there will be a lasting effect for businesses that remain stuck in their old ways of thinking and do not evolve their value proposition to potential employees.

Tell us about Jitjatjo. What does your platform do, and how has it helped restaurants battle some of these issues?

Jitjatjo is a workforce management platform and talent marketplace that services the hospitality, retail, education, healthcare, and facilities industries by providing vetted, qualified talent. We currently service Connecticut, New York, New Jersey, Pennsylvania, Washington D.C., and Illinois with upcoming plans for expansion south and along the sun-belt. We connect people with part-time flexible work that aligns with their skills, qualifications, preferences, and schedules giving our talent the power to create a work/life balance that suits their individual needs. We’re able to help restaurants, and other businesses fill open shifts with qualified talent that they may have lost over the last year. Many workers are not ready to commit to full time work for many reasons, and our platform allows those individuals the flexibility to find opportunities that fit their needs. While much of our talent is looking specifically for part-time work, many do find full time careers through our platform. The core of our mission is human betterment, so we’re also able to help talent who might want to explore a new industry gain the training and skills they need to succeed. For example, the skills utilized by cleaners could easily translate to a dishwashing role and those who have worked as greeters previously have the foundational building blocks to serve in a host or hostess role at a restaurant. We’re all about helping people reach their full potential and have seen great success in helping people reskill.

We talk a lot about why people don’t want to work today. What are some reasons they do?

There is a lot to be said about the upside to working right now.

The pandemic had an undeniable impact on the mental health of workers across the world and having a regularly scheduled obligation or commitment like a job elicits feelings of being needed and important and also helps maintain a steady schedule which, after a year of such unpredictability, can offer a sense of calm. Part time work, like the jobs we connect our talent with at Jitjatjo, allows for increased flexibility, scheduling freedom, skill development and ultimately, allows workers to take control of their own career paths. Plus, we’re able to ensure talent is compensated upon the completion of their shift, which eliminates the waiting period for the next paycheck.

How can restaurants improve their employee-value proposition past just paying more?

Restaurants, and business in general, need to be open to offering more flexibility with shift scheduling. Demonstrating openness for employees needing to take a shorter afternoon for a personal appointment, pick up a child from daycare or whatever the case may be is a gesture that goes a long way. Knowing you have a supportive team behind you eases stress and anxiety, boosts happiness, and ultimately productivity, in the workplace which is a win-win for all involved. Additionally, giving employees faster access to their pay helps attract workers. For example, at Jitjatjo we offer Instant Pay to our talent at the end of their shift if they meet our service quality and eligibility criteria. This not only gives them faster access to their pay, it rewards them for a job well done.

But speaking of that, how much of this issue is a wage issue?

There has been a lot of chatter around the notion that many industry workers are making more on unemployment than they would working. This does indicate that there is a conversation around wage that needs to happen across the entire industry, restaurants included, but there are also caveats to that conversation including what raising minimum wage would mean for restaurant ownership. At Jitjatjo, we have paid above minimum wage from inception to help us attract quality workers. We have also recently deployed a survey to our talent pool of over 10,000-plus to gather additional, direct feedback on these patterns so we can identify the less obvious issues. The industry has assumptions but we need data to understand the "why" so we can provide the ride solutions and get people back to work faster.

If you could look six months into the future, what do you think the next big labor challenge will be? And how can restaurants prepare for it?

In six months from now, we believe the enhanced unemployment insurance payments will have concluded. However, the demand for hospitality workers will have also increased as more businesses will have re-opened so the labor market will still be tight. There will also be an enhanced focus on employee engagement and retention to help ease the talent acquisition burden. Being aware of these issues now and starting to plan/implement strategies as soon as the hurdles of reopening are overcome, will help set restaurants up for success.