Technology

4 tech options to help manage labor shortages

Restaurants hoping to keep up staffing levels must pay more, which means cutting food and labor costs. Automating kitchen tasks, transforming customer phones into order takers, relying on data instead of instincts for inventory management and using apps to track hiring are just a few ways to pull that off. Part 1.

istock

February 21, 2022

Nearly 3% of the total workforce quit in late 2021, but that figure was double for hospitality employees, according to a January report from the Bureau of Labor Statistics. That might be because hospitality is the lowest-paid industry, with average hourly earnings of $19.20 as of November 2021, and some tipped restaurant workers making as little as $2.13 per hour federally. Quit rates for the accommodation and foodservice industry has grown from 4.8% to 6.9% over the past year, a larger jump than any other sector listed.

With those dismal numbers, the only real surprise for restaurants facing labor shortages was that it's just now happening as opposed to years ago, according to Greg Staley, CEO of SynergySuite, an enterprise restaurant management suite.

"The high resignation rates in the low-wage restaurant industry — combined with significant job openings and hiring — indicates that our economy is facing a wage shortage, rather than a labor shortage," he said in an interview with FastCasual.com. "If the most effective way to get staff to keep restaurants open is to meet higher pay demand, then restaurants must better manage food and labor costs to increase margins."

1. Data, data, data
Relying on technology is one way to cut costs, said Staley, who recommended that restaurants tap into data — not instincts— while also using cloud-based tools and an integrated tech stack to cut food costs and control scheduling.

"Operators who don't collect data are relying on gut instincts, which is not wise and can be quite costly," he said. "Instead, make more informed decisions backed by data. In terms of labor costs, integrated software lets you track information about employee hours, wages, tips, and performance all in one place. Tech tools can also inform decisions about food purchasing, inventory, etc. to reduce waste and save money."

It's also unwise to use manual processes or disjointed tech tools that don't work together seamlessly.

"These approaches don't provide accurate, comprehensive data or a holistic view of performance metrics," Staley said. "Modern, integrated tech tools make it easier, faster, and more accurate to track food and labor costs and other key measurements (e.g., inventory, etc.) to guide better decision-making."

These tools also help cut wastes.

Predictive prep lists reduce waste that comes from over-prepping and spoilage, for example, and better inventory management solutions stop inexperienced employees from over-or under-ordering.

"Smart reporting lets operators spot variances that could indicate theft or over-portioning," he said.

Operators must also schedule smarter as overstaffing can lower profitability, and understaffing can lead to frustrated, hungry guests.

"Restaurant labor technology uses your forecasted sales and historical patterns to determine how many people need to be working, when, and for how long to keep labor costs manageable — and customers happy," Staley said.

2. Automation
Some companies are taking automation to the next level, according to Picnic CEO Clayton Wood, who said his Picnic Pizza Station can make up to 100 pizzas per hour and requires only one worker.

"Given the world around us right now, we know that food costs are at all-time highs which means that waste is even more expensive and impactful on a food service operation's profitability than ever before," he told FastCasual. "Managing labor costs is a primary benefit of automation solutions, which can eliminate errors in consistency, communication, and the wasteful process short cuts that occur during rush times with human workers. Given the challenges of the past year, we most certainly predict that in 2022 food service operators will be even more focused on finding new tech solutions for their restaurants."

Centerplate, a provider of concessions services for 135 sports and entertainment facilities, recently tested out the Picnic Pizza Station at T-Mobile Park in Seattle. Executive Chef Taylor Park said the pizza quality, consistency and speed of the Picnic Pizza Station "blew him away."

"Embracing technology is an excellent recruiting and retention tool," said Wood. "It's been shown to reduce turnover, streamline training, and improve employee satisfaction, which helps ease the stresses on current staff and make open roles more attractive, With technology enhancements and improvements in the workplace, you'll see an even better employee culture. When employees are freed from repetitive work and allowed to excel in more creative roles, it drives career pathways and retention that may have not been possible in a traditional setting."

He also said that raising pay is not enough and not even possible for some kitchens.

"We must think about new types of solutions that can solve today's challenges," Wood said. "And that's where technology and automation can come into play."

As the industry struggles to recover from shortages and shutdowns, it's more critical than ever to make operational changes now to improve efficiencies and lower costs.

"Employers need to hire strategically in customer-facing roles, and consider where automation can pick up the slack," Wood said "It's important to implement strategies, while considering new, cost-effective technology enhancements that will attract and retain staff."

3. Ordering via text

Michigan-based Jet Pizza CIO Aaron Nilsson couldn't agree more, which is why he recently launched "text to order" at the brand's 275 stores. Since its launch, customers have placed over 2 million text orders, generating nearly $54 million in sales.

"We pulled off a technological and marketing feat that brands 10 and 20 times our size have yet to accomplish, and we have a two-year head start," Nilsson said. "Artificial Intelligence is the forefront of combating labor shortages and rising prices."

He started the process in 2019 when he began considering how many new customers would come from providing ordering options via various platforms, such as Alexa and the Apple watch.

"But they all have the same flaw: fractionalized market share," he told FastCasual. "Only some people have Alexa, only some people have apple watches, etc. but everyone has text, and is everyone is comfortable with it. Societally, we are mostly past the learning curve on text, and it has luckily remained gloriously pure and simple while other platforms constantly add complexity. Plus, pizza and texting are perhaps the only thing universally embraced from Boomers down to Alphas. To me, it felt right to jump in."

Although Nilsson anticipated a drop in staffing needs, the more obvious outcome was the increase in existing customer frequency lift, new customers and net sales increases.

"Every order that comes in via text can mean one less phone call and one less trip from the makeline over to the phones from a customer who never had to hear oven noises or be put on hold when the rush exceeds the immediate phone answering capacity of the store," he said. "If phone calls average 2.5 minutes, then with more than 2 million text orders, the phone equivalent is more than 83,000 labor hours, and the number just keeps growing."

Although he couldn't share exact costs, Nilsson said ROI was extremely important but so are great customer experiences.

"Compared to a phone call, and with labor rates being what they are, text orders are profitable on day 1," he said. "But the program (on average) has added double digit growth to stores because customers love it and we have a new marketing opportunity with great extensions of the technology like party ordering, curbside delivery, reviews, phone bot, etc., all on the same platform. We calculate the ROI so that we know, but we really focus on great pizza and great customer experiences because that's what matters to our customers."

4. Hiring apps

Turning a customer's phone into an order taker isn't the only way operators can use phones to help with labor shortages. Many restaurants, for example, use hiring apps to help onboard employees faster as their benefits outweigh their costs, said Jordan Boesch, CEO & Founder of 7shifts, a provider of restaurant scheduling software.

These apps not only store applicants' information in one place, they also give users the ability to collaborate with their teams on job postings and scouting the right employees. Hiring managers use them to keep tabs on each candidate based on their stage in the hiring process.

"What it comes down to is efficiency," Boesch said. "A central spot to hold all the candidate info and notes makes hiring so much simpler. Easier collaboration, easier to post, easier to get your team to share for referrals. It saves time, and in turn, that means money savings in the long-term."

Editor's note: While technology is certainly one way to help with the labor shortages, it's not the only way to solve the problem, said Blane Hurst, former CEO of Panera Bread, who is passionate about helping adults with intellectual disabilities live more independent lives. Part 2 of "Solving labor shortages" will include interviews with Hurst and his partners about how giving these workers a chance to work in restaurants can be a win win for the industry as well as the communities they serve.