Labor Trends Fueling 2019 Restaurant Technology Decisions
As 2018 draws to a close, more and more restaurant operators say they are planning to make larger investments in back-office technology.
According to Hospitality Technology’s 2018 Restaurant Technology Study, 45% of operators said they planned to increase spend on back-of-house software — an increase from 25% in 2017.
But what’s driving this increase in back-office spending? There are three key trends driving the need for labor insights.
- A Great Guest Experience Demands Great Service
Increasing employee productivity and harnessing the power of third-party delivery services saw the biggest jumps in priority for restaurant operators in 2018. In fact, the 2018 Restaurant Technology Study shows that 40% of operators said employee productivity was the top reason for increased restaurant technology investment.
Employee productivity can be a tricky thing. Providing your team members with tools that enable communication, save managers time and streamline operations can play a large role in increasing sales and improving the bottom line.
Given the state of the labor market going into 2019, employee productivity is going to make all the difference.
- Labor Costs Will Continue to Burden Restaurants
Restaurants rank among the most labor-intensive industries, and employee productivity is crucial to making your margins count — statistics show that the revenue per fast food employee in U.S. is more than $55,650.
Unfortunately, research shows that labor costs are expected to rise 50-100% in the next five to seven years. There are a few factors pushing the price of labor higher, including a rising minimum — nearly 20% of Americans will live in a state or metro area with a $15 minimum wage within the next four years.
With U.S. unemployment at an 18-year low of 3.7%, many restaurants are grossly understaffed. According to research firm TDn2K, open chain restaurant jobs grew by 1.8% during October 2018, up from 1.7% in September. The firm’s data paints a rather dire picture of restaurant staffing levels:
- 73% are short staffed in the FOH
- 98% are short staffed in the BOH
- 57% are short staffed on Shift Leaders
- 48% are short 1st Level FOH Manager
- 53% are short 1st Level BOH Manager
Those last two data points are particularly concerning, because with fewer managers per restaurant, there’s increased pressure to hit your numbers.
- Tech Bloat Boosts Need for Consolidation
Hitting your sales target can be tough when a surplus of software is eating managers’ valuable time. In the 2018 report Building an Insight Enabled Infrastructure, Hospitality Technology found that more than 50% of restaurants use anywhere from 10 to 30 or more technologies in their daily operations.
To stay competitive, restaurants are prioritizing labor insights. Staffing and labor management ranked as the top areas where restaurants need deeper insight, according to the Building an Insight Enabled Infrastructure report.
A whopping 89% of restaurants said that labor percentage data had the highest value ranking. Scheduled overtime trend alerts were another particularly valuable — 29% said they are extremely valuable.
Much to the chagrin of restaurant managers, the HT report also found that 77% of restaurants still rely on spreadsheets for data visibility — an inefficient and ineffective way to gain valuable insights into your business.
Managers need actionable insights, not data dumps, in order to manage and optimize their labor spend. With integrated, cloud-based labor management and back-office solutions like Clarifi by HotSchedules, operators can arm managers with the data and the insights they need to execute perfect shifts.
Mary Hamill is the Vice President of Sales Solutions at HotSchedules, provider of Clarifi™, the first cloud-based intelligent operating platform for restaurants. With more than 20 years of experience in the industry, Hamill and her team help some of the world’s largest restaurant brands solve workforce and back office challenges through HotSchedules’ innovative technology solutions. She is also a recipient of Hospitality Technology’s Top Women in Restaurant Technology Award.