Restaurants Sweeten Pay and Perks to Find Scarce Workers
Quit rate among food workers is higher than ever, forcing executives to get creative
By Heather Haddon July 21, 2019 7:27 pm ET
https://www.wsj.com/articles/restaurants-sweeten-pay-and-perks-to-find-scarce-workers-11563751663?mod=searchresults&page=1&pos=7
Restaurants are sweetening pay packages and adding perks like more scheduling flexibility to attract and retain workers in the tightest job market in decades.
Waiting tables and operating deep-fryers has long been some of the lowest-paid work in the U.S., and a rite of passage for students during the summer. This year, with unemployment at the lowest level in decades, restaurants are finding fewer students and lower-skilled workers willing to take those jobs.
“I would describe working in restaurants as robotic,” said Aleena Solomon, a 17-year-old high-school student from Columbus, Ohio. Last summer she worked as a restaurant hostess, and this summer she was offered a job with Noodle & Co. She decided to take a paid internship with her aunt at a branding agency instead.
Restaurants are also spending more on bonuses and changing payment practices. McDonald’s Corp. said it is using $150 million recouped from federal tax-code changes to expand its offering to pay for college scholarships for employees and their families.
“That is a huge recruiting piece for us,” said Melissa Kersey, McDonald’s U.S. chief people officer.
More than 7.5 million restaurant and hotel workers quit last year, the most since the Bureau of Labor Statistics began releasing that metric in 2001. Around 10.7 million food-service and hotel workers were hired last year, but there were an average of nearly 900,000 job openings in the restaurants and accommodation sector in each month of last year, a record, federal figures show. And quit rates this year are even higher.
“The old way of thinking that people will work in any conditions to get a minimum wage just doesn’t work anymore,” said Luke Fryer, owner of a Manhattan burger restaurant and a former Burger King franchisee in Australia, who started the Harri restaurant workforce management site after struggling to hire and retain workers.
A recent Harri survey of restaurant employers found that 85% reported half their staff turning over annually on average, incurring thousands of dollars in costs.
Many restaurants are raising pay, of their own volition or by law. Nearly two dozen states and some big cities have raised minimum wages this year. U.S. hourly restaurant pay was $14.79 in May, the highest since that survey began in 2006, according to BLS figures that typically include tips. The National Restaurant Association predicts restaurant wages will rise 4.7% on average this year, outpacing total private-sector growth of 3.3%.
Chipotle Mexican Grill Inc. last month instituted performance bonuses of a week’s pay for restaurant workers who help hit quarterly sales targets and other goals. Chipotle also expanded tuition-reimbursement earlier this year and extended some education benefits to employees’ family members. Chief People Officer Marissa Andrada said Chipotle has directed managers to discuss career development in their quarterly performance reviews for restaurant workers.
“It’s showing an interest in people beyond this hourly job they have,” Ms. Andrada said.
Checkers Drive-In Restaurants Inc. recently started giving all employees the option of receiving their pay in more regular increments than bimonthly checks, said Marna Killian, a human-resources executive at the Tampa, Fla.-based chain’s parent company.
She said such sweeteners at its Checkers and Rally’s restaurants are necessary to compete with employers including Amazon.com Inc., which raised its minimum wage to $15 an hour last year. The federal minimum wage is $7.25. Checkers said its lowest hourly wages vary regionally and that the company has raised pay in places where competition is particularly intense.
“Amazon pays $15, and you are not in a hot, 900-square-foot box,” Ms. Killian said, referring to a fast-food restaurant. “Our jobs are hard.”
Some restaurants are devising other incentives to boost retention and staff satisfaction.
Noodles & Co. recently enhanced its parental-leave policies, while Mighty Quinn’s BBQ in New York is trying to bolster loyalty in its employees by rewarding top performers with manning the company’s food booth at concerts, co-founder Micha Magid said.
“You can go get a paycheck anywhere,” said Mr. Magid, who has hired about 25 workers so far this summer, up around 20% from last year.
Dave & Buster’s Entertainment Inc., meanwhile, is offering prizes to workers who sell more menu specials or game cards at the video-arcade chain.
And franchisees of chains including Applebee’s and Burger King have hired app developer ShiftOne to create an incentive system with the feel of a videogame that gives rewards such as free meals and more scheduling flexibility to employees who receive strong satisfaction scores from customers they serve, the tech company said.
“They want to have fun,” ShiftOne President Ashish Gambhir said.
Write to Heather Haddon at heather.haddon@wsj.com