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labor panel.jpg Photo courtesy of Alicia Kelso
Panelists at the National Restaurant Association Show discuss solutions to overcome labor shortages.

Why the restaurant industry needs a mindset shift on labor

Nate Hybl, founder/CEO of gusto, called employee investments ‘sneaky capitalistic’ because happier employees lead to happier customers and more revenue.

The restaurant industry has a labor shortage problem. That is certainly not breaking news. Employee engagement is at an 11-year low. That might surprise some folks.

There are several factors driving low engagement, including a disconnect between the frontline manager and frontline employees, according to Eric Blumenthal, SVP of foodservice commercial and growth at the Coca-Cola Company. He moderated a panel at the National Restaurant Association, alongside Olympic Gold Medalist Laurie Hernandez, gusto founder/CEO Nate Hybl, and ADDO co-founder Kevin P. Scott, discussing how to overcome labor challenges. And, according to Hybl, this conversation about employees is long overdue.

“We’re at this show with products, technology, signage. Where’s the people element? Why isn’t this industry talking about it more? What is the main thing in the restaurant business. In our opinion, it’s people,” he said. “We’re building our company using the North Star of being the most empowered employer brand in the business. That’s a big statement but people are the key to our business.”

Hybl added that there are three reasons gusto shifted more investment toward employees. First, it’s the right thing to do, he said. Second, when you invest more in people, there is less turnover. And third, “it is sneaky capitalistic,” meaning happier employees create happier guest experiences and revenues go up.

“It’s a great way to grow a business,” he said.

The bigger companies are already focusing more on the employee proposition, but smaller brands need to make people development a part of their budget, Hybl added. He suggested taking 1-2% off the topline to invest in people.

Scott added that the industry is inundated with insights that tell you how dire the labor situation is, but the question is how to uniquely solve for it for your brand. 

“Insights tell you what everyone is privy to. Instincts is how you uniquely solve those challenges. Insights and instincts lead to solutions that change the world. The combination of the two of them is key,” he said.

Solutions are easier to come by with communication, Hernandez added, particularly for Gen Z employees who have different expectations than their older peers.

“Understanding that the Gen Z mindset is different is the first step. We come from a world of technology. The most prominent priority is a good work/personal life balance,” she said. “Second is diversity and inclusion. Let those around you know what programs you have in place and acknowledge it. Also, the work matters. It’s important to know the work is important and that comes from our leaders.”

Hybl said acknowledging as much is more important than it’s ever been, in fact, adding that the pandemic changed the employee mindset and gave more leverage to hourly workers.

“Pre-pandemic restaurant operators weren’t forced to listen to these conversations. They were just getting by paying folks to do a job. Like it or not, this is the way forward. Mental health is going to matter. Educate yourself on how to be a stronger employer or hire robots,” he said. “We may have a labor shortage, but we don’t have a labor shortage for employers who are really taking care of their folks.”

Scott said this work starts with the frontline leaders and connecting the language of those leaders to the language of the learners. That means communicating and translating your goals in a way that resonates with Gen Z. Hybl said that language should be especially clear about your restaurant’s culture.

“I’ve found it matters whether you believe in the product, in the owners and the leaders. Does your team know who you are or is it just transactional? We’re trying to be more meaningful, and it always starts with culture,” he said.

To promote such culture at his concept, gusto’s leaders meet once a month for growth sessions, where they have hard conversations. The sessions include shift leads to expand the company’s bench. Gusto also prioritizes its performance reviews, which are called “Heard” sessions. Two such two-way sessions are held each year.

“We are trying to turn our restaurants into a small professional organization. You’ll find our leaders huddled around the table at the same time and place every day talking about the business like it’s a professional business. You’d be shocked to see the turnover that starts to not happen when shift leaders have an actual voice,” Hybl said.

He cautions that these types of initiatives cost money and require patience, but adds that they’re worth it, as proven by his company’s results.

“We’re talking about a mindset shift. It’s not going to happen overnight. We don’t have all the answers, but we’re working on it,” he said. “And our turnover is about half of what the stated industry turnover is, so it matters.”

Contact Alicia Kelso at [email protected]

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