There’s an important distinction in the restaurant industry; it’s the difference between full-service and fast-casual restaurants. We have full-service restaurants like Terroni, Baro, Chotto Matte. These operations provide table service, up to two-hour seating and have been one of the most negatively impacted industries in all of Ontario.
Their cousin is a fast-casual restaurant. Think Rudy’s and IQ Foods or my latest, up-coming venture, Brasa Peruvian Kitchen. This format of restaurant has experienced turbulence but have still been available to us by way of pick-up and delivery.
When you think of your favourite restaurant I’m sure certain things come to mind. Perhaps it’s the Cavolo Nero Salad from Gusto, Sugo’s mouth watering Instagram feed or the Macro Bowl from Impact Kitchen. Somewhere in your thoughts and dreams of returning to your favourite restaurant could include the prompt customer service you’d receive from Toronto-owned restaurants. But, where in your thoughts are the employees of your favourite establishments?
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Evaluating employee pay is imperative
Your favourite bartender, server and chef have been treading water for one year. Just barely keeping their heads above it. Even with government aid for both businesses and individuals, the people who greeted you with a smile continue to experience unrest.
So, what can we as Torontonians and operators do to fix this? If you look at our neighbours south of the 49th parallel, there are protests and employees not showing up for work all because of a lack of equitable pay. However, it’s being positioned as a “labour shortage.”
It’s not. It’s employees finally being fed up with their pay. I side with them and support them. Don’t look now but Canadian-based restaurants can, and likely will, find themselves in a similar situation, but, thankfully, we have an opportunity to stop this. Employees need an ally more than ever before. Government moves too slowly and most companies’ capital allocation (what they do with their profits) aren’t aligned with the employees best interest.
Employees like perks and learning but, there’s only one thing that will help them secure their livelihoods, pay down debt, and can deposit into a bank….money.
Emerging from the pandemic, restaurant operators have the ability to reevaluate their budgets, specifically their labour budget. It’s a fresh start, one that can become a tipping point for their brands for years to come.
If you want employees who bring their whole selves to work every day and represent your brand well then find a way to pay them more.
Easier said than done, I understand, but it can be done. You just have to want to make it happen as much as you want your Instagram account to have 20,000 followers.
Three questions to ask yourself
- Can I stop spending money on certain things that didn’t bring me value during the pandemic? This would require you “refining your controllables.” Maybe your take-out bags don’t need to be as highly designed as they once were or you pay an employee to take your product photography rather than a big agency. It’s possible that the budget you have reserved for these things could be allocated to a stronger labour budget.
- Will my customers pay more? In a recent LinkedIn poll, 81% of my followers said they would pay more if they knew that the restaurant was paying their employees well. Increasing your pricing doesn’t have to require you to do an elasticity test or deep market research. If you believe increasing your pricing won’t detour your customers or price you out of the market then I’d consider doing it. Although, customers can be cynical and think you’re profiting more.
- Should I pay myself less? Please don’t immediately reject this idea. As the leader of your organization this has to be on the table. I can tell you firsthand that reducing your salary or compensation to protect your team members from being laid off is a good feeling and you will reap the benefits because your team will be even more committed. This isn’t forever. The operators who are able to think long-term will win.
The restaurant operators that are able to survive the pandemic will be greeted with pent up demand unseen in the full-service and fast-casual industry. I don’t believe there will be a shortage of customers wanting you to serve them.
Just remember who’s serving them. Your employees, likely not you.
Written By: Michel Falcon