Industry Spotlight: Recruitment, Retention and Benefits in the Restaurant Industry

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In the restaurant industry, the more things change, the more they stay the same when it comes to recruitment, retention and benefits. Today, we’ll look at the status quo, emerging trends related to staffing and benefits options for businesses in the restaurant industry.

Status quo in the restaurant industry

Bruce McAdams, a 30-year restaurant industry veteran and researcher, told Foodservice and Hospitality magazine about an ongoing theme in the restaurant industry: labour shortages. He says, “I remember thinking in 2005 that we have issues now like we did in 1985, when I started in this business. And if I look back now, we have the same labour issues in 2017 that we had in 2005. There seems to be a pandemic throughout our industry.”

That’s not the only staffing issue that’s been around for decades in food service.

Staffing challenges in the restaurant industry include:

  • High turnover.
  • The perception of this work being only for first-time employees or a steppingstone to a real job.
  • Burnout due to shift work and low pay.
  • Difficulty finding reliable workers.
  • Lack of benefits (making it hard to recruit employees).
  • Wage discrepancy between front-of-house and back-of-house staff.

Restaurants Canada reports that:

  • 20% of 15- to 24-year-olds are employed in the restaurant industry.
  • 22% of Canadians got their first work experience in the restaurant industry.
  • There are 1.2 million Canadians—7% of the workforce—employed in the restaurant industry.

According to a Research Gate publication, Human capital challenges in the food and beverage service industry of Canada: Finding innovative solutions, “The Food and Beverage Industry is thriving in Toronto, yet wages for the front of house staff fail to support a living wage for a resident in Toronto.”

Emerging trends in the restaurant industry

These recruitment and retention challenges have gone on for too long in the restaurant industry and some industry professionals are exploring new ways to deal with them.

Emerging recruitment and retention trends include:

  • Equalizing salaries across the front and back of the house.
  • Replacing tipping with a hospitality charge that’s distributed between cooks and servers.
  • Providing benefits to employees.

In 2017, Earls.67 in Calgary tested out a 16% mandatory hospitality charge (instead of tipping). The idea behind it was to even out salaries between servers and back-of-house staff. This solution didn’t sit well with staff or customers and after six months, they returned to the traditional tipping system.

That same year, Emma’s Country Kitchen in Toronto, implemented a 3% surcharge for all bills which is being used to pay for staff benefits.  Co-owner, Heather Mee, told the CBC, “We could either raise our prices or add a surcharge like this. We felt this was a very transparent and accountable way to charge more.”

In Canada, bigger companies are more likely to offer benefits than smaller businesses and this holds true for the restaurant industry as well. But small companies compete for the same talent pool which is why offering benefits is becoming more common.

Figure 1: In 2011, LIMRA found that mid-size companies are more likely to offer benefits than small businesses.

The Globe and Mail reports that, “Full-time kitchen staff at Chabrol, Atlas, Cava, Blackbird Baking Co., Mabel’s Bakery & Specialty Foods, The Drake Hotel, The Boulevard Club and Delica Kitchen all receive some form of benefits package, most of which consist of medical and dental insurance.”

In that same article, Graham Bower, partner at Delica (now permanently closed), said, “High staff turnover costs way more than good employee retention. We compared the two costs and the numbers overwhelmingly showed that it was to the business’ benefit, and our employee’ benefit, to keep them happy, well taken care of and employed here at Delica as long as possible.”

Benefit options for restaurant industry professionals, from traditional to flexible

If benefits can make employees happy and cut down on turnover costs, what are the options for restaurant industry professionals, including small business owners?

Traditional benefits offer a structured medical and dental plan for a monthly premium. Traditional benefits typically cost $300-$500 per month per employee (that’s $3,600 – $6,000 per employee per year). The downside to traditional benefits is that employers pay the premium every month, even when employees don’t use any benefits.

That simply doesn’t work for many small business owners in the restaurant industry working with slim margins.

The alternative is flexible benefits like what we offer at BeniPlus. Our Benefit Wallet is a flexible spending account; benefits can include health and dental, wellness, savings, giving and personal insurance. Best of all, you—the business owner—decide how much you want to spend in benefits per employee. Even at $200 per month per employee ($2,400 annually), you can save considerably over a traditional plan while offering your team the benefits they want (and can use). Plus, you only pay when employees submit claims.

With the restaurant industry staffing challenges overlapping with small business recruiting challenges—the smaller the company, the more likely it is to have unfilled positions—it’s worth exploring how benefits can help you find and keep quality employees.

Take 10 minutes today to get a quote for our simple, flexible and affordable employee benefits program that can help your business stand out in the restaurant industry.

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