The restaurant industry is expected to grow this year, but realizing big profits will be a tall order in the face of rising food and labor costs.
State minimum wage increases – ranging from 28 to 34 cents - could have a large impact on quick-service restaurants, potentially elevating a business's labor cost by several percentage points. And with wholesale food prices increasing 8 percent last year and a National Restaurant Association forecast of another 4 percent increase this year, restaurant industry profit margins will feel significant pressure.
Restaurants may look to increase prices or cut staff to offset increased costs but both responses could cost customers and further confound the challenge.
A third option exists that will help you tackle increasing costs without risking customers. Building a stronger workforce can drive increased sales, build customer loyalty and encourage repeat business, giving you cause to ask, "what cost increases?"
Hourly employees make or break the service experience, and, in turn, your competitive edge. According to American Express, 70 percent of Americans are willing to spend 13 percent more with businesses that provide excellent customer service.
Building a solid hourly workforce that will drive bottom line results can ease the blow of rising costs, but it may take a fundamental shift in your hourly hiring approach. If you hire to simply fill open positions, you're missing an opportunity to strategically build your workforce to drive growth. If you hire on aptitude first and experience second, your workforce will deliver results.
Attract the right applicants
How you start your hourly hiring process has a significant impact on your results. You have plenty of sourcing methods to choose from, but you'll maximize your sourcing spend if you speak directly to your target audience. If you're hiring hourly positions, go to where hourly job seekers go to look for jobs – an hourly-focused niche job site.
Evaluate for fit
Don't fall into the trap of hiring on experience alone. Include behavioral assessments in your application process to evaluate applicants against your restaurant's core characteristics to determine which applicants are the best fit for your open positions and are poised for success. When employees' personalities mesh with their jobs, they're more engaged in their work, are more productive, provide better customer service and are less likely to leave, reducing the need for reactive hiring.
Once you've hired your workforce of right-fit employees, you aren't done. Keeping employees engaged will keep your restaurant thriving. Three key things will keep your employees engaged in their work:
- Empowerment to make decisions on the fly to provide better customer service,
- Recognition for a job well done, and
- Training to broaden their skill base and keep the job interesting.
The pay dirt
Changing your hiring perspective to build a stronger hourly workforce is a solid approach to combat increasing hard costs. But what benefits can you expect to gain when you build a more engaged workforce?
- Job seekers applying through niche job sites are two times higher in quality than employees attracted through general job sites, and eight times the quality of hires made through traditional newspaper ads, according to a Direct Employers Association Recruiting Trends survey.
- The Conference Board found highly engaged employees outperform their disengaged colleagues by 20 to 28 percent and average 27 percent less absenteeism.
- When your entire staff is highly engaged and productive, scheduling to maximize profitability and meet your target labor threshold is easy.
- When you have engaged employees who perform better and are more productive, more work gets done in the same amount of time. Translation: less need for overtime.
- According to studies, following the suggestions from a 15-minute assessment can improve front-line sales easily by 6 to 10 percent per employee.
- Having a staff that can live up to or exceed your sales forecast helps reduce shrinkage and spoilage, which for most restaurants accounts for between 0.5 and 3 percent of lost sales.
- Engaged employees are less likely to leave. And according to People Report, which specializes in foodservice industry benchmarking, it costs more than $2,000 to replace an hourly employee and more than $19,000 to replace a manager.
- According to Harris Interactive, 86 percent of people say they've stopped doing business with a company after just one bad customer service experience. Right-fit employees provide better customer service to keep customers coming back.
Whether your restaurant sees hard benefits including increased sales or soft benefits such as management efficiencies, the benefits of building a more engaged workforce are real and are worth shifting your perspective on hourly hiring.
You have little control over increases in hard costs, but you have complete control over your hiring process. By viewing each hourly hire as an opportunity to drive growth and making strategic adjustments in your hiring process, you can build a workforce that will deliver results to help resuscitate your bottom line.
As SVP of Product and Marketing, Amanda manages product development of Snagajob's business solutions making it easier for hourly employers to source, hire, manage and train workers. She is also responsible for business development efforts. Oh, and she loves brunch.