Will Unionized Restaurants Help Stabilize Employee Turnover?

There is no doubt that the tight labor market is leading to rising salaries, new perks, wage inflation, food cost inflation, etc. Most concerning to many is the rise in unionization of restaurant employees and the onslaught of unforeseen consequences resulting from the rise of restaurant worker unionization.

Regular readers of this blog know that back in 2018, the National Restaurant Association calculated the restaurant turnover rate to be 74.9% annually, compared to 48.9% in the private sector. Meanwhile, a report from CNBC puts the annual turnover rate at 130-150% for fast-casual restaurants alone.

That said, what is the most important to restaurant owners and operators is consistency in service and brand messaging.  According to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®, “employee turnover is the most identified cause for a breakdown in the restaurant Price, Value, Service Equilibrium.

There is no doubt that the tension between supply and demand for talent is most likely going to keep increasing, and the factors driving the trend including the ilk of all time low U.S. birthrates, low immigration, rising employee empowerment, aren’t likely to abate any time soon.

One thing is clear, that is both Gen Z and Millennials are dissatisfied with traditional employment options, pay, and working conditions.  They are looking for new job opportunities at a rate never before seen. We must remind our readers that for the past two and a half years the world has been ‘unstable’, and as the pandemic travels, disruption follows. The hardest hit sector worldwide has been the restaurant industry.

Remember all of those restaurant companies fighting against the $ 15 an hour minimum wage three years ago, are now wishing those days were back again.  For the most part the in the U.S. the ‘fight for $15 has come and gone.  What has not come and gone is the messaging owners / operators sent telling employees you were not worth $15. That’s right you remember those on CNBC, FOX News, ABC News, and others telling everyone how bad that would be.  Your employees struggling to pay their rent on 29 hours a week heard that as well.

Social media has played big role in brand messaging for six years if not more.  Public restaurant companies told their employees they were number # 1 while at the same time telling Wall Street there was no way the ‘fight for $15’ would survive sent such a mixed message that employee’s distrust, distain, and disregard for restaurant owners and operators seeming disintegrated the desire for such jobs as a career according to Johnson.

In the world today branded messaging matters, so, the team at Foodservice Solutions® along with the Grocerant Guru®, once again retooled, reevaluated, calculated their original Price, Value, Service Equilibrium, and here is the new formula:  Price + Quality + Social + Portability = Value.

Just about everyone is aware of the effort and partial success to unionize Starbucks in Buffalo, N.Y.  Well, that effort has moved to Mesa, Ariz., where six employees of a single store have alerted chain CEO Kevin Johnson that they have begun the organizing process. The group is backed by Workers United, an affiliate of the Service Employees International Union (SEIU), one of the nation’s largest unions and the biggest group representing hospitality workers. At this time there looks as if the efforts to unionize Starbucks will continue.  The real question is your company going to be targeted next.  What messaging are you sending to your employees and to Wall Street?

In a Battle for Share of Stomach

You can Win

You do not have to be as big as Starbucks to beginning thinking how you talk with or about your employees.  Most regular reader of this blog know by now that Burgerville and the Burgerville Workers Union have approved and ratified the nation’s first collective bargaining agreement for a fast-food restaurant. The contract pertains to only five Burgerville locations at this time.

Jill Taylor, Burgerville CEO, stated “We are pleased to approve the nation’s first fast food union contract and look forward to working with all Burgerville employees to be the best restaurant company to work for in the Pacific Northwest,”

Just think about how powerful Jill’s statement was for all of the employees at Burgerville.  How are you messaging to your employees?  What is your employee turnover rate?  In your customers minds-eye are you a ‘good place to work’?  Is your customer service level, speed of service, better today than it was in 2019?

According to Steven Johnson, if you answered no to any of the items above you need to worry as new non-traditional fresh food retailers are selling meals, selling them for less, and bundling more than one meal period worth of meals together elevating the ‘veto’ vote to go to your restaurant.

Remember that the line between restaurants and food retailers is growing ever thinner. The fight for America’s food dollars continues to intensify as consumers find fresh prepared Ready-2-Eat and Heat-N-Eat fresh prepared food options at a wide and growing array of outlets, across every retail channel: convenience stores, chain drug stores, furniture stores, restaurants, grocery stores, club stores, vending and even more non-food retailers like dollar stores. 

While manufacturers, retailers and restaurants worry about choice overload, consumers have embraced their new choices and points of fresh food distribution and show no signs of returning to the old ways. This fight is taking place in what is called the grocerant niche.  Does your restaurant look more like it did in 1980, 1990, 2020 than a fresh food retailer today?  How can you leverage your current ‘footprint’ to drive more sales, incremental customer adoption, and bottom-line profits? Do you think you can do that by doing what you have always done?  Think again.

The restaurant industry is not an industry known for trying to be first as in fastest to market with an ideation, food flavor or technology advance. In the United States the larger the chain in almost all cases the more slowly they are to adopt something than a smaller chain or independent restaurants will. Chain restaurant’s goal is simple; feed one person, one meal at a time, in the restaurant while protecting and edifying the brands legacy. Does your brands messaging sound more like yesterday than today or tomorrow?

Regular readers of this blog know that historically chain restaurant leaders have denied the credibility of start-up competitors as non-relevant. The pizza sector is a great example; evolving from family dinning independents to national chain of “Red Roof” Italian, then to delivery only outlets and now Take-N-bake is garnering market share in the pizza sector.

It is at the intersection of the consumer, fresh prepared food, and technology we find that consumers eating behavior is evolving and is now beyond the control of traditional food marketers. Evolving culture and lifestyle, demographics along with the new uncertain economy are all putting pressure on the American food consumer: Demands of work, economic shrinkage, demands of raising a family, commuting, social interaction, kid’s after-school activities, all contribute to a food marketplace where convenience vies with price over legacy brands.

Is there any wonder that the undercurrent of instability around the world is creating incremental instability in your work force?  What is your cost for new customer acquisition?  What is your cost if you lose customers due to high turnover, lack of training, slow customer service, or reduce hours of operations because you don’t have enough employees to cover shifts?

Recent advances in food packaging and new points of non-traditional food distribution have empowered consumer choice, and Americans are embracing these choices even as legacy restaurant marketer’s cringe. Who’s after restaurant food dollars simply put everyone.

Why should you care if Walgreens is selling fresh prepared Ready-2-Eat sandwiches? Why should you care if Whole Foods, Trader Joe’s, Safeway, and Wegmans are selling Ready-2-Eat and or Heat-N-Eat fresh pizza? Why should you care if Coinstar is selling Seattle Best Coffee at 1,000 locations for $1.00?

The restaurant business in not brain surgery. You should care because they are selling it, and you are not! New non-traditional avenues of fresh prepared meals and meal component distribution are growing, gobbling market share while establishing new patterns of consumption, price points, and customer loyalty according to Johnson.

Trader Joe’s and Whole Foods have created Ready-2-Eat and Heat-N-Eat fresh prepared food items with qualitative differentiation as an entity with identity that has help propel them into Ready-2-Eat fresh prepared food leadership.

According to the team at Foodservice Solutions®, recent grocerant scorecards found both Trader Joe’s and Whole Foods are each known for high quality (restaurant quality) Ready-2-Eat and Heat-N-Eat foods with distinctive offerings elevating food discovery for both Gen Z and Millennials consumers.

More important both Trader Joe’s ad Whole Foods are leading with innovative products, and package size that create value, in the minds-eye of the consumer while positioning each chain as a food shopping destination for meal components that can be customized and personalized for immediate consumption, or mix and matched for personalized family meal at home. In short, they are stealing your customers.

According to Johnson, “Traditional views of meals and mealtime can pretty much be discarded”. Legacy retailers waiting for the “next big thing” to copy simply might be out of luck this time. Legacy food retailers may not like to be first movers very much but it may prove that waiting too long will not work this time.

The retail food world is evolving at an ever-increasing pace filled with innovation in food, portion size, points of distribution, and quality fresh prepared meal solutions. The price, value, service equilibrium is resetting in retail foodservice. If your service, value, and price are not competitive you may not need to worry about unionization.

Many legacy food retailers continue to practice brand protectionism, stifle the brand while diminishing consumer relevance. The consumer is dynamic not static. Brands must be dynamic, evolving with the consumer. Four years of watching other retail sectors thrive should be long enough. Success in the restaurant world is no longer simply about what happens within your 4 walls.

Are you ready for some fresh ideations? Do your food marketing ideas look more like yesterday than tomorrow? Interested in learning how our Grocerant Guru® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit: us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter