Though it might sound counter-intuitive, the minimum wage hikes that are happening across the US in 2019 aren’t the biggest employment-related threat to the restaurant industry and its bottom line. A bigger problem – surprisingly enough, given all the talk about automation displacing low-skilled workers – is a lack of willing employees.
According to Bloomberg, fast food restaurants are resorting to unorthodox and creative methods to try and boost hiring as fewer teens enter the job market and wage hikes at several big-box retailers – including Wal-Mart, Amazon and Target – combined with near-record-low unemployment make low-paid food service work seem unattractive by comparison.
Since 1968, teenage employment has plunged, with even young legal adults avoiding work as many enroll in college (perhaps because the debt burden being incurred seems so insurmountable, that it makes more sense to focus exclusively on school to try and boost their post-grad earning potential).
Ironically, while investors and the Trump administration celebrated Friday’s blockbuster jobs number, fast-food franchisees may have been one of the few groups who interpreted it as a net negative for their restaurants.
One increasingly problematic impediment for fast food restaurants is the fact that they are typically loathe to raise wages…
Many franchisees, who do most fast-food hiring, are loath to raise wages, which must be offset by higher menu prices. They count on ample pools of workers willing to accept modest pay. So the falloff in employment among postmillennials, those less than 22 years old, is particularly troublesome for restaurants that have depended on young workers since the days of soda jerks and carhops. Just 19 percent of 15- to 17-year-olds had jobs in 2018, compared with almost half in 1968, according to a Pew Research Center study published in November. It wasn’t much better for 18- to 21-year-olds: In 2018, 58 percent had been employed in the previous year, down from 80 percent in 1968, Pew says.
…So instead, they are “rethinking” their approach to hiring workers, even offering quarterly bonuses for some of their more-senior employees.
Some restaurants are throwing “hiring parties” with free food to entice young people to consider hopping into the work force. Others have launched apps that allow workers to switch shifts at the last minute.
That’s making restaurants rethink how they recruit and retain young workers. Taco Bell has started holding “hiring parties” with free nacho fries to draw prospects. Tom Douglas, vice president for operations at Golden Gate Bell, which operates 80 Taco Bell locations in and around San Francisco, has gone further: He’s started using software to connect with potential hires. The program sends prospects text messages with links to its career page, along with occasional food freebies to lure candidates. Golden Gate Bell, which employs about 1,800 and competes with Wendy’s, McDonald’s, and big-box retailers for employees, also recently started a quarterly bonus program for hourly staff.
“The traditional way of trying to hire folks just isn’t working,” says Douglas. “We’re just trying to make ourselves a little bit different and stand out from the competitors.”
Actions that increase employee retention are also getting a lot of attention in the high-turnover business. The White Castle hamburger chain is using an employee mobile app that allows hourly staff to swap shifts at the last minute when conflicts inevitably arise. And Sticky Fingers Ribhouse, an 11-store barbecue chain in South Carolina, is asking employees for their opinions. It recently surveyed staff about its new rib recipe, along with their happiness with its uniforms. “The younger labor market, they really want to feel connected to a brand,” says Will Eadie, global vice president for strategy at WorkJam, which provides training and other digital labor services through a mobile app for clients including restaurants and retailers such as Target Corp. and Shell gas stations.
Other methods include handing out “hiring cards” instead of business cards, and trying to streamline kitchen operations to require fewer workers and making jobs less strenuous so that less-than-competent workers can still succeed.
How desperate are fast-food operators to reach the right people? Instead of business cards, managers at Church’s Chicken outlets in October started handing out recruiting cards that say, “We are looking for great talent like you!” The cards include phone numbers and emails for cook and cashier prospects to get in touch.
Meanwhile, Applebee’s, a dining chain owned by Dine Brands Global Inc., is trying to offset rising wage costs with kitchens that are easier for workers. No longer are cooks hand-cutting steaks, and it’s adding other foods that take less prep, Chief Executive Officer Steve Joyce said in December. “It’s hard to find quality folks to work in the restaurants,” he said. “We’ve got to make sure that we’re doing everything we can to make every other part of the restaurant as efficient as possible.”
Still others are focusing more on retirees and senior citizens to fill jobs once held by teenagers (which is hardly surprising given that many elderly Americans are broke).
Increasingly, chains are hedging their traditional bets on younger workers by boosting hiring pitches toward much older workers. Both McDonald’s Corp. and Church’s have said senior citizens will be a focus area to build out their ranks in 2019. Other chains including Bakers Square and Village Inn are paying to list jobs on the AARP website.
Setting aside all of the pressure exerted by the “Fight for $15” crowd, the shortage of low-skill laborers is expected to persist. Which means we’ll likely be seeing more of these in the very near future.
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