by Mike Wills, Chief Executive Officer
The restaurant labor shortage: An obstacle to recovery?
The post-pandemic “great reopening” is now upon us, much to the relief of foodservice operators and consumers alike. Throughout the pandemic, operators demonstrated their flexibility by shifting their back-of-house processes to focus on off-premise orders as a method to survive. Now with pandemic restrictions lifting, many of these operators are facing choices again, represented by a different set of challenges — particularly the restaurant labor shortage.
While their off-premise order business continues to thrive, their patrons are returning in volume to their locations to enjoy dining in or to place a carryout order as they enjoy a cocktail at the bar. This may all seem like welcome news; however, many operators are throttled by the growing labor challenge as they seek to not just survive but now thrive in the re-opening wave of customers returning to their brand. According to a recent article in QSR, U.S. eating and drinking establishments remain 1.5 million jobs (12 percent) short of their ideal staffing goals. This dramatic shortage in restaurant labor, along with the rising hourly cost of labor, is the newest obstacle operators face in returning to full capacity.
A first-hand perspective on today’s challenges
Like most people, my wife and I enjoy dining out. When we do, we often sit at the bar area for the entire meal as it provides a great level of consistent service, a feel for “what is going on” with the brand and lastly, great conversation with the bartender. One night while on vacation in the Southeast, we stopped into a brand that we had not had prior experience with (another habit of ours.)
We sat at the bar and struck up a long conversation with the bartender, who also happened to be the managing partner for the establishment. She went on to tell me about their pandemic and post-pandemic experiences. Like many operators I have spoken to, they chose to re-invent themselves during the pandemic period. They reduced their operating hours, focused on off-premise orders, and made a significant investment in their dining area and experience. When pandemic restrictions began to lift, so did their returning volume. They are breaking pre-pandemic records and are thrilled with the results.
However, she said the one issue that was not sustainable was the current restaurant labor shortage, causing a lack of available workers to hire and staff for the new growth. Those employees that they’re fortunate enough to find are often lost in a matter of weeks to another brand down the street for a few dollars more an hour. It was not common for her to be paying back-of-house service team members (non-food prep) $22 an hour as a starting wage, and they had multiple openings. To offset the shortage of BOH team members, they were limiting the number of tables and overall orders they were able to take for concerns of losing more team members due to workload levels.
A perfect, post-pandemic storm
When I returned home, I found the same story taking place virtually everywhere. Brian Moynihan, CEO of Bank of America, said during a June 15, 2021 interview on CNBC that consumer spending is up over 20% from pre-pandemic 2019 levels in virtually every consumer discretionary category.
Moynihan pointed towards federal COVID relief consumer stimulus payments that families are now spending in full force as a major contributor to that growth. However, as the federal government has also extended some unemployment benefits until Labor Day (September 6, 2021), the current variables translate into a “post-pandemic perfect storm” for brand operators. Many consumers are flush with savings and ready to (re)enjoy dining out, while foodservice operators can’t fully staff up or are now paying considerably more than their operating models (prices) anticipated.
The good news is that many operators continue to see increased digital orders for off-premise dining, even as guests return to enjoy the on-site experience. During the pandemic period, many operators made important back-of-house process changes to accommodate the surge in digital off-premise order volume. Those changes included new automation investments like Contactless Food Order Pickup Lockers as a method to better serve their off-premise order customers. That same investment often increased the efficiency in their back-of-house processes, too, which is now helping them deal with the restaurant labor shortage in significant ways.
Trial and error leads many to progress
Before we discuss the many merits of automated pickup lockers, let’s unpack the other common methods for dealing with off-premises orders — which all fly in the face of the restaurant labor shortage. Think about it — how do most foodservice operators deal with off-premise orders? They assign a full-time team member to hand the order to the actual customer or third-party delivery driver when they arrive. No one can argue that this commitment provides a high level of accuracy to make sure the right order gets to the right person, but at what cost? At $20 an hour, you can easily calculate it. The answer would tell you it is contributing more cost to that carryout order.
For example, say a brand produces 12 off-premise orders an hour, or one every five minutes. The brand operator is adding another $1.66 to each order with that dedicated labor — someone who could be redeployed in a more productive and valuable area of the operation. Compared to a contactless Food Order Pickup Locker solution from Apex, the same volume of orders could be handled for 10% of the cost of full-time labor, on a per-order basis. This makes it a much more attractive solution — for the operator, the back of house team, the drivers and the customers.
Other approaches include the unattended table or shelf for off-premise orders. We are all familiar with this approach that involves bagged orders with names printed on stapled receipts but no supervision as to the right people taking the right orders. Layer on to the process multiple people touching and handling those orders and now you have sanitary concerns entering the picture. From a labor cost it certainly is the most attractive model — at least on the surface.
However, with any unattended process, mistakes happen. Distracted delivery drivers and guests alike pick up the wrong order. Once it leaves the building, the recovery for that mistake will either show up in complimentary order “re-makes,” poor post-experience guest reviews or the lack of return customer business. Regardless, the errors show up in the brand’s profitability, either immediately or over the long run as customers vote with their wallet after an unpleasant order pickup experience.
For fast casual and full-service operators, we often see off-premise orders being directed from the bar area. Unfortunately, if they have a bar operation, this one area is the highest margin for the fast casual/full-service brand. Pulling the bartender away to retrieve an off-prem order for a waiting guest or driver is a major drag on the revenue-generating capacity of the highest margin in your establishment.
How smart food lockers offset the restaurant labor shortage
Those brands who have invested in contactless Food Order Pickup Lockers, or are currently testing them, are able to de-couple the dependency of their back-of-house labor and processes with the physical handoff of the order to a guest or third-party delivery service driver. This allows team members to return to the back-of-house order make and prep lines, driving a specialization approach and maximizing order capacity and efficiency.
At the same time, these pickup lockers make it easier for customers to get their orders. As noted in a June FSR article, “Automation within the four walls, from pick-up lockers, to back of house robotics, will all support greater productivity and reduced labor.” It’s clear that investing in simple yet smart technology is a sustainable strategy for reducing restaurant labor needs. When technology is easy to use and speeds the customers’ journey, they rely less on employees, which makes it easier to reduce staffing in customer-facing roles.
Many operators have placed automated pickup lockers in locations where the orders are loaded from the back of house straight into the locker and completed. Once the order is designed as delivered, the software associated with the locker solution sends a notification to the customer or driver that their order is ready to pick up along with a unique, secure QR code for the customer or driver to scan once they arrive, thus completing an accurate and contactless order pickup experience.
This investment provides a superior solution to the processes many foodservice operators have developed to hand off orders. It’s an investment that maximizes the operator’s labor investment, preserves the fast casual or fine dining high-profit bar revenue potential, while providing the off-premise order customer an exceptional experience.
I invite you to join the growing list of brands that are adding smart order pickup lockers to future-proof their business against ongoing wage and labor challenges. Discover how Apex Order Pickup Solutions can help you make digital orders a more efficient and profitable part of your business.