Few industries are as competitive as food service. With over a million restaurants in the US alone and a rapidly increasing number of take out or meal delivery options, there’s an enormous number of businesses all fighting for the same consumer dollars.
One of the most common approaches to landing those coveted customers is to cut product pricing to fall more in line with, or even undercut, competitors. But with an industry average profit margin of just 4%, racing to the bottom by slashing prices isn’t a sustainable approach.
Instead, food service business owners and operators need to find ways to optimize other areas of their businesses, like controlling operating costs, if they want to boost profitability and remain competitive in the long run. For many food services businesses, those savings come in the form of reining in their largest continuous expense: staff.
In an industry renowned for high turnover, fluctuating demand, and a limited number of high-dollar work shifts, food services business owners and operators are increasingly looking for new ways of balancing staff management and improving profit margins — and they’re finding it in software.
Staffing cost control is critical
Food service business leaders can often feel like they’re fighting battles on two fronts. Not only are they battling other establishments for customers, but they’re also fighting for talent — servers, kitchen crew, and managerial staff.
Hiring and retaining the best talent in the restaurant business is a historically uphill battle. In fact, Michelin Guide’s research found that 59% of restaurant operators believe staffing is their greatest challenge, owing to an average restaurant staffing turnover rate of nearly 70%.
Those high churn rates occur for a variety of reasons, namely that workers have many restaurants to choose from and that the need for friendly, competent staff is pervasive in every kind of food business — QSRs, fine dining, and take-and-make businesses alike.
That kind of choice and the relative ease of finding new employment makes employee retention much more challenging and, worse, perpetuates a costly hire, train, replace cycle that eats away at a business’s profits.
And that cycle is especially damaging to businesses who either rely on manual processes or don’t have formal HR processes in place at all — especially when it comes to activities that can dramatically impact an employee’s job satisfaction, such as:
Onboarding and continuous training
Employee engagement, performance management, and career development
A primary challenge is that many employees have preferred schedules that fit their needs. They enjoy the flexibility of food service because they have families or other obligations that mean they may not be available to work at certain times. At the same time, working in a tip-driven environment, it’s not uncommon for employees to fight for shifts that have the best potential for earning them the most money per shift.
Meanwhile, training food service workers — while necessary from a regulatory and business success standpoint — is often costly and challenging to schedule as well. Initial training or onboarding is usually cursory to quickly fill immediate needs like learning the point of sale systems, the menu, food prep procedures and other core activities.
But because most food service businesses are so concerned with just getting new employees up and running, additional development opportunities like manager-in-training programs or cross-training have to wait.
Not only does continuous or non-essential training take employees off the floor and requires paying employees that aren’t doing actual work, it can also create additional complications and complexity when factoring in that many businesses employ a mix of full-time and part-time staff.
Maximizing productivity and profitability with technology
Like other industries, technology is playing an increasingly important role in food service. Business owners and operators are recognizing that it makes financial sense to find ways of bringing efficiency to engaging, retaining, and managing staff.
Fully integrated, cloud-based human capital management (HCM) solutions give food service operators unprecedented scheduling capabilities, performance management tools, and granular reporting to help them understand their cost structures and identify opportunities to reduce these costs that wouldn’t be obvious otherwise.
Specifically, modern HCM software connects various systems across a business like accounting, payroll, and sales systems to create more accurately forecasted staffing requirements using historical and predictive data. Restaurant managers can use that information along with automated workflows to rapidly and easily right-size staff schedules based on estimated demand, workforce availability, and employee preference to satisfy employee expectations and reclaim wasted dollars that cut into operating margins.
These software solutions can also help improve employee onboarding and training practices by automating intake paperwork to get new workers to the floor faster and enabling flexible, online training modules for continuous staff development — with the added bonus of creating a digital audit trail for industry and government compliance.
Beyond that, restaurant leaders can also use tools like one-to-one employee/manager modules and other performance evaluation tools to encourage individuals to grow within their role throughout the year, rather than just an annual review. That can translate to a more motivated workforce who’s more inclined to stick around longer and build a long-term career instead of just having a job — all for far less time and money spent on hiring and onboarding new staff.
The food business is an essential part of the modern economy and a major source of employment for workers across the country and around the world. But as more businesses enter the fray, business owners and operators should embrace technology solutions that help to reduce core operating expenses, improve employee retention, and boost profit margins to create more breathing room and financial flexibility in a hyper-competitive and unpredictable market.
Contact SyncHR for a free personalized demo to see modern, integrated HCM solutions in action.
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