HotSchedules co-founder and CCO, David Cantu shares insights into issues plaguing labor managers and how to address them.
There are many new issues facing restaurants when it comes to managing the workforce. From legislation to fresh competition for talent in the labor pool, operators must find ways to address these issues while still running the business and meeting the needs of customers. David Cantu, CCO & co-founder of HotSchedules highlights some of the major labor challenges that operators must content with today and offers tips for combatting them through intelligent use of technology.
What are some of the biggest labor challenges facing operators today?
DAVID CANTU: It really depends on who you’re talking to and what specific issues they are dealing with. Many of these issues impact operators differently depending on their size or region. Generally speaking, however, I can’t remember a time when there were more laws, rules and policies in play that impact labor so significantly.
Can you list some of the laws and policies that are having the greatest impact now?
DC: Let’s start with the new overtime legislation laws that go into effect on December 1st. Operators will need to classify or reclassify their employees to meet the new threshold and are asking how they are going to manage these costs and their people’s time.
Next, is the Joint Employer Legislation. This is a complicated topic, but has emerged as a major issue for restaurant brands that franchise, which of course, is a huge universe. Franchisors can be held liable for minimum wage or overtime violations by franchise owners and each individual co-employer could be responsible for the entire amount of wages due to the employee. That’s just the tip of the iceberg too.
And let’s not forget the ACA rules – there are a lot of restaurants out there that still aren’t managing this very well. Some have gone to a part-time only strategy to avoid paying for healthcare, but this has had a detrimental effect on culture, retention and guest satisfaction. I’ve heard several stories where well-known chains have used a part-time only strategy and they end up dramatically understaffed. The good news is, technology exists to help track measurement and stability periods, manage full- and part-time schedules, and provide alerts when staff members are approaching or going over those set levels. Investing in the right technology can help ensure you don’t get hit with a major fine. A great example is The Dave MacGrogan Group which is using technology to manage ACA rules.
You haven’t even mentioned the wage and tip issues that are plaguing the industry these days. Any thoughts there?
DC: Federal minimum wage increases are here for many, and on the way for everyone else. Planning for these changes is critical. There are many ideas out there for how to best manage increasing wages and new or changing tip plans. Some restaurants are using technology to gain efficiencies and save costs that they can then use to pay their workforce a higher wage.
Others are increasing the cost of menu items to offset wage increases. In those cases, however, it’s critical that you don’t simultaneously decrease service levels while increasing prices. Optimizing the labor schedule to ensure service is as good or better than it was prior to the menu price hikes is the only way to keep customers from defecting. Most customers will withstand a pricing increase, but not both a price increase coupled with a degradation in service.
Q: All this is hitting operators, while at the same time the competition for talent is fierce. How can technology help?
Today, restaurants are not only competing with other restaurants and retail establishments , but now they are also vying for employees against the new gig industry – super flexible jobs like those with Uber, Lyft, TaskRabbit etc. Operators that can use technologies to increase schedule flexibility, ease of access and communication will score major points with their teams. Furthermore, investing in the development of your people is critical. ELearning solutions can deliver training on-demand via mobile devices. These solutions are a must to keep today’s workforce engaged, while offering your best team members a career path with ongoing development – this is the best and most effective way to keep them on board for the long term.
Q: Any secrets to success for leveraging labor technology to reduce costs or gain other efficiencies?
A: Activity-based forecasting is a great way to save on labor costs and there is absolutely technology out there to help you with this. The technology will need to be able to integrate with your POS so that it can extract historical data and events. Then you can apply that information to create hours and shifts accurately. You should also be able to pull in drivers for various times of operation and revenue centers, such as the bar, carry-out, drive-though, banquet and dining room, to get a solid accounting of where you need staff.