The labor market for restaurants is tight. And has been since the Great Resignation – which Harvard Business Review finds has been the result of the multi-decade symptoms of the “… Five Rs: retirement, relocation, reconsideration, reshuffling, and reluctance.”
Yet the numbers are still perplexing. According to the U.S. Department of Labor, “The number of job openings increased to 11.0 million on the last business day of December (2022).” The Department of Labor estimates 10% of these openings are in the foodservice industry.
Calling this a “deep and profound change in the labor market,” The Wall Street Journal in an article with the dark title “Restaurants can’t find workers because they’ve found better jobs” (subscription required) mentions that nearly 2 million jobs in hospitality and leisure remain unfilled.
The article goes on to report that there are 200,000 fewer jobs in foodservice today than in 2020.
Of the top challenges faced by restaurants in 2023, 51% report labor shortages and staffing as the second most daunting obstacle – right behind high food costs.
And as the largest operational cost in food service is labor – typically 30-40% of total expenses – the increasing costs of labor, highlighted in this infographic from the Economic Policy Institute, there is no labor cost relief in sight. In fact, 26 States have recently mandated increases in their minimum wage.
This labor shortage, according to the Society for Human Resource Management, is forecasted to persist for 10 years or more.
So the pressure is not relenting any time soon. Something has to give.
A popularly predicted trend in 2023 is the use of information technology to help alleviate the labor shortage. Can that ease the industry’s labor shortage?
Technology Can Mitigate the Labor Shortage and Increase Profits for Restaurants
A study conducted by the National Restaurant Association (free to members) found that restaurants that use information technology effectively, such as mobile apps and online ordering systems, can increase sales by up to 30%. So the use of the right technology does pay off.
Recently Nasdaq published “How Technology Is Helping Restaurants Overcome Labor Shortage Challenges,” which spotlights increasing technology use and the potential of robotics in restaurants helping to cope with this labor shortage.
Here at FinancesOnline, we are hearing from innovative and very busy owner/operators who are analyzing their standard operating procedures and staffing hours and determining that meshing Front-of-House apps with Back-of-House solutions will make their scrappy teams more efficient.
By optimizing inventory management, managers can reduce the staff hours devoted to time-consuming vendor and invoice management burdens while at the same time contributing to significant cost savings and increased profitability.
Forbes agrees, offering some tips and tricks on recruitment and retention, stating that investing in restaurant technology can… ”mitigate more of the time-consuming administrative tasks, such as online reservation services or automated inventory systems. Freeing your staff of these menial tasks will lead to more productivity and higher retention.”
How Inventory Management Increases Profitability for Restaurants
By improving inventory management, restaurants can achieve cost savings of up to 30% by optimizing their inventory management practices – sometimes reducing inventory management tasks by hours each day. In addition to saving time, automated inventory management can reduce waste and spoilage, minimize overstocking and overspending, and use data analytics to better forecast demand and optimize inventory levels.
How Restaurants Use SaaS Technology
Investopedia has a fairly painless definition of Software as a Service (SaaS): SaaS is a licensing model that provides software on a subscription basis, where the software is NOT located or maintained in-house. Accessed through a web browser, with users logging into the software using a username and password, business owners avoid a heavy capital investment and can focus on what they do best – rather than managing their information technology. Ideally, SaaS should be easy to implement, easy to update and maintain, and very cost-effective. Today, from Salesforce to Toast to Netflix, everybody (mostly) is exposed to a SaaS model in some way professionally or personally.
Why Restaurants Love SaaS Restaurant Technology
SaaS accomplishes things that many humans in restaurants hate to do: the technology can perform extremely tedious tasks quickly and accurately, handle tons of excruciatingly boring paperwork (think invoices!), and easily track food use and budget to spotlight profitability.
What Next Generation Information Technology Is Doing for restaurants in 2023
Without a large capital expense, the newest generation of restaurant technology is helping owner/operators do more with less and making staff and management more effective in their core tasks.
With apps like POS and online ordering making employees more efficient, the new tech helps by:
- Automating repetitive tasks: new restaurant technology automates many manual, repetitive, and labor-intensive tasks that require human labor. Restaurants can reduce their reliance on human workers for these demands and allocate their existing employees to more complex and higher-value tasks.
- Improving efficiency and productivity: the latest restaurant technology helps restaurants streamline their operations and increase employee productivity. This can be particularly useful in regions where there is a limited supply of qualified workers.
- Improving communication: SaaS technology can leverage mobile technology to allow employees to collaborate more effectively. Think about word of mouth when an ingredient or menu item is 86ed, new handheld tech can inform the Front-of-Restaurant immediately and avoid any customer satisfaction issues.
Information technology (IT) has been used reliably over the last few years to help restaurants mitigate the labor shortage:
- Online ordering: By implementing online ordering systems, restaurants can reduce the need for staff to take orders over the phone or in person, freeing up employees to focus on other tasks.
- Self-service kiosks: Self-service kiosks can enable customers to place orders and pay without the need for a cashier or server, reducing the need for front-of-house staff.
- Automated inventory management: IT can enable restaurants to automate inventory management, reducing the need for manual stock-taking and reducing the workload of the kitchen staff.
- Mobile apps for scheduling and communication: Mobile apps can enable restaurant managers to communicate with staff and create schedules, reducing the need for administrative staff.
- Contactless payment systems: Contactless payment systems can reduce the need for cash handling and reduce the workload of front-of-house staff.
Already in place, many restaurant-centric apps and platforms help restaurants mitigate the labor shortage by automating tasks, reducing workload, and streamlining operations. By leveraging IT, restaurants can operate more efficiently with less staff and reduce their reliance on manual labor.
Restaurant Tech Helps Restaurants Go Digital, Reduce Labor Costs
Many studies have shown that kitchen automation – replacing profit-draining “pen to paper” tasks “ – helps restaurants reduce labor costs, while also improving order accuracy AND customer satisfaction.
The biggest? It is important for restaurants to carefully evaluate their IT investments and ensure that they are choosing the right solutions for their specific needs and business goals.
Restaurants can increase profits by using IT effectively to streamline operations, improve customer experiences, and optimize sales and marketing efforts. However, it is important to note that the specific benefits and ROI of IT investments will depend on many factors, such as the size and type of restaurant, the specific IT solutions used, and the level of adoption and integration of those solutions.
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