Across the U.S., restaurants are restricting their hours and shutting down altogether because there’s no one available to work. “The Great Resignation” that gained steam over the summer saw more than 706,000 food service workers leave their jobs in restaurants, dining facilities, bars, and hotels in May. Many critics and some foodservice employers are under the false impression that no one “wants to work” anymore, or that the extended, additional unemployment benefits are the only culprit of the shortage. However, recent labor reports prove this isn’t true and that staffing issues are more complicated than one factor.
The Real Reason Servers Aren’t Showing Up
Restaurants have an unfortunate history of underpaying and overworking their employees. From servers to bartenders and cooks to cleaners, turnover in the restaurant industry is alarmingly fast. And the pandemic didn’t help.
The average server salary in the U.S. is just $19,076 per year, while the living wage for a single adult is about $32,000. For workers whose jobs rely primarily on tips, the pandemic was devastating to their income. With indoor dining shuttered, people had less money to spend on eating out, and the risks and uncertainty were high.
Many restaurant workers went searching for jobs that offered a stable paycheck. One survey found that 15 percent of hourly restaurant workers changed industries in the past year, especially when indoor dining first shut down in 2020. Thirty percent of former restaurant employees got an office job, while 17 percent switched to teaching or education. Many others turned to warehouse and logistics jobs that support fast-growing e-commerce categories.
Profit Margins are Tight, and Hands are Tied
The restaurant industry knows morale is down, and keeping staffing levels up is a challenge. Some diners are still wary of eating out as virus variants surge, reinforcing indoor dining mandates. And then, there are spiking food prices and material shortages in addition to labor shortages. Restaurants are clearly not out of the woods yet.
In the best of times, restaurants operate under the thinnest of profit margins to competitively offer their customers the best value. These already narrow profit margins were made even tighter by fluctuating regulations and dining habits. Restaurant owners recognize that wages must improve to attract servers but find their hands tied without available funds to provide employee rewards.
A Win-Win Solution
Employee rewards programs are arguably one of the most valuable tools the restaurant industry can invest in to attract labor and expand their profit margins. Restaurants that regularly reward staff performance by making sales incentive programs standard practice are more likely to experience higher retention rates. And as anyone in the restaurant industry can attest to, new staff are attracted by word-of-mouth. Motivated, well-rewarded employees are going to spread the word amongst their peers.
An employee rewards platform can fundamentally change the restaurant sector’s workforce economics is a game-changer for restaurants by directly allowing operators to directly share revenues with workers as a reward for maximizing their sales influence within a brick-and-mortar environment. A platform like SparkPlug’s that plugs right into a restaurant’s POS system, enables operators to easily run sales contests and monitor their results in real-time. The restaurant’s sales campaign goals are communicated to servers via SMS messages. Staffers who upsell specific menu items or end the night with the largest check average will receive monetary or quality-of-life, like paid time off, rewards.
In today’s challenging labor market, incentives are necessary, providing workers with a different kind of motivation than wages. Restaurant owners need a workforce that’s engaged, not just showing up to clock in and out. They need workers who turn up motivated and excited about what they can accomplish during their shift, knowing they’ll be rewarded for their efforts, too.
The author, Andrew Duffy, is CEO & Co-founder of SparkPlug