Wolverhampton, Worcestershire Herefordshire, Shrewsbury, W.Midlands, and Shropshire

The staffing challenge in the hospitality industry, probably amongst others, is a fascinating challenge for both our industry and the government.  There are several big questions we need to understand in order to determine the right way forward, both as individual operators and as an industry. Here is my perspective, with a few industry facts that will help you come to your conclusions about what to do.

We need to understand the effects that furlough is having, the change in the sales demand profile of the industry, and how long the labour supply side will take to catch up. We need to understand how our team, or potential team, view our industry and whether we have a huge challenge, and we need to understand this not just for the UK workforce but for the overseas staff who have always come and worked in our industry. And above all, we need to decide how to apply short term solutions for short term problems, and long term solutions for long term problems. The biggest risk we have is in applying long term solutions to short term problems and being saddled with a cost base that is then unsustainable.

The Downside of Furlough

Our first challenge is that the staffing side and the demand side of the UK hospitality business have become lopsided. Because demand has switched away from city centres and the corporate market, for the time being, these venues have correctly continued to furlough staff while at the opposite end, in the suburbs and holiday destinations, we need more staff to cope with demand. Our figures show that a significant percentage of staff in the industry are still furloughed while sales growth against two years ago in the top 25% of outlets is running at 20%+ sales growth. So if all the staff who were furloughed were to magically switch to the busy sites the industry wouldn’t have a staffing issue! Once furlough ends this September then this imbalance should start to wash out with those staff coming off furlough moving, albeit slowly, across to the sites with the demand, but it is going to be a difficult ride until then. This means that a big proportion of our issues are temporary, and we need to ensure we then deploy temporary solutions to this particular problem.

Young People

The young person challenge is a more fascinating one. As the UK summer unfolds and our young people finish studies and come up for air, there seems to be either a greater reluctance to work or a greater reluctance to work in our industry. My own perspective is that this is money-driven. It seems to me that young people only work if they need money in the short term; saving up for an amazing holiday next year is not a sufficient motivator to earn money this year. So if our potential staff can only stay at home and not go to all the festivals, parties and trips that they would normally go on then they won’t bother to earn the money, or at least not as much. So oddly enough as soon as the market opens up for young people to do what they enjoy I think we will have more staff wanting to come to work and do more hours. Again I would hope while this might make for another painful summer it will all be back to normal next year, and certainly will ease once the shackles come off.

Overseas Workers

We all know that the UK has relied on a significant proportion of overseas workers to fill the gap, and this is harder because of the double blow of Covid and Brexit. Oddly enough our data as of June this year does not support this and shows the proportion of non-EU workers at 6% of the workforce and EU workers at 15% of the workforce, versus February 2020. This has surprised me, but it may be that the national position disguises some real regional challenges, such as London. While Covid should go away Brexit won’t, and I think the government will have to find a way to let more young people in to do the jobs we don’t seem to be able to fill. The UK government will also have to better balance retirement ages and benefits in order to encourage more people back to work, otherwise, the positivity about Brexit, enhanced by our vaccination approach, may start to backfire on a prime minister who can’t sidestep the issue. But the political processes work slowly so there is a real danger this turns into a longer-term issue that never quite gets resolved

Chefs

And then there are chefs. I think the chef position in the UK has been a time bomb waiting to happen. In our own pubs, about one in three chefs leave within four weeks because it is hard work. They prefer the old structures of a 40 cover restaurant and a pot wash and a team where the pace is busy for a short time but is pretty leisurely overall. Or they prefer the other way of working which is that each chef has their section whether or not the restaurant is quiet or busy, which gives them a few busy sessions during the week but overall an easy pace. But in the current world, we need greater productivity for economic survival, and I am one to argue that fundamentally we need higher wage rates across our industry for chefs that are highly productive and produce great quality. We have all heard stories of the chefs that have become delivery drivers during the pandemic and find the job much easier than being a chef, so why would they come back? Cooking I hear you cry! There are those chefs that really enjoy cooking great food, as well as the camaraderie in the kitchen, but there is a price for all this.

So what is the solutions?

The key questions are:

• Do we get better at recruitment, either as individual operators or as an industry?
• Do we pay higher basic rates, in order to attract better people, and put up prices?
• Do we find a way to utilise tips and tronc more effectively?
• Do we move to a more productivity based reward system?
• When we are all stressed, how do we avoid increased staff turnover?

Recruitment

We do need to accept that the battering the hospitality industry has faced will have a knock-on effect on industry recruitment. I find it constantly surprising how potential staff haven’t put two and two together and realised that they can find a job very easily at the moment! We do need to work harder on our individual and collective recruitment strategies, and I applaud all the work done by trade bodies and many others to promote a job in the hospitality industry. But we do need to work harder to promote the skills that young people learn in our industry. My neighbour’s daughter has recently started working at one of our pubs and he came up and thanked me for helping her realise that she isn’t the centre of the universe and has to get up on time and smile! If we only achieve that for our young people, that is a job well done, but we do need to be a lot better at communicating how we help young people grow up.

Pay rates

I think pay rates are creeping up, and I think in particular for those staff who are normally paid at their rate of the minimum wage – we now need to pay higher, and rightly so. We also need to pay a little more for people who are in genuine leadership positions. A supervisor who actually drives every staff member’s performance deserves greater pay rates, and more than 20p an hour

Tips

How we use tips and tronc is perhaps the hardest conundrum of them all. As an operator, we introduced a service charge as soon as we re-opened last summer. We were very nervous about tips with the massive decline in cash, and while the systems are there to add tips via the PDQ, there are still too many customers who don’t. This has meant that a team member, once trained and performing, earns at least £2/hr in tronc, and so easily earns over £20,000 a year. But equally the uncertainty over tronc remains a recruitment challenge. We recently offered a chef £24k plus tronc, which would have given him earnings of over £30k. But he preferred the certainty of a £28k salary. We need to find a better way out of this conundrum, and be able to offer the real wage rates people will achieve without confusing and unsettling our teams.

One of the ways in which tips and tronc work well is that the reward for the busy shifts is so much higher than quieter ones. This does, to some extent, people to work the busy shifts, but we also need to encourage them to work hard and to pay them for doing an amazing job. In a previous life, I proved that adding a commission led element to pay worked (in a bar environment) and we need to try and find the right way to apply it to restaurants.

Productivity Based Pay

I am a massive believer in paying for productivity. Of course, being productive and delivering great products and services are different things. Nevertheless, we need to find the right way, both for front and back of house. Daily tip allocation helps, tips on busy days, allocated by hour, are so much more than.

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When I go on holiday for two weeks, I always find the first day back pretty tough. Having switched off my mind a little for that period, I find getting back into work on day one really hard, so much so, that I wonder if it is just easier never to have a holiday! I can’t imagine what this is like if you have had three months doing nothing during either major lockdown, but I assume the return to work is pretty traumatic. For those of us who have worked all through the pandemic, and worked harder than ever before, we probably struggle to understand what it is like for those who have slumped back into their school, student, or retirement mentality, and are finding it hard to get back out. For many, while they were excited to get back to work, the pro-longed rest has meant they have found getting up on time, working hard, and being nice to customers all very difficult. It really has been like having a whole load of 16-year-old kids starting work, all at the same time. Of course, the same is true for our management team. They have found that managing staff, motivating teams, and training and coaching individuals is tougher than normal. And they’re doing this while re-learning and adjusting so much of what we do, whether it be covid rules, outside seating or adjustments to opening hours and menus!

And let’s not forget the customer. While of course we love them, our experience in our three pubs is that they have expected the engine to be at full speed from the start, with little tolerance for slip-ups. Combine this with the annual price rises we put in right at the start of re-opening, and the customer piece of the jigsaw adds to the pile of stresses; I could swear some people have become ruder but maybe it’s me!

So, in that melting pot of challenge what do we need to do? Of course, the answer is completely obvious; We need to train, coach, and encourage like never before, and we need to overstaff so that the management team can focus on team development and training. Our added challenges in Malvern Inns, are that customer demand has exceeded our supply of staff. We have also had some changes in our management structure which means many people learning new jobs. Oh, and let’s not forget the outside trading, covid restrictions and supply challenges to throw in as well as mentioned above.

In all honesty, is has taken us until now to get back to focussing on these basics. In the last two weeks, we have re-established job chats and 1-1’s; we have been able to focus the managers on training all staff, not just new ones; and we have properly been able to praise staff when they are doing things right and improve the energy and motivation in the business. It has made me kick myself for not getting focused on this earlier. My main excuse is that we didn’t expect the level of demand early and thought we would have more time. Coupled with a cash crisis, that meant we wanted to save every penny. Hindsight is a wonderful thing, and I dread to think how much more we could have taken if we had invested more, in all these things, ahead of re-opening.

But it does teach me something I should never forget. The basics of running a good pub are all about how the management team work with their people. When the management team are on top of the business, the important three activities of training, 1-1’s, and praising good jobs all happen well, and when they are stressed, they all incorrectly fall by the wayside. It has taken us too long to get to this point, but the relief I feel for having got back into this rhythm is massive. I finally feel like we are now managing the situation, rather than reacting to events. We can now focus on growth and improvement in a little more measured way and get a little nearer to that back to normal feeling that we all crave.

Alastair Scott is CEO of Malvern Inns, which runs three gastro pubs and an events business, as well as founder and CEO of S4 labour; the people, productivity, and payroll business.