Want to get through the labor shortage? Get creative

Jim Balis, managing director with CapitalSpring, says operators should try everything from artificial intelligence to cryptocurrency to help get workers.
restaurant labor shortage
Kiosks could get new life as the restaurant labor shortage continues./Photograph: Shutterstock

Jim Balis, managing director of strategic operations for the investment firm CapitalSpring, has been in the restaurant business since he was 14. Like many experienced operators, he’s never quite seen anything like the dual labor and supply chain challenges currently facing the industry.

“If somebody would have told me a year ago that 2021 would be more difficult than 2020, I would have told them they were crazy, but here we are,” he said on a recent episode of the RB podcast “A Deeper Dive.” “It’s a tough situation between staffing challenges, prices for commodities, supply chain shortages, trying to build new stores when you can’t get walk-in equipment. It’s very difficult.”

Overcoming these challenges, he said, takes creativity, especially on the labor side.

Consider, for instance, cryptocurrency.

CapitalSpring invests in a wide range of concepts. Some of them have found that handing out bonuses in bitcoin can be more attractive to workers than actual currency. “You wouldn’t believe that $100 in bitcoin is more valuable than $200 in cash,” Balis said.

“There’s greater appeal to getting bitcoin. The number of applicants we get is significantly greater than a cash signing bonus.”

There is another strategy some of his firm’s concepts are taking that are more traditional—such as hiring retired people part-time.

Many retired people may not want to work a full eight-hour shift and prefer working behind the counter. But they can add a valuable piece to a company’s culture while helping deal with the very real labor issue.

“It’s a huge value-add to the culture,” Balis said. “You have young kids and maybe an older person acting like a mother hen or camp counselor. That’s two added benefits.”

Labor has been a massive problem for several months as industry sales have surged but the number of people working has not increased. Some 6.6% of workers in the accommodation and foodservices industries quit their jobs in September, according to federal data.

Meanwhile, chains of all sorts are saying that a lack of workers is hurting sales, the latest being Jack in the Box, the San Diego-based burger chain that last week said that its same-store sales would have been 3% higher but for a lack of workers.

While creativity has become important for many restaurants pushing to overcome this challenge, technology is also playing a bigger role.

For instance, kiosks could become even more common, Balis said. The industry has been adding them at a relatively modest pace over the past few years. But uncertainty about labor could push more fast-food chains could add them to save on labor. “A lot of brands have tried to maintain the integrity of person-to-person interaction,” he said. “But utilizing that type of technology, whether it’s on the phone or the kiosk, is inevitable.”

Voice recognition is also becoming more common. While chains such as McDonald’s have taken deliberative steps to test voice-activated ordering in their drive-thrus, some smaller chains have taken more aggressive steps, such as the burger chain Krystal.

And robots, Balis said, should also take a greater role. They’ve already proliferated other industries, such as manufacturing. Restaurants need to take a harder look at that technology. “The robot doesn’t call out sick, works on weekends and holidays and doesn’t have drama with other robots,” Balis said.

In addition, Balis said, restaurant companies should use different criteria to manage labor efficiency. His company looks at transactions per labor hour, rather than sales per labor hour. Higher prices have clouded the ability to measure efficiency based on sales.

Either way, restaurants need to find ways to get more efficient. “The power dynamic has shifted to the employees,” Balis said. “It’s about how can I hire one less person.”

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