As the Pressure on Restaurants Increases, Offering Employees Benefits Can Help

Restaurants have been handed a mixed takeout bag so far this year. Overall industry sales are forecast to top $1 trillion for the first time in history in 2024, according to the National Restaurant Association. However, with rising food and labor costs, operators should temper their expectations for a windfall.

Restaurants’ biggest challenge lies specifically around hiring and retaining staff. Although restaurant unemployment rates have recovered to pre-pandemic levels, many owners struggle to both find good talent to hire and to retain their valued workers. Turnover, while improved from the pandemic years, continues to be an issue.

Again there is good news and bad news for restaurants. Starting with the bad, labor costs are increasing, especially in states such as California, where the minimum wage for chains with at least 60 locations nationwide has risen to $20 an hour. That puts pressure on other operators to compete. The good news is that despite the restaurant industry’s reputation for short-term stints, many of those who work in the industry love what they do and want to remain in their jobs, according to a recent survey conducted by 7shifts.

Here’s the caveat: workers expect their employers to reward them for their loyalty not only with competitive compensation, but the benefits typically standard with 9-to-5 jobs as well.

As inflation has led to thinner margins, restaurants can only raise prices so much. Instead, they need to focus on optimizing their labor force and hold onto their talent as long as possible. Savvy operators have realized that building a great employee experience has a direct correlation to their bottom line. So what benefits are most important to employees?

Paid time off: This is by far the most requested benefit according to more than 1,500 surveyed restaurant workers across North America. It makes sense, as hourly workers often have to sacrifice pay when taking time off, putting additional pressure on employees who are also students, parents, or just need a break. When workers are discouraged from taking time off, their risk of burnout increases.

When it comes to creating schedules, owners and managers need to have a good grip on people's availability (especially if an employee is a minor) as well as time off requests. Being flexible and allowing employees to switch shifts and have sick time goes a long way toward boosting loyalty.

Health insurance: The second-most desired benefit is health insurance. Health insurance is obviously expensive, which is the primary reason why only 34 percent of the hospitality industry offered the benefit in 2023. Those employers who can afford to provide insurance, however, will be rewarded with more loyal employees since it is such a rarity in the industry. Along with traditional insurance providers, there are specialty businesses such as OS Benefits that provide affordable insurance plans specifically for independent restaurants.

Retirement accounts: Restaurant workers want to feel like their employers are invested in them, just like anyone else, and that means investing in their future. Offering benefits such as a 401(k) can help restaurant workers feel like they have a sustainable career while supporting their financial wellbeing.

While focusing on these benefits may seem like just another expense that restaurant owners have to contend with, consider that the cost of bringing on a new hire and training exceeds $4,000. That’s not to mention the additional impact of a valued employee leaving, including a dip in morale and productivity.

Restaurant owners who want to compete for talent need to focus on optimizing their costs so they can offer a better employee experience. That may look like closing on the slowest day of the week, creating a new revenue stream such as a takeout station or focusing on delivery platforms.

The restaurant industry has recently undergone a big shift and workers are no longer looked at as cogs in the wheel that can be easily replaced. Today’s workers want to stick around and build their careers within the restaurant industry. Some days off and other benefits will go a long way toward helping them realize those ambitions.

Jordan Boesch is the founder and CEO of 7shifts, an app that enables restaurant managers to schedule, pay, and retain their teams in one place.