Scrolling through Indeed.com is an eye-opening experience. Every employer is trying to find workers because employees have a ton of options in 2023.
I’ve worked with franchises for nearly 30 years, and labor has always been tough. But it’s really tough right now.
Yet, there’s still plenty of examples of restaurants doing well – from chains like Cava, to Chipotle, to Taco Bell, with recent same-store sales growth even in the face of headwinds. And it’s because they’re doing something that keeps people wanting to come back.
As a restaurant operator, you must constantly highlight what’s unique about your concept and provide a guest experience that makes customers want to return. Part of that is your employees.
If you want to build a successful company, you need to get, keep, and grow great people – and align their compensation with your goals.
Understanding Today’s Labor Force
Young people today are motivated by different things. Many demand health care. At a lot of our restaurants, we stood out from the crowd because we offered benefits. But a lot of workers are simply motivated by a higher purpose.
People want to feel a connection to why they’re working at a certain business. If you’re trying to introduce vegan food, for example, then find employees who are passionate about that.
You must discover what young workers are drawn to. And people need to be told “Thank you.” Employers often only speak to their staff when they’ve done something wrong; nowadays that doesn’t fly.
People need to feel challenged, respected, and they need to feel part of something larger than themselves. They need to be inspired.
These are all little things we didn’t need to deal with as operators 20 years ago. But that’s our new reality.
Current Compensation Demands
As a business leader, it’s imperative that you take care of your employees – your key stakeholders. You need to pay staff members enough to keep them, keep them happy, and keep them taking care of your customers and building your business.
Are you going to pay employees the bare minimum? If so, get used to high turnover.
You must be willing to overpay to build a great staff. Look at whatever the prevailing wages are for that particular position and pay another 15%.
If you think about the significant cost of retraining new employees and running job ads – not to mention the time drain of job searches, plus the stress it places on your managers – it’s worth it to pay employees well. You can more than make up for that by driving sales. If your labor goes up three or four points but you’re able to raise sales 10% or 20%, then you more than make up for it.
It’s crazy to let great employees leave your business. It’s like dropping a pebble in the water and watching all the resulting rings; when you underpay, you have turnover, bad guest experiences, low repeat business, and you’re strapped to the business, feeling trapped.
When you have the right team you’ll have a healthier business, higher profits, a business that runs itself, a more valuable business to eventually sell, and compounding returns. And that is why you bought your business.
Editor’s note: Dan Rowe is the CEO of Fransmart, a leader in franchise development.
Under Rowe’s leadership, Fransmart developed an extensive portfolio of franchise brands, including Five Guys Burgers & Fries, QDOBA Mexican Grill, and The Halal Guys.
Rowe is Co-Managing Partner at The Kitchen Fund and FranInvest, which have invested in Sweetgreen, Cava, and Inday to name just a few. He’s an active board member of YPO and the National Restaurant Association.
The Food Institute Podcast
The foodservice industry has changed drastically since the pandemic, but who would have thought collaboration would be the main sticking point from all that turmoil? IFMA President & CEO Phil Kafarakis discusses this and how his organization is going through a transformation to better serve its members under this new industry paradigm.
