Shocker of shockers: Labor was a major focus of the educational sessions offered during the National Restaurant Association’s annual convention this week. But the content was far from a rehash of the usual laments about too few candidates being available for hire even at rates a lawyer might envy. No, speakers agreed, the current situation is far worse than that.
“It is the toughest job market of your career,” said Joni Doolin, CEO of People Report parent TDn2K and co-presenter of a session entitled, “Winning the Workforce.” “It’s not your imagination.”
Indeed, her husband and fellow TDn2K chief Wally Doolin observed in another session during the show, the data available today portrays a much more vivid picture of the situation and how it’s affecting the business. Among the more arresting upshots: Restaurants are cutting their hours because they can’t find the manpower for some shifts.
Wally Doolin recounted how he and several acquaintances had descended on the lobby bar of Chicago’s Fairmont Hotel three days beforehand—only to find it closed. “It’s 4:30 on a Friday during the NRA Show and they’re not open,” Doolin noted with clear amazement. “Why? Not enough staff.”
That wasn’t the only observation that attendees likely filed away during the first three days of the show. Among the other points that seemed to have them scribbling notes:
1. More important than the menu
Forcing restaurants to curtail their hours of operation isn’t the only way the labor situation is eating into sales. TDn2K compiles information on chain restaurants’ labor dynamics, sales performance and consumer perceptions. Analyzing those three data sets, the research company discovered that menu innovation and execution are not what separate top-performing concepts from the also-rans, Wally Doolin explained. The key determinant was the longevity of their staffs.
Turnover rates for hourly employees of the standouts tended to fall about 30 percentage points below the clip for the weakest performers, and the management churn rate was about 20 points lower. “What we found is that food and beverage innovation is table stakes; you need to do it, but it’s not sustainable,” Doolin said. The ironclad correlation with success? “It was GM retention.”
2. ‘We can’t recruit our way out of this’
If the industry wants to temper the pain, it has to focus on cutting a turnover rate that’s running more than 20 percentage points above the level of four years ago for limited-service places. “We can’t recruit our way out of this,” said Joni Doolin. “We have to focus on keeping the people that we have.”
3. Know thy managers
A good way to do it, suggested Roz Mallet, a franchisee of Buffalo Wild Wings, Smashburger and Corner Bakery, is by fostering a relationship with general managers. And that holds true if an operation has two or 200 units, she continued. “You cannot take it for granted that they know you appreciate what they do,” said Mallet, whose operations are located in airports and military bases. “If you don’t pay attention to this piece, you will not be in the top quartile, period.”
4. Yet GMs are doing worse today
“We actually do less for our general managers than we did eight years ago,” said Joni Doolin. She explained that today’s GM has to master a host of new competencies, from technology to managing social media and serving four generations with sometimes radical differences in their preferences. And all with less staff because of cutbacks and the tight labor supply.
Yet, “we’re actually paying them less, dollar to dollar,” said Doolin, referring to inflation. “What’s happened is, as we’ve juggled, we’ve shifted resources, and the GM is the one who’s suffered. That GM is worth every ounce that you can put into them.”
5. Training has to improve
Mike Archer, CEO of Houlihan’s and the third participant in the session featuring Mallet and Wally Doolin, noted that the tight labor supply is a non-negotiable mandate to upgrade training.
“We have to be better at training people than ever before,” he observed. “We find people that want to work for us, but they have zero experience in restaurants.”
6. Outgigging the gig economy
Victor Fernandez, director of insights and knowledge for TDn2K, noted the industry’s increasing alarm about competing with the so-called gig economy—the part-time, largely self-supervised fields of work presented by the likes of Uber and Lyft.
Joni Doolin noted that restaurants themselves aren’t cut off from that world. “There are places where you as a restaurateur can hire gig employees,” she said, referring to a new crop of temp agencies that specialize in restaurant jobs. “There are people who are going to be knocking on your door, saying, ‘I can cover your shift on Tuesday afternoon.’”
7. Stress the positive
Mallet noted an effective performance booster that her company, PhaseNext Hospitality, had adopted at its highest-volume Buffalo Wild Wings restaurant, a store in Atlanta. “We started talking not about counting the number of complaints, we started talking about counting the number of compliments,” she explained.