The restaurant and food service industry are facing a reckoning— Adapt or Die

Pre-pandemic, despite the total number of restaurants nationwide increasing +16% (‘07’-’18), new entrants joining the labor pool were drying up or flat (leading up to the COVID-19 pandemic). The teen labor force participation rate has been stagnant for 4 yrs and counting— In 2007 there were 1.7M teens working in restaurants; and in 2018 there were still only 1.7M teens working in restaurants. More from CNBC

In the restaurant and food service space teens used to dominate the adults aged 55+ by a 3–1 ratio; But prior to 2020 it was down to 2–1. So restaurants face a real labor challenge where they aren’t attracting young entrants to the sector, and over the last decade alone they’ve dealt with triple-digit turnover rates as the norm. Coupled with cyclical seasonal hiring, a severely low length of employment <2 months (average), a replacement period over 30 days (pre-COVID), and high replacement costs approaching $6,000 per head. The total expenses stack up to almost $150,000 per location per year. See The Real Truth About Hiring +Staffing in Food & Beverage and Hospitality And we must accept reality that COVID and the government response are having a direct impact on the labor pool.

These labor challenges alone (and how it’s been addressed) cumulatively drained industry coffers -$146B in 2019. Adding insult to injury, the industry has repeatedly sought help from the federal government as PPP and other programs were not designed to really help this sector sustain itself during continued shutdowns like we’ve seen across the country; though it appears the $120B Restaurants Act will be included in the next gov tranche if both sides can get to a decision to help the American people close out 2020.

But back to the -$146B… The use of more job boards, posting open jobs on social media, contracting with an external recruiter/agency (or building an internal talent recruitment team), better scheduling software, or offering flexible staff scheduling— do nothing to stop this bleeding. Zip. Zilch. Nada. Frankly these purported “solutions” don’t get these businesses any qualified (& reliable) workers in a streamlined way; the spiral will continue unabated.

It’s undeniable — A business cannot schedule workers that don’t exist! It’s simple math: a business has 10 total employees but really needs 20 employees in order to operate at full staff levels. What if someone doesn’t show up to work, quits, or God-forbid contracts COVID-19? How do they quickly and efficiently close this gap in the short term— long term? Because not closing the gap costs businesses revenue and further strains the employees they do have on hand. Going understaffed for any period of time is a sure recipe for disaster; and the use of flexibility tools, scheduling apps, or shift trading apps are helping jack shit!

There’s a disconnect between these businesses in desperate need of staff and the qualified industry workers looking to make more money leveraging their skillsets in a frictionless way. Just like you and me these workers value their precious time, and they value themselves more than businesses care to acknowledge. And the rise of the gig-economy and “gig-trade” are evidence that people want to leverage themselves and their time without the hassle or obligations associated with being an employee.

Widgets and job boards don’t go the distance to eliminate the root problem— Securing workers is a pain in the ass and the majority of managers are not good at this facet of the job. To believe otherwise is foolish. The turnover rate in the industry tells me everything we need to know about managements capacity to source, recruit, train, retain. And I empathize with management (& forgive them) for listening to the sales pitches and trying every tool available to them.

There is no further time on the clock to make adjustments and truly adapt to the new normal. The goal should be eliminating behaviors that don’t have a direct meaningful impact on the primary problem, rather than doubling down on rigid low ROI behavior. And the simple solution is staff augmentation through the gig-economy and use the rise of ‘gig-trade’ to scale the workforce as needed.

“We’re looking at a very different restaurant technology picture now than we were before the pandemic began,” says Jean Chick, a principal in strategy consulting and restaurant and foodservice leader at Deloitte. “The restaurant of the future — really, the restaurant of today — requires a more comprehensive back office technology suite, with a tight integration of systems.”

There’s simply no denying it: Restaurant operators must adapt… “Evolving customer expectations, new safety protocols, operating restrictions, and staffing obstacles are turning up the flame on investment in back office solutions and landing them a prominent spot on the IT “stove.” — Hospitality Tech magazine on the New Face of the Restaurant Back Office

The good news is that 70% of execs plan to adopt a labor model that leverages contractors/gig-workers et al as demand rises — YAY! We see the continued evolution towards tech-enabled staff management via the gig-economy, but it hasn’t been fast enough to curtail what they are facing and will continue to face long term. They are looking two years ahead, which is a lifetime as we’ve seen what’s transpired during 7 months of pandemic. Solutions exist right now that completely bypass the inherent poor quality and fulfillment that plagues “temp staffing”

The operators that are adapting are doing so with labor augmentation tools like SnapShyft and they’re surviving 2020 and have their businesses well positioned to move ahead of the competition going forward.

Adapting is ABSOLUTELY ESSENTIAL to compete AND STOP THE BLEEDING; or continue the same path that embodies the definition of insanity.