Hidden in Plain Sight: The Solution to Surging Labor Costs
- By Harri Insider Team | January 8, 2024
Ask any restaurant operator about their most pressing challenge today, and you’ll likely get a unanimous response: “labor costs.”
Surging labor costs are killing restaurant profitability. According to NRA’s 2023 State of the Restaurant Industry report, 89% of operators share this concern. This was clear while I was onsite attending the Restaurant Finance and Development Conference in November where conversations about California’s imminent $20 minimum wage echoed throughout the Bellagio.
While wage inflation often dominates labor cost discourse, here’s what we often miss: the cost of turnover is just as crucial to your profit margins.
When you take a scientific approach to calculating the true cost of turnover (considering expenses associated with recruitment, onboarding, training, and wages), you’ll find that attrition in the first 90 days accounts for 15-20% of your total labor costs.
The good news is that if you can predict an employee’s intent to depart, you can get ahead of their concern before they become a turnover risk. At Harri, we’re reengineering the labor equation for our customers, beginning with a strategic focus on an area with the greatest potential to improve retention and enhance margins: employee engagement.
So, how do you effectively engage employees who aren’t sitting in front of a computer all day?
These frontline employees are, by definition, hard to reach, so you have to connect with them within their flow of work. Instead of adding another app to the mix, maximize adoption by delivering touchpoints when employees are performing everyday tasks, such as clocking in and out, checking their schedules, and swapping shifts.
By capturing the true sentiment of every employee during every single shift, leaders have access to insights they’ve never had before, helping them truly understand the health of their business.
The proof of the pudding is in the eating – our customers are already transforming employee engagement.
“Harri Engage is helping us spot opportunities to ensure new starters feel adequately trained in their first few weeks and months with us, giving managers the insight they need to know when to intervene and help drive employees towards success in those critical first 90 days,”
Patty Collins, Director of Business Processes at Cafua Management, Harri customer and the largest private Dunkin’ Donuts franchise in the United States.
Employee engagement is a catalyst for change in our industry where retention is the key to profitability and sustained success.
When we retain our frontline teams, the positive impact extends to the customer experience – we enhance how we deliver our product, how we serve our customers, and how we deliver on brand expectations.
To learn more about how Harri Engage can help reduce turnover through effortless engagement delivery, visit harri.com/engagement.
