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03/09/2021

4 Reasons Why Minimum Wage Hikes Call for Labor Management Modernization

Restaurants across the country are closely watching the debate over whether to raise the federal minimum wage, and how high it may go. While the $15 an hour minimum now looks unlikely to pass in the next few months, this is not the first time the debate has come up and it won’t be the last. As wages continue to rise, whether in individual states and cities or at the federal level, operators need to look for ways to keep labor costs under control.

Implementing a more modern labor management solution after the year the restaurant industry has just had may seem daunting but operating without effective labor management will continue to drag down your profitability. Getting the right tools in place now will give you immediate benefit, as well as exponential savings as wages rise.

What this modernization means for you will depend on where you’re starting from, but many modern solutions will offset wage increases in a few key ways.

 1. Optimize Labor with Predictive Scheduling

The most obvious benefit stemming from a modern labor management system is smarter scheduling. No matter how good your manager, there will be human error in writing a schedule. A solid labor management solution should be able to take the guesswork out of how many employees are needed in which positions at your daily and weekly peaks and valleys.

By integrating with your POS, your labor management can forecast sales based off historical data and predict optimized schedules based off the forecast. This helps prevent the dual pitfalls of restaurant labor with over or underscheduling. No one wants to tank their profitability by having more employees than needed but skimping on labor can be just as bad if you don’t have enough employees working to give guests a good experience.

Managers can also receive overtime alerts when employees are close to hitting 40 hours, so you can avoid paying time and a half or double time on top of a higher minimum wage. Plus, these systems will help you stay in compliance with labor regulations by managing mandatory breaks, time between shifts and hours worked for minors.

2.  Increased Employee Adoption

If you want to retain employees and reduce the time and money spent on continuous onboarding, providing employees with tools they will use can be a big help. Many antiquated labor systems make it difficult for both managers and employees to manage schedules. This means a lost sticky note could result in an employee being scheduled despite having approved PTO.

Scheduling apps let employees manage their schedules the same way they do the rest of their lives—through their phone. Employees can set availability, swap shifts, pick up shifts, and request PTO all in the app, and managers approve everything with a single click. This ease of use drives adoption, which in turn means you have better controlled labor costs.

3. Better Visibility Into Data

Restaurant operators do not lack data. You have a myriad of data points that are possible to collect but having the tools to do so efficiently and understand what it means is the real challenge. Gaining visibility means not just being able to see individual data points but understanding them and what they could mean for your business.

When it comes to a rising minimum wage, it’s important to have this data visible if you are going to improve things like employee retention, overtime management, break compliance, inconsistent scheduling and more. Modern labor systems automate data collection and compile the information in easy-to-understand dashboards so you can immediately see the metrics that matter most.

Not only will managers have the information they need to work more efficiently, but corporate can also look at trends at individual, regional, and brand levels. This helps you identify areas that could use improvement, as well as see something a particular store or region is doing well that could be rolled out more widely.

4. Improved ROI

Committing to implementing a new labor management system may not have been in the plans after surviving 2020, but as the fight for an increased minimum wage gains steam, the need for a modern labor system will only grow. Having a system in place now means you not only get the benefit of labor optimizations today, but that you’ll have a competitive advantage when labor costs go up.

The impact of these optimizations will be felt exponentially as the minimum wage increases. And in the end, the restaurants who do not begin making plans to update their labor processes now will see margins disappear when wage increases hit.

Forward-thinking restaurants know modern labor management tools have a growing role to play in successful restaurant operations. Momentum for increasing the minimum wage isn’t going away, even if $15 an hour has been put on pause. You are going to face stiff competition for labor as employment and dining normalize. It’s time to think about what modernizing your labor management approach will look like, so you’re ready to face whatever challenge comes next.

About the Author

Greg Staley is the CEO of SynergySuite, a back-of-house restaurant management platform. Greg focuses on facilitating better visibility and increased profitability for restaurant chains through the use of intelligent, integrated back-of-house technology. For more information or to discuss SynergySuite’s solutions, please contact Greg at [email protected].