Expect higher pay and more benefits. But don’t anticipate a legion of robots
Given the current difficulties restaurant operators are facing in recruiting and retaining workers, they can count on managing employees and the business differently in 2022.
For one, operators will be paying workers more and providing more benefits. And they will be finding ways to make work more flexible.
But don’t count on robots taking over many of the restaurant functions, unless it’s automation to replace some corporate employees in specialty data-driven jobs, like forecasting and supply chain.
But adapting to the future is in the hospitality DNA, and that applies to the workforce as well.
“Diamonds are formed during heat and pressure,” said Melba Wilson, owner of Melba’s in New York City and president of the New York City Hospitality Alliance. “I think there are some definite gems that have come out of this extremely difficult time. One of those is the ability to adapt. We were forced to adapt.”
Raising wages
The COVID-19 pandemic closures and impact on the hospitality industry made it clear how close to the financial edge many restaurant workers were, said Susan Feniger, co-founder of Border Grill in Los Angeles and Las Vegas, who joined Wilson on a recent James Beard Foundation webinar.
“There are some definite gems that have come out of this extremely difficult time. One of those is the ability to adapt,” said Melba Wilson, owner of Melba’s in New York City and president of the New York City Hospitality Alliance.
“It made very clear how vulnerable our staff is,” Feniger said, citing their prolonged unemployment and other challenges, including healthcare.
“It really raised for us this awareness of how we have to figure out how to shift our industry into more equality front-of-the-house/back-of-the-house,” said Feniger, adding that such moves would require a cultural shift.
That shift may be occurring sooner rather than later.
In mid-March, Orlando, Fla.-based Darden Restaurants Inc. had about 115,000 hourly non-tipped employees compared to 165,000 before the COVID-19 restrictions. Those are at 1,822 casual- dining locations, which include Olive Garden, LongHorn Steakhouse, The Capital Grille and other brands.
Gene Lee, Darden’s CEO and chairman, said the company was increasing its team member wages to at least $10 per hour, including tip income, at the end of March and planning further increases in 2022 and 2023.
“This increase will impact 20% of our hourly team members, and we’re also committed to increasing the amount to $11 per hour in January 2022 and $12 per hour in January 2023,” a Darden spokesman said.
“We’re strengthening our employment proposition, which is already strong,” Lee said. “We’ve got to staff it. We’ve got to train people. We’ll train people now in a very high-volume environment.”
Darden increased its team member wages to at least $10 per hour, including tip income, at the end of March.
Adding to the bill
Denver restaurateur Troy Guard is planning to permanently close his flagship TAG restaurant on Larimer Square this month because of staffing issues. His TAG Restaurant Group also has Bubu, FnG, Guard and Grace, #Hashtag, Los Chingones and Tag Burger Bar. “Labor is so challenging because now we’re having to pay dishwashers $18-$20 per hour and having to put service charges on check to help with BOH,” he said. The Denver minimum wage is $14.77 an hour.
To pay for the back-of-the-house pay increases, TAG restaurants have added a service charge of 3.5%.
On guest checks, the brands add the note: “In an effort to bridge the wage gap between the front and back of house, TRG has committed to not raise our menu prices (increasing tips, and the gap), but does apply a 3.5% surcharge to all checks. This allows us to compensate our kitchen team above minimum wage as well as contend with increased sanitation and supply costs. We truly appreciate your understanding, contribution and patronage.”
Troy Guard’s TAG restaurants have added a service charge of 3.5% to close the gap between front- and back-of-house.
Feniger said restaurants also will be looking at healthcare benefits, the lack of which were so brutally exposed during the pandemic.
“Restaurants are suffering so much,” she said, “but we have to figure out how we make sure our staff has health insurance.”
Feniger added that she feels restaurant employers have a responsibility to figure that out. And the customer may figure in as well.
“How does the customer bear some of those expenses?” she asked. “How do you then supplement even more than we do already for health insurance because for someone to have to pay an additional $100 a month is a huge amount of their paycheck? If it’s going to mean that’s going to feed their family or they’re going to have health insurance, it will be going to feed their family.”
Cutting labor costs
The near-future of the workplace will also include automation, but probably less widely in the areas of food-prep robots and autonomous delivery vehicles.
Kristi Klitsch Weaver, a senior partner in the consumer practice for the McKinsey & Co. consultancy, told the recent Chain Operators Exchange, sponsored by the International Foodservice Manufacturers Association, potential returns for automation in the retail-hospitality-foodservice segment are high.
But, so far, progress toward automation in the restaurant industry has been low, she said.
“The sky is the limit in terms of automation,” Weaver said. “I think those that really invest in this — again this is where the digital data technology is a capability — not only unlock automation as a fundamental cost driver but drive it as a competitive advantage.”
Areas of the restaurant business that could benefit from automation, she said, including routine back-office tasks such as finance, information technology and human resources as well as ordering, menu architecture, procurement and supply chain.
Analysts expect restaurants will continue to increase their demand for workers as capacity restrictions ease in the COVID-19 vaccine era.
Forecasters expect the employment rebound in leisure and hospitality to continue toward a peak that’s expected in July, according to Geographic Solutions Inc., a workforce software company based in Palm Harbor, Fla.
Leisure and hospitality employment hit bottom at almost 8.7 million jobs in April 2020 and rose to 13.8 million jobs in March 2021.
Millions more workers will be added to the industry as the recovery continues, the company said.
“U.S. employment in the [leisure and hospitality] industry will peak at around 15.75 million in July 2021, then slip after the end of the summer tourism season,” the company said. “The recovery will likely not be completed until the end of 2021 or the first half of 2022.”
Mary Hamill, vice president of solution engineering at Fourth, the workforce and inventory software company, said restaurant employers will be seeking ways to foster collaboration among workers and expand their training and educational opportunities.
“Recruiting and retaining workers comes down to employee experience,” Hamill said. “With well-designed workforce management processes and tools, brands can leverage technology to create seamless scheduling and a better overall work experience for employees and management.”
Collaboration amongst workers, such as offering them flexible shift changes, will help optimize the restaurant workforce, she said.
Learning new skills will be especially important for workers. “We expect restaurants will be making even more of an effort to engage employees with additional educational and training offerings,” Hamill said.
