In the hospitality and foodservice industries, high turnover rates are a constant problem. In a recent interview, Luke Fryer, founder and CEO of Harri, shared the results of a company survey that looked at this challenge and its potential solutions.
Harri is a software technology platform that helps hospitality businesses build, manage and work with their teams. The company’s 2019 Hospitality and Food Service Wage Inflation Survey included more than 4,000 restaurants and 112,000 employees. The survey found that wage pressures are influencing multiple aspects of the industry, including the rise in turnover rates.
“With nearly 50% of states imposing a rise to the minimum wage in 2019, we sought to understand how this would impact the food service and hospitality industry. With the scale and velocity at which wages are increasing, operators are experiencing a rise in labor costs between 3% to 9%. Moreover, 88% of these organizations granted a wage increase to non-minimum wage employees in order to maintain equilibrium in wage differentials,” Fryer says.
One of the biggest employee-related challenges is high turnover rates. Surprisingly, rising wages are increasing turnover. The survey found that as companies make changes to their business operations, such as cutting hours, to offset wage inflation, 35% saw an increase in turnover.
“High turnover rates negatively impact operator profit and loss, and they create meaningful fallout in other parts of the business, particularly the consistency and quality of service delivery. When service falters, there is a snowball effect negatively impacting customer return rates, average checks and overall sales, which are the foundational concepts that are key to growth and sustainability for any hospitality or food service business,” Fryer shares.
Fryer points out that multiple variables affect an employer’s ability to retain talent. Although the engagement and development of employees are critical to a successful retention strategy, they are only one piece of the puzzle. Predictable and sustainable employee management starts well before an employee even begins their first day on the job.
“Most restaurant operators will tell you that employee turnover is the number one issue facing the industry. Thus, as a technology company, our mission has never been more clear in addressing this challenge. Universally, the rise in technology has played a role in bringing operational efficiency to numerous areas of the industry at different inflection points. We differ in that we view the unification of people-related workflows and data as a catalyst to solve employee-related issues, and helping people and operational leaders capitalize on the larger opportunity: to drive business performance through people performance,” Fryer says.
Technology offers different ways to solve the turnover problem. Fryer believes that an integrated, mobile-friendly technology platform that is deployed across the entirety of the employee lifecycle can help. Tech can reduce frustrations related to workflow, automate scheduling and payments, motivate staff and increase overall organization. Technology can also eliminate many of the mundane and repetitive tasks that bore employees until they quit.
“The best customer service and store experiences are driven by the people interacting with the guest. Automation can play a complementary role from an economic and efficiency standpoint, but any negative impact to the guest experience is a risk not worth taking. Machines and humans simply do not share or are in any way equivalent when it comes to intangible service skills,” Fryer says.
Fryer thinks what is actually happening is that technology expansion is allowing for businesses to increase the number of staff they need to hire. With the rise of mobile ordering and payments, self-serve kiosks and tablet-based ordering, brands like Starbucks, Panera and Chili’s need to handle greater order volumes, therefore creating a greater demand for additional staff.