Increasing margin pressure and a heightened battle for market share are two of the most significant issues facing restaurant operators today. Both factors are driven in part by current labor conditions. <\/p>\n
Profit margins are being squeezed because of external labor considerations, such as the doubling of the threshold for overtime and the ongoing effort to raise the minimum wage. <\/p>\n
Complicating the matter further is the re-emergence of a tighter labor pool. In fall 2015, Bruce Grindy, Chief Economist at the National Restaurant Association (NRA) said, \u201cThere are indications that job vacancies are becoming more difficult to fill.\u201d <\/p>\n
Anecdotal evidence of these difficulties has been piling up across the country. \u201cThe Chicago labor market is tighter than it\u2019s ever been,\u201d says Terry McNeese, General Manager and Wine Director at de Quay, a Dutch-Indonesian restaurant on the city\u2019s near north side. More competition for labor means higher employee-acquisition and turnover costs.<\/p>\n
The battle for market share is also compressing margins, as full- and limited-service operators now have to compete with delivery services, \u201cgrocerants\u201d and even home-meal preparation. Consumers are choosing these options more frequently because they question the value\u2014a combination of dining experience and price\u2014that full-service restaurants are able to deliver. <\/p>\n
\u201cToday\u2019s consumers are far less willing to accept the kind of inconsistent, undefined dining experience that staffing issues can create,\u201d says Gordon Food Service Commercial Segment Manager Doug Owens. \u201cWhen the quality of the dining experience falters, price becomes more important, and other foodservice outlets have a clear advantage over full-service restaurants in this regard.\u201d<\/p>\n
While your ability to influence external labor factors is limited, you can do a great deal to mitigate the margin impacts of employee acquisition and turnover.<\/p>\n
With multiple factors at work in this new labor environment, there\u2019s no single solution for improving profitability and gaining market share. Operators must develop a strategic plan with multiple tactics. The following are necessities of any approach:<\/p>\n
Benchmarking.<\/strong> Start with benchmarking your operation to determine the real financial impact of labor\/staffing issues. This will help you determine how your operation is performing against similar operations and guide you in developing achievable goals to reduce labor costs. <\/p>\n The NRA provides a starting point with its Restaurant Industry and Operations Report. By providing general foodservice-industry standards\u2014such as labor accounting for 33 percent of costs in full-service restaurants\u2014it will enable you to gauge your relative performance. <\/p>\n \u201cOperators should purchase this report annually to continually set reasonable goals and track progress against those goals,\u201d Owens urges. <\/p>\n Hiring and recruiting.<\/strong> Before beginning the tactical process of hiring, define the value proposition you offer employees. <\/p>\n \u201cThink of potential employees the way you think of customers,\u201d advises Lisa McKiernan, Manager of Talent Acquisition for Gordon Food Service. Just as you create a brand that promises customers a unique dining experience, build one that promises employees a unique working environment. \u201cRecognize that you are being interviewed by candidates who have options,\u201d she continues. \u201cGive them a compelling message that speaks to their needs and expectations.\u201d<\/p>\n As noted earlier, those needs and expectations have shifted over time. For one thing, millennial employees won\u2019t automatically grant their devotion. You need to earn their loyalty over time\u2014just as you do with consumers\u2014by carrying through on the promises you\u2019ve made.<\/p>\n One way to do this is to involve them more fully in your operation. \u201cMillennials want engagement and transparency from employers,\u201d Owens says. \u201cThey want to have influence and \u2018skin in the game.\u2019\u201d<\/p>\n McNeese promotes this kind of inclusion at de Quay. \u201cWhen I interview candidates, I stress that we train employees to learn the craft of our process, our cuisine and our beverages, so that they can take initiative with our customers.\u201d Getting to know the business inside and out is not a static process. \u201cPotential employees have to be passionate about learning, always learning, so we can continue to offer customers a unique experience.\u201d <\/p>\n McNeese\u2019s approach works. \u201cWith the knowledge we give them, our employees could go elsewhere in the city and make more money. But they continue to stick around.\u201d<\/p>\n \u201cGetting the right people on your team, as de Quay has managed to do, is critical,\u201d Owens says. \u201cIt significantly improves profitability by diminishing training and turnover costs. Consistency in employees also helps drive a consistent dining experience over time, keeping the brand promise with consumers.\u201d<\/p>\n The hiring process.<\/strong> This has evolved as radically as the work values of today\u2019s employees. Emboldened by technology, people are searching for jobs and making employment decisions in a much shorter timeframe. Operators must provide multiple technology touchpoints to reach job candidates.<\/p>\n \u201cInternet job postings, online applications and pre-vetting solutions that identify candidates with desired behaviors and attributes have changed the process for employees and employers alike,\u201d Owens says. These technologies can help position you as an employer of choice while reducing the time and cost of employee acquisition.<\/p>\n Retention\/motivation.<\/strong> Retaining employees in a highly competitive market is challenging. Higher competitive wages can drive employee defections. Counteract the lure of higher pay by continuing to deliver on your value proposition\u2014as de Quay demonstrates. <\/p>\n Also consider these four retention strategies: <\/p>\n \u201cOperators are often reluctant to invest in retention, but it more than pays for itself in reducing turnover costs,\u201d Owens says.<\/p>\n None of the strategies outlined here will be successful unless you develop strong leaders. Both leadership candidates and leaders already in place should receive ongoing training, which must include an understanding of your target employees. The ability to communicate your brand and vision to employees will directly affect the employee experience\u2014and in turn, the guest experience. <\/p>\n The key to resolving staffing issues isn\u2019t in the identification of problems and potential solutions. It\u2019s in the ability to implement solutions through strategies your leadership can deliver against. Make that happen and you\u2019re on your way to increased profitability and guest counts. <\/p>\n A shrinking unemployment rate, a rising number of people quitting their jobs and a corresponding increase in job openings are all signs that the labor market is tightening. Operators are feeling the squeeze\u201480 percent of respondents to a recent Nation\u2019s Restaurant News operator survey cite workforce-management concerns, with recruitment and retention noted as a top concern.<\/p>\n Ask your Customer Development Specialist about the wide range of professional services and solutions Gordon Food Service offers in the staffing arena, including:<\/p>\n The content of this article is for informational purposes only. The information in this article cannot and should not stand in for guidance from your human resource experts.<\/em><\/p>","protected":false},"excerpt":{"rendered":" As the labor market tightens, it\u2019s a good time to work on easing the financial impact of turnover and hiring.<\/p>","protected":false},"author":19,"featured_media":4464,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[69],"tags":[],"class_list":["post-4463","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-running-your-business"],"acf":[],"yoast_head":"\n\n
The leadership factor <\/h3>\n
Signs of a labor shortage<\/h3>\n
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