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Survey: Historic Labor Headaches Continue


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A new survey shows that the labor headaches continue. While restaurant operators need little reminder of that and the overabundance of restaurants, a 4 percent unemployment rate and historic job openings amount to extended labor challenges, and the survey from Harri showed how they're reacting. 

Harri, a workforce management solution for restaurants, released its 2019 Hospitality and Food Service Wage Inflation Survey early this week. It relies on about 4,000 restaurants with an employee base of 112,000. 

According to the survey, most everyone has seen labor costs rise in a blend of turnover expenses and higher wages to get and retain workers. Still, half of respondents said they had turnover rates of 50 percent or more across employee and manager roles. 

Nearly half—45 percent of responding restaurants—saw labor costs rise between 3 and 9 percent in the past 12 months. One quarter saw labor costs increase between 9 and 15 percent. And 12 percent saw labor costs rise by more than 15 percent in the last 12 months—ouch. 

The way operators are responding is all over the place, but the majority (64 percent) reduced employee hours. Less than half (43 percent) eliminated positions outright. Some 27 percent eliminated ancillary positions and 26 percent deployed new labor-saving technology. A sliver (6 percent) said they started a commissary to push labor costs upstream from their restaurants. And 9 percent of operators cited labor pressure as a reason they closed an entire location. 

Nearly everyone raised wages; 88 percent of respondents said they raised wages for non-minimum wage employees. And 56 percent of respondents said non-minimum employees a raise of 5 to 15 percent. 

To cover the costs of higher wages and other employment costs, 71 percent of operators who responded raised menu prices. Almost half, or 45 percent, reworked food and beverage offerings, tweaking portions sizes or 86ing underperforming or overly complex dishes. Wingstop for instance, recently stopped selling potato salad, coleslaw and baked beans, pushing loaded fries instead. The fries sell better, and without the additional items the company cut nearly five hours of prep time from each day at each restaurant. 

In all, just 23 percent of operators have made no changes to the business to battle labor pressures.

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Tom KaiserTom Kaiser is senior editor of Franchise Times. He can be reached at 612.767.3209, or send story ideas to tkaiser@franchisetimes.com.
 
Beth EwenBeth Ewen is senior editor of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Laura MichaelsLaura Michaels is editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
 twitter.com/mlarson1011.
 

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