Seven Restaurant HR Challenges to Overcome
Entrepreneurs open restaurants because they have a love of food, or a cooking talent they want to share with the world. Restaurants are often a labor of love but, if there is a lack of attention relating to the human resource aspects of the business, this dream can turn into nightmare. Below we will dive into seven restaurant HR challenges and explore ways to manage them. Keep these in mind in order to stay within the letter of the law, lower you liability, and retain employees long term.
Payroll for restaurants can be tricky because managers are on salary, servers earn tips & hourly wage, and cooks & dishwashers regularly work overtime. It becomes more complex when layered on are federal, state, and local wage rules. If workers aren’t paid the local minimum wage, or if anything mistakenly runs afoul of the Fair Labor Standards Act, owners could face expensive fines and have unsatisfied employees.
How to Overcome – make sure to be aware of the minimum wage for all restaurants. This can vary from state to state and even within municipalities within the same state. For instance, California just overhauled its minimum wage rules at the beginning of 2017. It’s also important to have an understanding of how to handle employees earning tips. Recently, the U.S. Department of Labor mandated that restaurants cannot require servers and wait staff to share tips with back-of-house staff. Though this decision has been challenged and is now pending before the Supreme Court, it’s still currently enforced. Lastly, it is necessary to understand the overtime rules for each of restaurant location by tracking schedules closely, and preventing managers from cutting corners in order to fill up schedules. Overlooking overtime abuse can result in a massive employee lawsuit and a hefty fine from the government.
Restaurants are a competitive industry with a high turnover rate, which makes it more susceptible to overlook I-9 requirements. You wouldn’t want a PR risk like having ICE knocking at the door of an establishment to lead away employees. Additionally, if the government finds out that an owner or operator isn’t dotting i’s and crossing t’s, it could lead to huge penalties and possible prosecution.
How to Overcome – Prior to a new employees start date, make sure to receive the right identification documents from every single employee and fill out Form I-9 when necessary. It’s required to keep Form I-9 for three years after the hire or up to one year after the employee is terminated. Yes, this takes more time, and it may eliminate candidates when desperate to fill positions, however following the law is always the smart move in the long term.
High Employee Turnover
It’s challenging to find people who are a good fit for a restaurants culture. According to the National Restaurant Association, for two consecutive years, beginning in 2016, the industry had a 70% turnover rate. The loss of these employees is expensive and frustrating to restaurant owners & operators. Each loss forces an owner/operator to re-strategize scheduling and forces HR teams to scramble to find replacements. Then it takes time and effort to train a new hire, and may cause customer service to temporarily suffer.
How to Overcome – Keeping good employees can be simple, yet can become challenging in an industry that runs on tight margins. If able, it’s best to pay competitive wages, offer benefits, and provide predictive scheduling for workers (even if it is not required by law.) To be successful, it is recommended to develop a strong onboarding process to train new employees quickly and thoroughly.
Safety & Risk Management
A typical restaurant is filled with sharp chopping knives, hot bubbling pans, and fast-paced servers carrying trays loaded with delicate glassware. The risk of cuts, burns, slips, and broken glass are standard operating procedure. Something as simple as a single slip could lead to a lawsuit from an injured customer or employee. Taking into consideration all the things that could go wrong, how can you keep your staff and customers safe?
How to Overcome – Risk is inherently a part of the restaurant business and can’t be avoided, but you can manage it. For starters, developing a safety manual for all employees will give you a guideline for handling issues that arise. It’s not enough to just write the manual, it’s necessary the management team actively enforce it. Make sure that all spills are cleaned up immediately, require all employees to wash their hands, and provide safety equipment, such as no-slip mats on the kitchen floor and cut-proof gloves. Additionally, it’s important to be prepared and invest in the right types of insurance or consultant to avoid a legal or PR crisis.
In the United States, as we continue to recognize the challenges of different minorities in our community, discrimination is at the forefront. Business owners must be sensitive to both overt and subtle discrimination. This means creating a safe and accepting workplace, addressing wage gaps and promoting equal access to job opportunities. The rules surrounding discrimination are becoming more complex and more strict for businesses of all types. The federal government passed the Lilly Ledbetter Fair Pay Act in 2009, which makes it easier for employees to file a complaint of wage discrimination against their employer. Recently, several states, including California and New York, have updated their gender pay equality laws. Lastly, the Equal Employment Opportunity could soon require large employers to submit information regarding employee compensation.
How to Overcome – Have a firm understanding on the laws regarding discrimination in your state and municipality. Writing up a clear & detailed anti-discrimination policy that is included in the company employee handbook. It’s important that appropriate training is provided to the management team & employees so that all accusations of discrimination are taken seriously. Additionally, consider providing employees with a means of submitting concerns and complaints securely. Finally, it would be proactive to perform an audit of all restaurants. Take a look at the racial and gender makeup of the staff. Analyze who is being hired, who is being promoted, and wage equality. If anything is cause for concern, address it immediately.
Regulating food and labor are important factors for a restaurant owner when controlling costs. Proper menu planning, sales forecasting and employee training are a large focus area when trying to prevent overspending. Looking at the big picture, you will spend the most when creating a valuable staff, purchasing supplies & equipment with the intention of providing quality dishes in a great environment. It might not be most cost effective to use a variety of planning, monitoring and evaluating techniques to control costs. It’s important to consider how your restaurant can save money each month, while still operating at an optimal capacity.
How to Overcome – Nowadays, everything is available with a digital copy, and a great way to avoid excess costs is by automating employee data into a paperless system. One great way to reduce expenses in your restaurant is investing in the appropriate tools for your staff. Between hourly wages, benefits and even training, the cost of employees are high. If you don’t currently have standardized hiring practices in place, there should be. Hiring the right people will decrease turnover, cutting down on training costs, and increase revenue through customer satisfaction.
Making sure that your restaurant is running efficiently is crucial to its success. Having multiple systems and processes that don’t interconnect can cause delays in your business and prevent it from running smooth. Restaurant environments are generally fast-paced and require the utmost efficiency. This is due to being a customer service focused industry. Creating success heavily depends on the flow with which a restaurant operates — customers placing orders, orders being fulfilled and then delivered to satisfied customers.
How to Overcome –Review your current processes. Begin with how employees are hired, look at how you create your menu, How orders are placed, how are sales calculated, what is you payroll process, ect… Consider the technology you are using for these operating processes. Making the right investment in technology could allow for your staff to easily clock in & out, swap shifts, input orders, calculate tab totals, easily distribute tips and more. With an automated restaurant system in place, your staff is then able to focus on creating a better overall customer experience for your restaurant.
How to Manage It All?
It can feel overwhelming to try and manage all of these different risks while still trying to keep the restaurant operating seamlessly. While there is food to make, ingredients to order, and staff to manage it can be hard to find time to write an employee manual, develop an onboarding process, audit the restaurant hiring policies, and stay current on the local wage laws.
Luckily, there are resources available through Stratex to automate and simplify the additional restaurant responsibilities discussed here. Stratex is able to help handle the biggest HR risks, to lower liability and allow the focus to be on what’s enjoyed most– sharing unique dishes while creating loyal happy customers!