Black Box Intelligence (formerly TDn2K) (Transforming Data into Knowledge) recently conducted a poll regarding the minimum wage hikes taking place across the nation. The poll asked restaurant operators to share what strategies their companies are using to combat these wage hikes and subsequent compression issues. Compression issues occur when minimum wage increases for entry-level workers rise to the same rate as wages for senior-level workers.

The challenges facing the HR professionals in the restaurant industry have never been more taxing. Department of Labor, Fight for 15, recruiting and retention are just a few of the issues that are keeping executives up at night. As Black Box Intelligence (formerly TDn2K) CEO and founder, Joni Thomas Doolin, recently said, “It’s the workforce perfect storm. It’s a very challenging environment.”

Min. Wage Quick Poll (2)

Results

The results of the poll showed that, above all, restaurants are attempting to generate more revenue to offset higher operations costs. 75 percent of the survey participants reported that their companies are actively increasing menu prices to offset minimum wage increases. Restaurants are also looking to reduce labor costs, with 52 percent of participants reporting that they are implementing labor-saving technology and 50 percent reporting that they are adjusting their staffing levels. One particularly notable insight is that full service and fast casual companies are 20 percent more likely to implement labor-saving technology than quick service restaurants.

Additionally, 16 percent of restaurant companies are exploring new strategies to help cut labor costs. These include raising expectations for job candidates, increasing training to enhance productivity, maximizing responsibility of full-time employees and reducing some positions to part-time.

To address compression issues, 71 percent of restaurants are developing a compensation strategy along with market pay analysis for key positions. On the other hand, only 19 percent are re-evaluating their tipping and tip-share policies, none of which are fast casual restaurants. Fast casual restaurants appear to be focusing more on driving performance management and evaluation processes, with 67 percent of respondents from this segment indicating this as a key strategy.

New strategies include using performance ratings and providing equity increases to experienced employees.

** Results reflect over 70 responses collected from chain restaurant companies. Participants’ responses were analyzed by quick service, fast casual and full service dining segments as well as company size.