As we go into 2023, it would be easy to begin the year on the back foot. There are significant head winds facing not just our industry – the whole country feels like it’s in the weeds. Next year we will go into battle with a recession, the cost of energy crisis, shortages of staff, upward pressure on the supply costs and the downward pressure on customers discretionary spend. These are just the challenges we know of, and yet, we expect more. Headline news would suggest that 2023 could be a year of inevitable, unstoppable, and relentless doom. But it won’t be. Not for everyone. There is still huge opportunity for those who rise to the top, the best in our industry will still face the challenges, but they will have the experience, tools, and tenacity to succeed.

As a business, we are conscientiously optimistic about what we will achieve in 2023 and while never complacent. We are optimistic about what our customers are going to achieve in 2023 too and there is good reason why.

For the past 12 months we have spent a great deal of time and energy better articulating and refiring up our “purpose”. It hasn’t just been a self-indulgent corporate retreat exercise, it has been pivotal to everything we do, and the framework for all of our plans. All businesses need to innovate, but it is useful to keep returning to those first principles that led us to transform the industry as we have. “Be Your Best”, has emerged as the philosophy that has fed the products we build and the internal culture of the whole organisation.

Be Your Best is a significant statement of intent for our customers. We know that there are going to be only two routes to operate next year. The first will be to burn through cash, taking on debt and relying on a swift return to better days. There are few who have the cash to weather this storm, fewer still who have investors patient enough to plug the red holes for too long. The second route for our customers is to be the best at what they do, consistently. We have had the privilege of working with a lot of the best operators over the last 10+ years, the likes of Oakman Inns, Brunning & Price, Liberation Group, Revs have all been entrepreneurial early adopters of S4labour and are all the best in their areas. Moving forward, our challenge and focus is to have a development roadmap that supports our current customers and as many new ones as possible to be at their best. We have found that the typical S4labour customer has also been an innovator in the industry that has made them stand out, these are the people who are already looking to be the best.

In January we will be rolling out the biggest update to the S4labour system. Having put the philosophy of supporting operators to be their best at the centre of every brain storming session, every stand-up meeting and every round table discussion, this inevitably bleeds into every line of code.

As a result, we feel we have built a system that ensures our customers are their best, in every shift. Better at driving sales, better at engaging and retaining staff, better at getting teams to the floor rather than behind the desk and ultimately, better at making the right decisions, faster. All these things are opportunities to beat the gloomy head wins facing the industry, and all are reasons to be optimistic for our customers in 2023.

Be Your Best is a mantra that is also at the heart of our people and culture plans. We know that to support our customers to be their best, it is essential to support our own teams to be their best. That goes for every single person we employ and bring on the journey with us. We know that to ensure we deliver a product that supports customers to be the best, we need to have our innovators, our developers, our customer success, and support teams all at their best too. It’s tempting to have all our people answer the phone with, “Hello, how can we help you be your best today.” Possibly a step too far into the world of cringey, but it’s the mindset we have got to.

There will be businesses that fail in 2023, and even the best will find trading hard, but those who manage to be their best, will thrive and we very much look forward to helping them get there.

Employee turnover in the hospitality industry is a problem. It’s higher than most other sectors, and we are behind the curve on giving a proper focus to engagement and retention — as well as not recognising the benefits it brings. This isn’t overly controversial, but for some it has become an inevitable feature of hospitality. However, others in the industry are getting on the front foot and reaping the benefits of better people management, leading to significant reductions in staff turnover. S4labour have taken a look at what the real costs of high staff turnover are, as well as uncovering some of the real causes (and solutions) to the problem. 

The Cost

Accepted wisdom in the industry puts the figure of replacing an employee in the region of £1,000. However, data from the Society Of Human Resource Management puts the figure at 16% of annual pay. Taking an average across the range of hospitality roles, this puts the figure way over the £1,000 per employee mark, and closer to £3,500 a go. 

Data from YouGov.com reveals that 1 in 3 employees in hospitality will leave their job over a year, but for many roles replacements will need to be found 2 or 3 times over the course of a year — leading to turnover rates in many hospitality businesses of 70% or higher. That would mean to maintain a team of 50 people, the cost to the business is at best £30,000 but possibly as high as £122,500 per year. Of course, costs vary depending on the position and pay rate, but there is a substantial reward for bringing staff turnover down.

Why Does It Cost So Much?

The reasons for the big cost to replace someone are multiple, complex and when added together… they start to mount up. Firstly there are soft costs, including recruitment; admin; and interviewing which will contribute to lost time. With lost time, there are lost opportunities — time spent on admin is often time lost. Therefore limiting sales and training that would drive productivity for the rest of the team. In good times, there are plenty of suitable interview candidates. However currently there is an acute lack of labour, so the chances of interviews going poorly, probations not working out, and the inability to find the right fit for quite some time, are all quite high. Once you have a replacement, the costs continue to stack up. Onboarding H.R. and payroll setups only add to the administrative burden. Training not only takes up a manager’s time but the new team members’ time too. There is a steep learning curve in hospitality, and those who have not experienced the front line before will take time until they become sufficiently productive — especially when compared to the person whom they may have replaced. 

What Is the Solution?

These are issues felt by the entire hospitality industry, and whilst they may be unavoidable there are ways to significantly mitigate the severity of the problem. Those who are giving this a real focus are using data trends to identify, and manage, areas of the business that are driving staff turnover. Ultimately, they are doing something about it.

Where can you start? Every shift is different. It goes without saying that every business is different; there is no one answer on how to reduce staff turnover. Some of these issues will require you to survey your team, giving them a voice to tell you what their stresses (or even the things they love about work) are. However, there is also a hidden treasure trove of insights within your people data — potentially transforming your ability to retain talent. 

At S4labour, we have some amazing forward-thinking operators who have been helping guide the future of our H.R. offering. When we have been speaking to HRD’s about the issues they are facing, the solutions often come back to improving visibility of the workforce. After all, if you can’t see what’s gone wrong, how can it be rectified? Gaining visibility is key in identifying weak points in your staff retention, or pressure points within management that helps prioritise management time, training and focus areas. 

For example: do you know which sites, or which managers, are having the best outcomes? How many people leave your business for a different sector or are they moving to competitors? If so, why? If you don’t know this, you can’t do anything about it.  Some of the main causes for people leaving the business include: not being recognised for their service; being overworked; not being paid correctly; or poor relationships with management.

Being able to see if, when and where WTD breaches are happening will help identify stresses in the business that typically lead to high turnover. Recognising work anniversaries or birthdays has a big boost on morale and generates higher levels of staff engagement. Trends in lateness, or sickness, can be early indicators of dissatisfaction at work (either those arriving late or by those observing tardy behaviour). Having the data to show either improving or worsening trends is critical in how you focus resources in doing something about it. Supporting better management and having appropriate discussions with teams is a lot cheaper than continually supporting a revolving door workforce. 

If you would like to know more about data giving you the right insights to reduce your staff turnover, please book a demo below:

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I think we had all hoped that life would return to normal post-pandemic, but it certainly feels like the repercussions of the Coronavirus are set to last far longer than the virus itself. Lockdown gave us the head space to plan and give real thought to how we can improve our people, training and innovate our business. We were optimistic about our place in the wider economic recovery and the feel-good bounce back of the nation. But all of this has now been completely overtaken by a cocktail of challenges that have entered every area of the business. I don’t know whether the lack of staff, and in particular kitchen team, are the biggest challenge. Or, whether the constant failure of the supply chain is now taking more management time. The result of all the challenges is that, as a management team, firefighting has taken over and we are not spending enough time on innovation and growth. Before we know it, VAT and rates will be back to normal and we will have a cost base that has grown to a point where we are not making enough money. This article is a reminder of what we are now trying to focus on in order to drive our business for the long term. How quickly we will get round to them is a different question!

Recruitment and Training:

At the moment, our key priority is recruitment and training. Without the right team our senior team will be in the weeds. Currently we can’t meet the demand on most days—particularly on Sunday. So, being able to recruit and train to meet Sunday demand is a priority. It does seem to be getting better. The end of Furlough has triggered some people to look for work, but more importantly for us has been young people (students or school leavers) who are now wanting to get back into the workplace. This is building up our team one person at a time. Even yesterday one of my managers said 1/3 of the candidates turned up for an interview, which is a higher number than normal. Our real challenge, though, is how we up our game in the long term on recruitment. My guess is that how we have recruited historically will not be good enough for the future, and we will need to connect better with young people and be more persuasive about the personal benefits of some time spent in hospitality.

Pay:

Pay is a real conundrum at the moment. I think we are all worried about ratcheting up pay in the short term and then being unable to claw it back, but equally wanting to find the right level for the long term. I am really puzzled by the challenge we seem to face in tips. I don’t think that our staff actually understand what they earn when they add base pay and tips together, and that we have lost staff who think that they are being paid more in other jobs when the opposite is true. We are seriously thinking about whether we can morph our service charge into price and remove tips from the equation, but it is another big step that may then prove to be wrong. Pay matters and we need to help people understand the pay they already receive before piling more on the top.

Pricing:

As our costs go up, whether it be staff; electricity; VAT; rates; food; drink; or all of the above, we need to decide how much to put our prices up and when to do it. My straw poll suggests that most people are considering a 5-10% price rise currently, but we want to do it in a way that ensures we lose the least volume we can. So, a lot of thought needs to go in to when we do it and which lines we do it on. We also need to spend more time than we have looking for more meat light dishes, which will both reduce cost and fulfil the market move to a lower level of meat in our diet. But of all the 8 blokes I had dinner with yesterday, only 1 chose a meat light dish… chicken pizza!

Productivity:

The government seems to have made it very clear that they are not going to let in heaps of Europeans to help us out of our staffing challenge, so we are all going to have to find customer friendly ways of driving productivity. We have not yet gone down the self-ordering app or self-payment app road, but we will have to look at all the IT led productivity solutions and pick the right solution for our customers in time. We also need to address some of the basics that have slipped a bit, such as how well we deploy staff and how we are managing them to be as productive as possible on shift. This is the challenge of the firefighting regime.

The Planet:

We have just signed up to the Peach led Net Zero regime. I don’t yet know what it entails but recognise that we need to do the right things in the right way, and I know our customers will be supportive. I also think we can make some more steps in packaging waste and our use of plastics, but this will become more and more something we need to work with our local suppliers to solve.

Final Remarks:

Overall, our sales have held up pretty well over the last few months. In truth we have had the demand there—if only we could fulfil it. However, the looming cost moves means that we need to address our core profitability even more urgently, as we know the time from now until April will come quickly. Hopefully we will be fully staffed by then and have made enough moves on the four P’s: pay, price, productivity and planet to make sure we have maintained our underlying profitability.