With 90% employee turnover rates, restaurant tech company brings fresh ideas to the table.
Nearly 100 Bay Area restaurateurs gathered at Yelp Headquarters for Instawork’s “Get a Handle on Hiring” panel Tuesday evening on July 25, 2017. The panel addressed the Bay Area’s staffing crisis which has local businesses struggling to remain open as they fight to find and retain talent.
Instawork, an innovative platform that connects job seekers to restaurant industry positions nearby, collected unique data from analyzing the results of thousands of job listings posted on the website and app.
Yelp’s San Francisco Business Outreach team, led by Emily Washcovick, invited the restaurateur community to take an inside look into Instawork’s data and user research in a discussion led by Instawork Co-Founder and CEO Sumir Meghani. Meghani was joined by Obie Ostergard, President and COO of Left Bank Brasseries and LB Steak and Julie Howe, HR Director at DOSA. Ostergard and Howe both have two decades of experience hiring in the Bay Area and are currently responsible for managing multiple properties across different locations.
San Francisco’s tech scene has notoriously hiked up the cost of the living, leaving a detrimental impact on local businesses and their staff. As a result, hospitality workers have been forced to relocate to find affordable housing and commercial rent has increased dramatically. Both factors create significant challenges for restaurant owners.
According to Instawork’s data, employee turnover rates are currently 90–120% for back of house staff and 50–80% for front of house. The main reasons; location, compensation and scheduling.
“When I see the turnover rate on paper it completely terrifies me, but it’s the reality that we live in,” said Ostergard. He went on to add another shocking number to the room full of restaurant owners and operators explaining that the process of rehiring and retraining a minimum wage hourly employee costs about $3,000.
Location is the number one reason for these jaw-dropping statistics. Compensation plays a role as businesses try to keep up with their competitors who are offering bonuses, healthcare and other benefits, equity and PTO; which goes beyond what small businesses traditionally offer.
Scheduling, the third reason for high turnover rates, heavily affects back of house staff in particular. The average line cook in the Bay Area works 2.3 jobs. “They’re working A.M. jobs, P.M. jobs and working gigs on their days off,” Meghani explains. Flexible scheduling is crucial for retention, especially in the on-demand economy where people have the freedom to earn an income on their own time.
The data shows that the hardest positions to fill are line cooks, dishwashers and hosts/hostess. Howe suggested adding host/hostess to the tip pool which she found be a successful strategy used at DOSA for retention.
Keeping up with wage increases
Meghani brings up more eye-opening figures with a chart of dramatic YoY hourly wage increases categorized by location.
- San Francisco increased by 4.3%,
- East Bay increased by 6.4%
- Peninsula increased by 5.3%
- South Bay increased by 13.6%
- North Bay increased by 7.4%
- Napa/Sonoma increased by 0.4%.
Taking an even deeper dive into how location affects hourly wages, Meghani compared restaurants in the Mission versus restaurants in the Marina. “Certainly restaurants that are in a more favorable location are able to generate a lot more interest,” he explains. “People are working multiple jobs, relying on public transportation and counting every dollar that it takes for them to get to work.” Restaurants in convenient locations have more leverage when it comes to the compensation they have to offer in order to bring in and retain their workers.
Howe admitted that staffing for DOSA in the South Bay is more difficult than staffing in San Francisco, but she must keep the wages consistent across the Bay Area in order for DOSA employees to pick up shifts from different locations without adding complications.
Don’t get blindsided
Howe and Ostergard both stressed the importance of opening up an honest dialogue about compensation with employees on a regular basis.
Ostergard urged managers to frequently have one on one conversations with their staff to check on how they’re doing and where they think they’re at from a compensation standpoint to avoid any surprises. “They’re absolutely going down the street for 50 cents. If we can engage them in that conversation so they know that we care, then maybe they’ll give us that opportunity before just saying ‘today’s my last day.’”
Howe shares that most common reason for employees leaving DOSA’s San Francisco property is due to scheduling conflicts. Recognizing that most of her employees have more than one job, “maintaining those consistent schedules and making sure to adhere to them as much as possible,” is crucial for keeping employees around.
The panel goes on to discuss creative solutions to these seemingly unsolvable problems. At Left Bank Brasseries and LB Steak, Ostergard incentivizes his employees with anniversary bonuses which he found to be an effective way to retain his staff.
Meghani recommended cross-training employees so businesses can be prepared in the event that they’re understaffed with short notice. “As a small business, we’ve realized it’s become imperative,” said a woman in the audience, but she points out that she’s often faced with the challenge of her staff having a ‘that’s not my job’ mentality. Howe’s advice to her was to approach cross-training with complete transparency. “If the employee is being trained for a what they perceive as a higher position, make sure to let them know that when a full time position opens up, they will be the first to be considered for that role if they’ve successfully and positively done both roles.”
Another creative staffing solution mentioned by Meghani is to partner with restaurants close by who are open different hours. He gives the example of a restaurant in the Marina working with a bakery nearby to share staff. “When they’re done at the bakery, they walk down the street and they’re ready for their PM shift.” This saves the worker commuting time and money.
Employee referral programs
Employee referrals programs are another promising solution for higher retention rates and save businesses time and money on the recruiting process. Ostergard suggested giving referral bonuses publicly and in cash as a way to remind and encourage other employees to refer their network.
Make the most out of walk-ins
Searching for new staff is just as challenging as retaining staff. Meghani revealed a new tactic aimed to take advantage of foot traffic even when the hiring manager isn’t around. Instawork has replaced the standard “now hiring” sign with a “text to apply poster” in over 200 restaurants. This eliminates hard copy resumes being lost or misplaced, allowing for businesses to efficiently capture every walk-in applicant’s information.
Job post content is another huge variable that impacts talent search results. For example, including compensation increases the hiring rate by 50%. Disclosing this sort of information in the post also prevents interview no-shows.
Instawork’s applicant outreach team contacts every applicant who fails to show up to a scheduled interview to find out why. “One of the top reasons that comes up over and over again is lack of data,” Meghani recalled. Applicants often admit that they would rather spend time commuting to an interview that lists compensation and benefits upfront.
Ditch the wordy job descriptions
Instawork ran another report that assessed how long applicants spend on each job post. Meghani recommends ditching the lengthy essays and only including critical information. “You may think that you’re weeding out a lot of people,” he explained, but the data shows that job listings perform much better when containing fewer paragraphs and clearly list compensation, benefits, a couple of cultural attributes and the experience required. Based on feedback from Instawork’s labor pool, he also recommended posting back of house positions in Spanish or at the very least, mentioning that it’s a Spanish friendly kitchen.
Read more job posting tips here.
Commute time counts
Per applicant request, Instawork incorporated Google Maps directly into the post so job seekers are able to see their commute time. This new feature has helped decrease the number of interview no-shows.
“Instabook” for speedy hires
The panel and room of restaurateurs all agreed that time is of the essence when bringing in new talent. Instawork launched “Instabook” which allows anyone who applies to the job to be able to schedule an interview immediately. This is an ideal hiring solution for positions that require little to no experience since it eliminates the time spent searching through resumes and going back and forth to secure an interview time.
Text instead of email
For positions that require more screening, hiring managers must be respond to applicants quickly. Candidates are likely to accept a position elsewhere if hiring managers are waiting a week or two to reach out. Sticking with the theme of speed, Meghani emphasized that texting an applicant, especially for back of house staff, is far more effective than email. Text is typically considered an nontraditional channel to connect with job candidates, but it ensures a quick response and has been proven to work.
Ostergard recalled a time where his team received dozens of resumes but zero responses to the emails requesting interviews. “I just went in and started texting them myself.” The applicants he texted responded immediately.
An attendee expressed that she also had success with text messaging but using her personal number quickly became a nightmare. As a solution, Instawork is launching a messaging platform next month that will allow businesses and applicants to communicate directly on the app without having to share their personal information.
*Update: Instawork has launched messaging*
Facing the “no-show” culture
The panel addressed the hospitality industry’s “no-show” culture. While it’s more common for applicants to not show up to interviews, businesses are also a culprit; a complaint Instawork hears from applicants everyday. This unprofessional behavior creates a vicious cycle of the interview process not being taken seriously on both ends. In efforts to change these habits, businesses are encouraged to get back to every candidate they interview as a way to demonstrate professional etiquette.
The discussion ended with final thoughts from the speakers and questions from the audience. Ostergard shares that the key to finding new talent is responding quickly to candidates. Howe deemed transparency to be the best way to retain workers.
Free job post
Use the code YELPFREE to post your first job listing on Instawork for free. Click here to get started and take advantage of the platform’s unique features.
More tips for business owners: What Every Restaurateur Needs to Know About Yelp.