“Our team cannot continue at the pace we are at,” said a Chick-fil-A franchisee in a Facebook post in late August 2021. “Our team members are exhausted, and we have no relief for them in our current roster.”
Perhaps you can relate.
Around the country, pizza and quick-service restaurants are scrambling to respond to the ongoing labor crisis, even amidst recent reports that consumer spending at restaurants is rising. So, if you’re an owner or operator struggling to run an understaffed restaurant, we have tips for you here.
This is the second article in our series Fighting Back Against the Food Service Labor Shortage. In our first article, we discussed the scope of the labor crisis, its challenges, and future predictions.
Today we want to focus on 9 ways well-known restaurants are creatively handling the labor crisis. We hope that learning the strategies that others are employing may help you manage the shortage in your own restaurant.
1. Increased Wages
We’ll start with one of the most obvious responses to the labor crisis. Due to fierce competition to attract new workers, several large chains have increased employee wages. For example:
- Mcdonald’s raised hourly wages by an average of 10 percent. Entry-level employees will make between $11-17 per hour, and shift managers will make between $15-20 per hour.
- Darden Restaurants, the parent of Olive Garden, announced that every hourly worker would earn at least $10 an hour, including tip income.
- Chipotle has increased wages to an average of $15 per hour.
If you’re considering raising wages at your restaurant, it’s important to know the starting salaries of other restaurants in your area to set a competitive wage. Of course, you may need a way to offset the increased wages (see #5 below). And it’s also important to remember that higher pay isn’t everything (so make sure to read #4 on this list).
2. Sign-On and Retention Bonuses
In addition to (or instead of) raising wages, some restaurants are addressing the labor crisis by awarding bonuses to new hires and employees who stick around.
- Papa Johns offers a $50 bonus for new team members. Also, existing team members are eligible for up to $400 in appreciation bonuses to be paid in increments throughout the year.
- In Columbus, Ohio, Wendy’s offers a $100 sign-on bonus for new crew members, payable after 90 days.
3. Referral Systems
In addition to sign-on bonuses for new hires, restaurants are also using referral systems to reward existing employees who bring new workers into the fold. The Papa John’s program listed above includes a $50 referral bonus if an existing team member refers a new employee. Other examples include BurgerFi and P.F. Chang’s, which also have employee referral programs.
4. Employee Benefits
As we mentioned in the first article of this series, although wages in the food service industry have increased dramatically, we are still facing a labor crisis. This indicates that while competitive wage is a factor for job seekers, other things matter too. Thus, you can make your restaurant an attractive workplace by setting up benefits that make sense for you and your employees.
Here are some ideas that other restaurants are trying:
- In and Out Burger offers free meals on workdays.
- Chipotle’s benefits package includes paid time off for frontline employees, with accrued vacation and sick time starting one year after the start date.
- Chipotle also highlights the chance for upward mobility with transparent career paths and certified training at every level.
- Starbucks’ Employee Assistance Program includes short-term counseling and mental health services.
- Five Guys runs a tuition assistance program for employees who want to obtain degrees in business administration, hospitality management, and finance.
- Panda Express offers a matching 401(k) of up to 4 percent.
5. Raising Menu Prices
Another strategy restaurant owners are using to deal with the labor crisis: raising menu prices. This helps restaurants offset the cost of increased wages and reduced revenue (because an understaffed restaurant usually can serve fewer customers per day).
Craig Dunaway, president of Penn Station East Coast Subs, normally sets suggested menu pricing for his franchisees at the end of each year. However, because of the labor crisis, he adjusted prices again in May 2021, bumping them about 5 percent higher than the prices set in November 2020.
“I will tell you, it’s not absorbing all the wage inflation,” he says. “If you have a sign in the window offering $9 an hour and you can’t get anybody, then you offer $10 an hour and $11. If you offer $11 an hour to start, and you have an experienced crew that’s been there one month or three months, then they’re making less, so you have to bump them up, too.”
Other restaurants that have increased menu prices include Chipotle and Texas Roadhouse. And this is an overall industry trend. According to the National Restaurant Association, restaurant menu prices have increased 7.4 percent from May 2021 to May 2022.
6. Reducing Operating Hours
With fewer employees to serve customers, many restaurants are reducing operating hours. This widespread tactic has been used by businesses including Mcdonald’s, Burger King, Popeyes, and Yum Brands (which operates restaurants like KFC, Pizza Hut, and Taco Bell).
If you’re interested in optimizing your business hours, here are some tips:
- Look at your POS to find statistics on hourly sales to determine your best business hours.
- Use analytics from your cloud phone system to examine call volume based on the hour of the day and day of the week.
- Make a data-driven decision, and let your customers know your new schedule well ahead of time.
7. Limited or Closed Dining Area
Remember the quote from Chick-Fil-A that we began this article with? The franchise owner expressed overwhelm and the inability “to continue at the pace we’re at.” The solution they turned to was to close the dining area and offer drive-through services only.
As Eater states, ghost kitchens (including delivery-only pizzerias and restaurants) “are the wave of the future.” Restaurants trying to navigate the current labor crisis may consider temporarily closing dining areas or limiting the hours that dining-in is available.
8. Embracing Technology
Pizza and restaurant owners are also embracing technology that can help them automate, simplify, or speed up processes, which helps when fewer workers are available to handle customer demand. Some creative examples include:
- Chilis deployed a server robot named Rita, who helps team members by seating guests, delivering food, and even singing Happy Birthday.
- Jet Pizza launched a “text to order” option allowing customers to order via text message at the brand’s 275 stores.
- A newly-configured Taco Bell uses digital kiosks and food lockers to save on labor-related needs and costs.
As QSR mentions, technology, from self-serve kiosks to tableside tablets to kitchen display systems, can help restaurants address the labor crisis.
9. Menu and Purchasing Changes
Finally, restaurants around the country are also getting creative with menu changes and purchasing adjustments that will help them save on labor costs (and needs) while raising revenue. According to this Forbes article, Wendy’s is now purchasing pre-chopped lettuce to save on labor time, and Wingstop has shifted to a “whole bird” strategy in reaction to the increased price for wings.
The article points out that:
- Less labor-intensive food items are gaining in popularity in restaurants.
- Orders to suppliers for frozen food items and premixed beverages are increasing.
- The use of premade items (versus from-scratch cooking) is growing.
Thriving Despite the Labor Crisis
This article shares many examples and strategies well-known restaurants are using to survive and thrive despite the ongoing labor crisis. You can use this list to evaluate your options and discover what will work best for your pizza or quick-service restaurant. Of course, another solution to managing the labor crisis is attracting and hiring more quality workers. We will continue with that topic in our next article of this series.