The hospitality industry in general and the restaurant sector in particular tend to get hit hard when things change. These shifts can be as big as globalization, as specific as the local economy, and as unpredictable as technology. Add in the fickleness of consumer decision-making, and it’s no wonder business owners and managers in this sector are losing sleep. What are some of the most significant challenges facing the hospitality industry and restaurants right now, and what can you do to meet them head on?
Global and Local Economies in Flux
For hotels and restaurants, the economy always plays a role in determining the level of both personal and business spending. For tourism-heavy locations, this is even more true. In the travel and hotel sectors, the ups and downs of global events have an obvious impact on international spending making it one of the greatest challenges facing the hospitality industry and restaurants. As demand for lodging and plane travel goes down, both total revenue and profit decrease. Prices are slashed to try to fill empty rooms and flights, and raising rates to recover lost profits later is a tricky business.
But the impact of globalization is also being felt in the food service sector. Restaurants now have a greater variety of vendor options to make their menus more appealing while obtaining ingredients and supplies at a lower cost. At the same time, importing from other countries has its own set of risks—especially if there is a well-publicized incident regarding contamination, unfair labor practices, toxic materials used in manufacturing, and other issues that media-savvy consumers may find troubling. While cheaper sourcing may be easier in a global economy, customers are more and more selective about spending in alignment with their shifting values.
As far as sourcing talent is concerned, stricter immigration regulations since 2001 have made it more difficult for the hospitality sector to supplement the shrinking local labor pool with workers from other countries. Congress is being urged to make changes to immigration and work visa laws to help the hospitality sector better fill vacant job openings with foreign employees. However, these changes are sure to happen slowly. In the meantime, employers should ensure they are complying with existing laws for hiring documented workers. Failure to comply with all documentation requirements, such as I-9 processing, continues to be a challenge—but it can be readily mitigated with the implementation of onboarding that integrates with e-Verify.
Labor Shortages Emerging Again
Labor shortages is one of the greatest challenges facing the hospitality industry and restaurants. The restaurant industry in the U.S. alone employs about 14 million workers—and that’s not counting the rest of the hospitality sector. Shortages are becoming an issue as the talent pool of suitable candidates shrinks. Since the quality of employees hired has a direct impact on brand reputation, revenue, and overall labor costs, simply lowering standards is not an acceptable solution for savvy business owners and hiring managers. It’s essential to access a larger volume of talent in order to be able to pick and choose the best options. Businesses in this sector must also be willing to make changes in how they operate to support workers in giving their best effort on an ongoing basis.
Right now, the demographics of the available candidates are skewing older. Boomers who had their retirement plans put on hold due to the recession are looking for ongoing work even in physically demanding roles that they may not be equipped to fulfil while younger workers are aggressively seeking jobs with a reputation for higher wages and better working conditions. Paying increasing attention to creating an excellent workplace culture, being competitive with wages and benefits, and improving working conditions to place less stress on employees will ease the burden on an aging service industry population and help attract younger talent.
As an example of one way to make benefits better, even organizations with fewer than 50 employees are able to offer health coverage now by leveraging the power of group plans and blending them with supplemental coverage that helps fill in the gaps. Insurance brokers and advisors are getting creative (within the bounds of the law) in helping smaller businesses negotiate for better insurance for their employees.
Employers may also want to consider seeking out more WOTC-eligible job candidates to fill out their workforce. These candidates typically face significant barriers to hiring due to income, veteran status, disability, or history of incarceration. But they can bring a lot of motivation and dedication to the job, especially if adequate training is provided. This labor pool is always available, and businesses can capture thousands of dollars in tax credits for hiring eligible individuals. Using automated WOTC processing makes it simple to capture the necessary information and submit documentation to qualify for these tax credits.
Technological Demand Going Up
The demanding nature of the average consumer is skyrocketing in an era of instant gratification. People want what they want and they want it NOW! That’s always been true to a certain extent in the hospitality industry. After all, customers are paying for service and they expect to get it. But they are now doing more than just comparing your organization to direct competitors. Customers comparing you to their experiences in general—particularly when it comes to digital interaction and speedy service is one of the challenges facing the hospitality industry today.
In March of 2017, Amazon debuted its first public demo of drone delivery. Will customers expect their food to fly to the table without having to wait for a server to actually make the slow walk with a tray? Probably not. But they do expect to be able to pre-order and pay for their meals on the smart device of their choice whether they are dining at a drive in or requesting room service at the hotel. They also expect to receive prompt responses no matter how they make contact with your organization.
As an example of this shift toward reliance on technology, statistics suggest almost 60% of hotel reservations are made online, with 65% of same-day reservations being made via smart phone. Customers don’t expect to have to pick up a phone—and they will even complain about the number of keyboard strokes or mouse clicks required to complete an online booking! The restaurant industry is also feeling increased pressure to go digital, and even to change their business model to include to-go and delivery services for locations that were previously dine-in-only.
Hospitality and food service organizations should look for ways to use technology to improve the overall digital customer experience from on-site kiosks to their website and social presence. To start with, it’s essential to have someone monitoring all digital channels from review websites to Twitter, FaceBook, email, and beyond. Reputation management is a best practice for keeping customer satisfaction high and a valuable source of data and insights for future improvement.
Internal customers (job candidates and employees) also have higher expectations for how they will interact with your organization. A mobile-friendly online application process, web-based onboarding, virtual training, and self-service tech in general will help attract savvy employees, get them ready for work faster, and help keep them engaged and satisfied over the long run.
For more information about the challenges facing the hospitality industry and the paperless onboarding solutions, contact our team today!