INDUSTRY REPORT

ENGAGINGRESTAURANT

EMPLOYEES

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Despite the daily pressures of the restaurant business, owners are an optimistic and forward-looking lot.

That’s in part because the business starts and ends with people: the ones who create and prepare, those who advise and serve, and, of course,

the patrons fed.

In fact, few industries rely more on its workforce’s connections with customers than restaurants. And very few industries enjoy as high levels

of employee engagement. Employee engagement, defined as the strength of the mental and emotional connection employees feel toward

their places of work, affects just about every important element of a restaurant — profitability, revenues, and patron experience.

However, no business is immune to the pressures of the marketplace, particularly pressures affecting its workforce. Today, three challenges

threaten the viability of even the most established restaurants:

TRAINING EXCEPTIONAL

CUSTOMER SERVICE

DIFFICULTY RECRUITING & RETAINING

QUALITY STAFF

SHIFTING LABOR COSTS & REGULATIONS

1 2 3

3 | Engaging Restaurant Employees: Industry Report

THE GOOD NEWS About 92% of restaurateurs said they are optimistic for their sales in 2017. And 86% of restaurateurs believe the success of their business is in their control.1

It’s no surprise restaurateurs feel this way, given the state of employee engagement in the restaurant industry: 68% of restaurant workers are engaged, 2 points higher than the national average of 66%, according to our annual Employee Engagement Trends Report.

That optimism and engagement has helped to not only push restaurants to the lead in total U.S. job growth, but also add middle class jobs at a stronger rate than the overall economy.

92% are optimistic

about 2017 sales

86% believe success is in their control

NATIONAL AVERAGE

LOGI

STIC

S76

.8%

CONS

TRUC

TION

72.7%

PROF

ESSI

ONAL

SE

RVIC

ES72

.2%

REAL

ESTA

TE72

.0%

TECH

NOLO

GY71

.7%

FOOD

& A

CCOM

MAD

ATIO

N68

.3%

OTHE

R SE

RVIC

ES68

.3%

TRAN

SPOR

TATI

ON &

W

AREH

OUSI

NG66

.3%

MAN

AGEM

ENT

OF

ENTE

RPRI

SES

65.9%

RETA

IL65

.2%

FINAN

CE &

IN

SURA

NCE

64.8%

MAN

UFAC

TURI

NG57

.9%

EDUC

ATIO

N60

.1%

HEAL

THCA

RE56

.9%

ARTS

&

ENTE

RTAI

NMEN

T60

.1%

UTILI

TIES

52.4%

WHO

LESA

LE

TRAD

E58

.2%

GOVE

RNM

ENT

51.1%

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4 | Engaging Restaurant Employees: Industry Report

THE BAD NEWS

Challenge 1: Shifting Labor Costs & Regulations

Rising labor costs and a complex legislative and regulatory landscape on federal, state, and local levels add pressure to business performance and bottom lines. Wages are going up, due indirectly to an employee shortage and more directly to increased minimum wages throughout the country. In addition, restaurants continue to increase wages as a way to recruit and retain highly skilled workers.

Some organizations are experimenting with new pay models altogether. For example, in late 2015, New York City’s Union Square Hospitality Group eliminated tipping in its 13 restaurants. The reason? CEO Danny Meyer told The New York Times that during his 30 years in hospitality, “[K]itchen income has gone up no more than 25 percent. Meanwhile, dining room pay has gone up 200 percent.”

Regardless of their preferred approach to handling such challenges, the most successful restaurants have prioritized above-average pay to boost retention rates and offset financial struggle among workers.2

Challenge 2: Difficulty Recruiting & Retaining Quality Staff

About 46% of restaurant owners name hiring, training, and retaining staff as their biggest challenge in 2017.3 While current turnover is relatively low, compared to record highs just before the economic downturn, it is trending up. The competition for employees will only intensify as the economy continues to improve. More than one in four restaurant operators say they have difficult-to-fill job openings. (The biggest challenge? Finding applicants for back-of-the-house.4)

Because the restaurant industry employs more immigrant labor than most others, proper hiring of work-eligible immigrants remains a major area of hiring concern. Restaurant operators must be careful to track all appropriate information without demanding too much documentation from their employees and risking document abuse.5

Three major challenges in the workplace today threaten those high levels of engagement among restaurant employees.

1

2

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5 | Engaging Restaurant Employees: Industry Report

Challenge 3: Training Exceptional Customer Service

What about the 46% who name training as their biggest challenge? The rise of fast-casual restaurants like Chipotle and Panera has noticeably shaken the restaurant industry. For mid- and high-end restaurants, this means having to compete with quick, cheap meals and differentiating themselves with exceptional customer service and one-of-a-kind ambiance. For the other guys, this means creating quicker, cheaper meals, for which you need friendly, efficient, and multi-skilled staff.

The bottom line? As more and more restaurants flood the market, skilled employees who interact well with patrons are a must. Well-prepared employees are happy employees, and happy employees are able to pass on the same sense of care to their patrons. Restaurants must thoroughly train employees on fragmented softwares, constantly changing menus, and customer interaction if they are to beat out the competition.

3

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3 STRATEGIES TO DRIVING ENGAGEMENT

FOR RESTAURANT EMPLOYEES

To drive employee engagement, there’s no better place to look than employees’ own answers. The following three

items have the highest levels of correlation with high employee engagement among restaurant employees.

Learn the three key drivers of restaurant employee engagement and how to leverage these to create

an engaged workforce.

7 | Engaging Restaurant Employees: Industry Report

HR Recommendations:

• Find out what motivates your employees in the restaurant — do they love creating a masterpiece of the food variety? Do they love putting a smile on a customer’s face? Are they energized by the rush of patrons during your busiest times?

• Rather than force an employee to succeed in a role that doesn’t suit their skills, be flexible with the role they take in the restaurant.

• Prepare for employee strengths and interests to change over time. To retain an employee for more than a couple years, be willing to accommodate dynamic employees.

Engagement Driver 1:

RESTAURANT WORKERS FEEL THEIR JOB ALLOWS THEM TO USE THEIR STRENGTHS.

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8 | Engaging Restaurant Employees: Industry Report

HR Recommendations:

• For employees who work in a chain restaurant, where the owner isn’t visible or available the majority of the time, encourage local-level leaders and managers to have a discussion about the impact that a restaurant’s senior leadership has on the day-to-day aspect of the restaurant’s success.

• Share messages from leadership and corporate headquarters whenever possible and hold discussions about new products and upcoming changes in a timely manner.

• Encourage your employees to research the current company leadership and company history as part of their initial onboarding.

Engagement Driver 2:

RESTAURANT WORKERS TRUST SENIOR LEADERS TO LEAD THE COMPANY TO FUTURE SUCCESS.

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9 | Engaging Restaurant Employees: Industry Report

HR Recommendations:

• The tired Employee of the Month Award might need a revamp: let employees choose their desired shifts for the next month, give them a gift card to their favorite restaurant (other than the one they work at!), or allow them to train on a specific role they are interested in.

• Invest in a real-time recognition software. Unlike a typical office environment, a restaurant’s shift schedule means employees don’t interact with a majority of their teammates on a regular basis; this software will help employees feel like a part of the collective organization.

• Create a culture of everyday recognition. Recognition needn’t be extravagant to be real: Be polite, be friendly, and say thank you. Hot-tempered chefs in the mold of Gordon Ramsay or Anthony Bourdain make great TV, but not engaging work.

• Ask each of your employees, “How do you like to be recognized?” Personalization is the most important part of recognition.

Engagement Driver 3:

RESTAURANT WORKERS FEEL THEY ARE RECOGNIZED FOR THEIR CONTRIBUTIONS TO THE ORGANIZATION’S SUCCESS.

How to Choose an Employee Recognition Software That Fits Your Culture

Read More Now

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10 | Engaging Restaurant Employees: Industry Report

Quantum Workplace

YOUR PARTNER IN MAKING WORK AWESOMEQuantum Workplace’s employee engagement platform is a recipe for success, borne out by businesses across the U.S.—including our own.

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360 FEEDBACK

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11 | Engaging Restaurant Employees: Industry Report

Sources

1 https://cdn2.hubspot.net/hubfs/412971/Content_%2B_Assets/toast_success-report_2017.pdf?__hssc=164422816.1.1498052557513&__hstc=164422816.92c14dfe671ea1465ba537f2654429cc.1497884355057.1497884355057.1498052557513.2&__hsfp=2966074484&hsCtaTracking=4733babb-4fad-4cab-9b04-e04a0e9e8807%7C1c905d34-3126-4b0e-8973-054122a20017

2 http://wheniwork.com/blog/smb/for-your-industry/restaurants-cafes-bars-coffee-shops/restaurant-management-trends/

3 https://cdn2.hubspot.net/hubfs/412971/Content_%2B_Assets/toast_success-report_2017.pdf?__hssc=164422816.1.1498052557513&__hstc=164422816.92c14dfe671ea1465ba537f2654429cc.1497884355057.1497884355057.1498052557513.2&__hsfp=2966074484&hsCtaTracking=4733babb-4fad-4cab-9b04-e04a0e9e8807%7C1c905d34-3126-4b0e-8973-054122a20017

4 http://www.restaurant.org/News-Research/Research/Forecast-2017

5 https://www.modernrestaurantmanagement.com/from-boston-to-la-labor-issues-top-of-mind-for-restaurant-operators/

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