Technology Helps Restaurant Industry Recruit and Retain Staff



Technological tools are increasingly helping restaurant operators recruit and retain employees in a tightening labor market, but experts say a human layer to the digital approach remains a significant part of the equation.

“Recruiting technology will continue to evolve to look more like marketing technology,” said Kevin P. Walker, an Austin, Texas-based business-to-business marketing expert. Job hunters are increasingly open to technological pitches, he noted.

A total of 44 percent of adult workers in general subscribe to websites that send job alerts on openings, Walker said, citing Harris poll data during a seminar at the recent Meeting of the Minds conference in Dallas hosted by Self Opportunity recruitment consultancy.

But until recently, technology hasn’t played a large role in restaurant hiring and retention practices, according to study released Tuesday by WorkJam, a Montreal-based employee relationship management platform.

About 57 percent of restaurants still rely on manual processes when scheduling employees, a survey of 500 U.S. service managers and 700 U.S. hourly workers found. Those processes led to frustration on the part of the employees, with 56 percent of employees surveyed saying they received their schedules a week or less in advance.

Response to scheduling

A line cook at a family-dining restaurant in Michigan City, Mich., told Nation’s Restaurant News about his frustrations with his schedules and the general manager.

The line cook said that his general manager played favorites when scheduling work hours, he wrote in an email to NRN. “I've been there six months and go to work every day. I have never called off one day. I work for other people, I do everything in the kitchen and I'm good at it.”

He said that restaurant staff is often scared to speak up about concerns because they are afraid to lose their jobs, "but somebody needs to stand up for what's right.”

Unpredictable and inconsistent scheduling practices affect not only retention, but the ability to recruit new workers.

The WorkJam survey, entitled “An Inside Look at the Hiring and Scheduling Crisis in the Hourly Workforce,” found that 46 percent of restaurants reported frequently or sometimes being understaffed. Of those, 53 percent said it compromised the customer experience.

The result was often both dissatisfied guests and employees.

More than a third of restaurants report a quarterly turnover rate of at least 26 percent for their hourly employees, and 33 percent claim that this rate has increased over the past two years.

“To maintain growth and minimize costs in today’s tough regulatory environment and competitive marketplace, businesses must quickly adopt more comprehensive systems to manage the employer-employee relationship,” Joshua Ostrega, co-founder and chief operating office of WorkJam, said in a statement.

“Managers need to realize that investing in better ways of hiring, scheduling and managing employees is an investment in the company’s bottom line,” Ostrega added.

In August 2014, Starbucks Corp., which has long been known for its enlightened and often cutting-edge employee practices, smacked head-on with the darker side of automated scheduling when The New York Times reported challenges some employees were having with scheduling software.

Last year, Starbucks said it immediately made significant changes in its automated scheduling, including getting rid of widely split shifts, known as “clopening,” when an employee is scheduled to close a unit at night and open it the next morning.

Clopenings are surprisingly common in the restaurant industry. The WorkJam survey found that 48 percent of managers schedule employees for back-to-back closing and opening shifts.

Last year, Starbucks also said schedules would be posted at least a week in advance, and workers who lived more than an hour’s commute from their current location would be relocated to closer units.

But in September, a survey of Starbucks employees by advocacy group The Center for Public Democracy found continued worker scheduling concerns including unpredictable work weeks, inconsistent schedules and clopening shifts.

“We’re the first to admit we have work to do,” Starbucks spokesperson Jaime Riley told the New York Times. “But we feel like we’ve made good progress, and that doesn’t align with what we’re seeing.” Despite the survey’s assertions, Starbucks told the New York Times that employees receive their schedules 10 days in advance.

(via Nation's Restaurant News)


400,000 Restaurant and Hotel Workers in State Getting a Raise


  Servers and other tipped workers will see more in their paycheck soon now that New York will hike their minimum wages.

The state's acting Labor Department commissioner signed off on an agency panel's recommendation of a $7.50 minimum wage by January in the hospitality industry and letting it increase to $8.50 in the city, if state lawmakers decide to raise it here.

Industry groups warned of layoffs and stressing companies with razor-thin profit margins, but unions and organizers for low-income workers heralded the first raise for tipped workers since 2011.

“That would make New York tipped workers one of the highest in the nation,” said Hotels & Motels Trades Council President and state wage board member Peter Ward, at an Albany rally with Gov. Andrew Cuomo seated on stage.

The decision from acting Commissioner of Labor Mario Musolino strips categories of tipped workers, like food from hotels, for one tip rate. The current minimum wage rates for these employees range from $4.90 to $5.65. Musolino also rejected a recommendation to give businesses more of a “tip allowance” that counts against a minimum pay for a worker.

“I believe this recommendation strikes the proper balance,” Musolino wrote of the hiked minimum pay. “It increases wages for those who have been without a raise for far too long and completes the goal ... of establishing a single rate for all tipped workers.”

Isidro Suarez, a 31-year-old bus boy living in Corona, was making $5.50 an hour at a midtown restaurant and has gotten a new job boosting pay to $6.50. He appreciated the higher base pay, especially in colder months when there are fewer customers.

“Sometimes it's good sometimes, very bad,” he said.

He said the additional money coming his way next year would help cover day-to-day expenses.

“When I take the train, it's now more expensive,” he said.

Melissa Fleischut, president of the New York State Restaurant Association, slammed the 50% increase and said the new levels would result in fewer hours and jobs for workers, and higher pay for untipped wage earners.

Jimmy Haber, CEO of ESquared Hospitality, which runs the BLT chain and The Wayfarer restaurant, raised the idea of a no-tips model in the future and paying the standard minimum wage for most workers.

The Labor Department's decision, he said, would “spur restaurants to rethink how they will re-employ their front house staff and whether a tip model makes the most sense.”

That idea is on the menu for the Labor Department: the acting chief agreed to a review of eliminating the system of cash wages and tip credits.

Tsedeye Gebreselassie, a senior staff attorney with the National Employment Law Project, said the group backs ending the sub-minimum wage for tipped workers that forces them to rely on gratuities — a policy in seven states.

“There's no reason why restaurant employers can't pay the full minimum wage,” she said. “It makes no economic sense for a worker to have to rely on the generosity of the customer or whether or not they get a Friday night shift or a Monday morning shift.”

L.A. Restaurants Push for Tips to Count Toward Minimum Wage


The battle over boosting the minimum wage in Los Angeles has turned to the dollar bills tucked under an empty coffee cup, the spare change dropped into tip jars and the hasty calculations jotted down on meal tabs. As L.A. leaders weigh raising wages for businesses across the city, scores of local restaurateurs argue that the city should count tips toward the added amount they would have to pay workers to reach the proposed $13.25 or $15.25 minimum wage.

Doing so, they say, would ensure the wage increase helps those who need it most and reduce the financial burden on businesses.

"There is just no room for us to be able to afford this increase and stay in business," said Caroline Styne, who owns several restaurants and cafes around Los Angeles. "None of us is refuting the fact that people making $9 an hour cannot get by on that. I'm talking about people that are already making well over that."

Tips on table

Restaurant servers may get $9 or $10 an hour in wages but as much as $30 or more hourly when tips are included, restaurant owners have argued at public hearings, citing industry research. They maintain that including tips in calculations of minimum pay would not harm workers. If tips were unusually low one day, they say, the restaurant would have to make up any difference to ensure employees receive the required minimum.

"We're willing to pay people to get them to minimum wage," restaurant owner David Dickerson told lawmakers. "We're just asking that tips be part of the equation."

Labor activists warn that counting tips toward the citywide minimum wage would violate California law and leave those waiting tables, scrubbing cars or turning down hotel beds more vulnerable to being illegally underpaid. Most tipped workers have low incomes, they say, both inside and outside the restaurant world.

Restaurant owners "cherry-pick examples of servers in very high-end restaurants" who get big tips, said Rusty Hicks, head of Los Angeles County Federation of Labor. But the Raise the Wage Campaign estimates that 62% of L.A. workers in tipped occupations earn less than $25,000 annually, including waiters, bartenders, barbers, taxi drivers and hairstylists working both full and part time.

"It's not fair for us to be kept down while everything around us increases in price," South Los Angeles resident Troy Taylor told city lawmakers at a recent hearing. Taylor said she earned only $900 in March — including tips — while working part time as a server and cashier at concession stands for sports and concert venues. She said her wages typically hover around $12 an hour.

At the Ice Cream Lab in Little Tokyo, 22-year-old Erick Plazo said he averages a few dollars in tips hourly for serving up cups of salted pretzel-and-caramel or Thai tea-flavored ice cream prepared with liquid nitrogen. He also works a second job at a coffee shop to pay rent and buy textbooks for his classes at Cal State Northridge.

If his employers could count his tips as part of his pay, Plazo said, "it feels like it kind of defeats the purpose of a tip."

The question of how to handle tips has posed a dilemma for Los Angeles lawmakers, who say their intent is to pull Angelenos out of poverty. Beacon Economics, hired to analyze the wage boost for the Los Angeles Area Chamber of Commerce, estimated that nearly a fifth of Los Angeles County workers earning less than $13.25 an hour do jobs that usually involve tips.

California law prohibits employers from counting tips against the wages that workers are owed. The California Supreme Court has previously interpreted those state rules to prohibit setting a lower, alternative minimum wage for tipped workers. But as Los Angeles considers upping hourly pay to at least $13.25 citywide within a few years, some restaurant owners are pressing city leaders to find a way to count tips for their industry — one that economists see as especially sensitive to wage increases.

Restaurateur George Abou-Daoud said tips already "act, talk and walk like a wage" because employers must pay taxes on them, among other costs. For instance, workers are supposed to report the amount of tips they receive so employers can include them when calculating the Social Security and Medicare taxes they pay.

Abou-Daoud said the restaurant owners' proposal to count tips is meant to apply only to their industry. If it's not approved in some form, he warned, "you will lose a lot of restaurants in Los Angeles. And a lot of employees are going to lose their jobs."



State legislation to loosen the rules on counting tips toward pay requirements was sponsored by the California Restaurant Assn. and introduced by Assemblyman Tom Daly (D-Anaheim). Mayor Eric Garcetti said he backed that bill, telling reporters recently, "For folks from one particular industry who are already earning much more than the minimum wage, for them to get two to three bucks more … doesn't seem logical."

But last week, Daly signaled he wasn't pursuing the idea, canceling an upcoming hearing on the bill. The restaurant association said there was "insufficient legislative support for the bill." Timothy McOsker, an attorney representing local restaurants concerned about the rules, maintains that Los Angeles could nonetheless legally adjust its rules for tipped workers without violating the state law, which he said "was not adopted with municipal wage ordinances in mind."

Labor activists and their attorneys say that it is illegal and that there are good reasons California law bars any such move. Counting tips in wage requirements would make it harder to catch employers shortchanging workers, they say. Such "wage theft" can include paying less than minimum wage, denying workers required breaks and illegally deducting workplace costs such as uniforms from paychecks.

Rosemarie Molina, a lead organizer with the Raise the Wage Campaign, argued that when tips are down, businesses could neglect to put in the money to ensure workers reach the proposed $13.25 or $15.25 an hour — resulting in a kind of "subminimum wage." The National Employment Law Project has pushed to change long-standing rules in other states to count tips toward required pay, arguing that in New York, for example, the rules' complexity has resulted in "significant levels" of worker underpayment. A White House report released last year raised similar concerns, saying it was "difficult to enforce" rules requiring workers to be compensated if their tips fell short.

"We have millions and millions of dollars in claims showing employers should not be given the benefit of the doubt," Molina said.

One such claim was filed by Koreatown resident Ara Kim, a former waitress who said it took years for her to get paid more than $3,500 in wages and damages that the Flying Pig restaurant and food truck was ultimately ordered to pay her. The state labor commissioner found that she was owed money for what Kim described as an unpaid "training period" and for meal breaks she was denied. Other co-workers who won their claims in that case have yet to be paid, according to state documents.

At a recent hearing, Kim told lawmakers that counting tips toward a new minimum wage "will create a double standard when it's hard enough as it is to enforce."

Flying Pig owner Joe Kim could not be reached for comment. Abou-Daoud and other restaurant owners contend that counting tips toward the wage requirements would not exacerbate the problem of wage theft, since employers are already supposed to track tips for tax purposes.

In a recent letter to fellow council members, Bob Blumenfield, Mitch O'Farrell and Felipe Fuentes said they wanted to adjust the wage rules for tipped workers.

But Blumenfield said city lawyers warned during earlier discussions of hiking wages for hotel workers that it could be "very challenging legally" to do so. Other council members say they aren't sure how the city could alter the rules for tipped workers, some of whom may be faring well, without hurting others who are struggling.

"We're not trying to lift someone from $40 an hour to $45," Councilman Paul Koretz said. "But it's a hard deal to sort out.… I haven't seen anything yet that makes me comfortable that we have found the sweet spot to handle this without doing harm."


What’s Behind Restaurant Workers’ Faster-Rising Paychecks?



Last year, restaurant workers received bigger raises than workers in most other jobs.

Is it because the minimum wage increased in recent years in 24 states? Or is it because people are eating out more, demanding restaurant owners to increase pay for grill cooks, waitresses and dishwashers, etc.?

It's a combination of both.

Restaurants have hired at a faster pace than the typical company since the middle of 2010. Food workers’ hourly pay grew 3.1% last year after growing less than 2% a year for several years. That could show there’s a bigger need for restaurant workers than people willing to take those jobs for minimum-wage pay.

“The jobs recovery has been concentrated in lower-wage sectors, particularly the restaurant and hospitality area,” said David Smith, a labor economist at Pepperdine University. “There’s a lot of demand for those types of workers, and that’s causing wages to inch up.”



Hospitality, which includes restaurants, has accounted for about one in six jobs added anywhere in the country since economic growth started ticking up in mid-2009.

At the same time, many states have raised the minimum wage that employers must pay their workers. Big states, such as California, New York and 15 others, raised the minimum wage in 2014. Even more raised pay at the start of this year.

For example, California’s July 2014  increase to $9 an hour resulted in a 12.5% raise for minimum-wage workers there. The federal minimum wage has remained $7.25 an hour since 2009.



Wage mandates from states are forcing many restaurants to pay their employees more. Nearly half of workers earning the minimum wage in 2013 worked in food service, according to the Labor Department.

“I don’t know if we can disentangle minimum wage effects,” Deutsche Bank chief U.S. economist Joe LaVorgnasaid of rising restaurant pay.

Restaurant workers say they’re benefiting from raises that go beyond minimum-wage bumps. In some states, the minimum wage increased by less than than a quarter an hour.

Kevin Montgomery, 23, left a minimum-wage job at a grocery store to take a slightly better-paying position at Pi Pizzeria in St. Louis. Since he started as a prep cook in 2012, he has received several raises, including a 16.5% bump given to all kitchen staff last year. Pi’s ownership gave across-the-board raises as part of an effort to reduce turnover and attract better workers.

Mr. Montgomery now earns $11.75 an hour, well above Missouri’s $7.65-an-hour minimum wage.

“I can actually start saving money, save it for a car, and have a savings account,” he said. The extra money allowed him to return to school. He’s learning the welding trade and his managers have agreed to work around his class schedule. He’s eying an Acura TL or Nissan Altima.

“Morale at the restaurant has gone way up” since the staff received raises last summer, he said. “They say money can’t buy happiness, but in this case, it kind of did.”

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Laughing Planet Cafe to Give Restaurant Workers Paid Parental Leave


Do long term benefits outweigh the added costs of high turnover in the restaurant business?

The Laughing Planet Cafe is a fast casual restaurant chain with 14 locations throughout Oregon and Nevada. The company is made up of 280 employees who spend their time at work making burritos, smoothies and salads. And now in an extremely rare move in the restaurant business, all of the employees of the Laughing Planet Cafe will have the benefit of having three months of paid parental leave after they have a baby.

The decision was made in late January by Franz Speilvogel, a chief executive at the company, after a discussion with a pregnant store manager who voiced her concerns about not being able to take maternity leave.

"She's entering her final trimester, and she talked about the circumstances of being an employee in my company and what she's faced with. I told her, let me think about it and get back to you," Speilvogel said.

It wasn't until a few days later when President Obama announced that federal employees would receive six weeks of paid sick leave and that the plan was to push Congress to extend those rights to everyone else, that made him ultimately decide on extending paid parental benefits to employees.

Only 6% of service workers in the nation receive any sort of paid family leave according to the U.S. Bureau of Labor Statistics. Full-time workers are offered 12 weeks of unpaid leave under the Federal Family and Medical Act, however, part time workers do not receive this benefit.

Laughing Planet Cafe's new policy will cover mothers, fathers and adoptive parents. Employees will be paid their full salary. If they are part time employees, they will still be covered by the same policy, however, they will be paid the average of what they've earned in the past six months.

"It wasn't a business decision to do this, it was a human decision. But as a business owner, I also think it'll pay off down the road." - Franz Speilvogel

Speilvogel and his executive team examined the costs of paying employees for six weeks of leave, eight weeks of leave before eventually settling on three months. By reviewing the types of people who are employed by Laughing Planet, he realized that not many of them had children. He admitted that working in the service industry and raising a family is a challenging feat due to the typical work schedule.

According to Speilvogel, it costs approximately $5,000 in wages and time to train a new employee. He did the math. If 10 people were out on parental leave simultaneously, he could easily have other employees temporarily cover their duties while the employees on leave would be paid for 12 weeks and spend less than the $50,000 it would cost to hire replacements.

An added benefit of providing this type of coverage to employees is their job satisfaction. Speilvogel believes that having parental leave in place will lead to healthier parents and children. He also believes that employees will be less likely to leave the company because of this offering. It appears he may be right; a 2011 study of California's paid-leave law found that when low-wage workers were given access to paid leave, 83% returned to the same company compared to 74% who did not have paid leave.

What are your thoughts? Should more restaurant employers offer paid leave? Would having paid leave help alleviate some of the pressures associated with parenting and raising a family? Would having benefits like this make you more likely to stay at one company? Let us know in the comment box below.



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