Post Pandemic Labor Strain in the Food Services Industry

Restaurant and food service industry were the most impacted when the COVID disruptions started across the world back in 2020. Economies came to a grinding halt when governments started imposing restrictions, mainly on travel and gatherings. As a result, food services industry that depended on both local and international customers started to see long term impacts. Labor cost is estimated to be around 30% of the standard revenue of a restaurant and a dramatic reduction of revenues directly translated to labor optimization, wage cuts and layoffs.

While majority of the world stayed at home and restricted outdoor dining, big restaurant chains started adapting to the situation by implementing several contactless delivery models. Investments in technology and digitalization accelerated for big players and it is paving the way for a rebound in this sector now. Nevertheless, it is approximated that almost 2.5 million restaurant industry jobs disappeared in US during the pandemic period and by 2021, food services industry was down to 2014 levels wiping of almost 6 years of growth.

The bounce back

We are in 2022 where the world is bouncing back from COVID, and the food services industry has a different problem to solve now. NRA’s (National Restaurant Association) 2022 report states that 7 out of 10 restaurant operators reported not having enough employees to support demands in their restaurants and does not anticipate this situation to get any better in the latter half of 2022 as well. Challenging times in the food services industry and prospects of higher pay elsewhere has led restaurant workers to move out in large numbers. Industry models have changed during the last 2 years with curbside, to-go and online ordering taking prominence assisted by emerging technologies making it extremely challenging to hire qualified workers and to get the industry back to its pre-pandemic levels.

Restaurant chains are making the employee hiring process extremely innovative and simple to attract talent. As younger generation comes into the workforce who are more comfortable operating from their phones, the industry is trying to attract talent by making the onboarding and operating experience simple and innovative. Biggest turnover period for restaurants are the first 30 days and another critical milestone is the 30-to-90-day period, so onboarding and retention strategies must be well thought through with the help of immersive digital experience. The continuous challenge of recruiting high-quality people remains more difficult than it’s ever been.

The industry is also seeing high turnover numbers because of the demands for flexibility from the workforce. People need flexible working hours and even remote working possibilities to engage in school, extracurricular activities, work another job, etc. and is more inclined to the “Uber” model of working. This can be addressed using robust technology investments. Making the kitchens and the back-of -the-house digitally equipped to deal with food cost issues so that the highly skilled chefs can focus on their culinary aspect is key to motivating talents. The right set of tools in the kitchen can make a big difference in employee satisfaction and retention which in turn will reflect positively on the services that are being provided to the guests. Imagine having the training team send a tiny snippet of training content to all the employees of a store real time where they see high food cost variance. Not only does it give the operators guidance to focus on their most profitable items but also enables decisions at ground level in real time adding to profitability.

The way forward

Providing access to store operators to do simple onboarding, continuous engagement, real time trainings and decision making are some of the factors that are key to address the challenges of the future. Learning management platforms that can guide employees to plan for their targets and roadmaps can help curb the 30-90-days turnover ratio. Flexibility in working hours and supportive environment for employees to pursue other activities outside work, assisted by digital apps and collaboration platforms can improve employee morale and affinity towards the brand. The “Uber” model of working is becoming increasingly popular where the employees wanting to work multiple gigs at the same time to satisfy their financial needs as well as their passion. Right technologies to support this will make the brand more attractive to the newer workforce.

Stores and restaurants need to communicate more with back-of-the-house and commissaries on demand, product assortments, deliveries and others operational aspects. Manual communication is often cumbersome and leads to several misses. Consolidation of businesses like the bakeries, premium food, catering etc. creates synergies and efficiencies in the system which can be achieved by having the right technology platforms in place.

Some of the responsibilities in these scenarios are shifting to the guests too. Guests are spending more time on their mobile devices and are not hesitant to check out the food, make their own payments, apply discount coupons on their own and more. Technology product organizations within the enterprise can help build platforms and solutions that would make the guests take up a lot of these activities without making them feel like they are doing all the work.

Future of the food service industry is already being positive disrupted with the rapid adoption of technology, change in consumer behavior and priorities, having to deal with higher-than-normal food and occupancy costs and many more factors, rightly called as the “new normal” by the National Restaurant Association. The right digital strategy is essential for enterprises of all sizes and flavors to navigate successfully through this “new normal” and any future challenges that the industry may encounter.

Author Details

Sooraj Mithran

Sooraj Mithran is a Principal Consultant in the Retail Domain Consulting Practice for Infosys. He helps architect and deliver Domain led Digital Transformation programs for enterprises and has expertise in Consulting and building high performing business solutions for his clients. He currently focuses on Supply Chain, In Store Transformations, Fresh Food Technology and has been consulting for leading QSR, Fresh Food and Beverages clients for their digital transformation initiatives.

COMMENTS(1)

  • Good to read. “Farm To Fork” value chain is digitally disrupted with automation and robotics. Post pandemic, food industry deploys innovation and best practices to optimize work force productivity.

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