Workforce Challenges

California Secretary of State Shirley Weber announced that the referendum initiative challenging California’s fast food council law reached the required number of verified signatures, in a political win for the fast food industry.

The announcement delays the implementation of the law until after California’s next statewide election, which is scheduled for November 2024, unless other process trigger a special election in the intervening time.

A California judge previously blocked attempts to enforce the law while the secretary of state verified petition signatures. 

Since the approval of AB 257 (The FAST Recovery Act) last summer, the fast food sector has rallied to overturn the landmark labor law. The industry has already given more than $13,7000,000 to defeat AB 257, which would create a council to regulate wages and working conditions for fast food workers, at the ballot box, California records show. With almost two years to go before election day, the referendum on AB 257 is shaping up to be a major political duel between organized labor and the restaurant industry, with potentially national ramifications.

Weber’s office verified about 700,000 of the more than 1,000,000 signatures submitted by the restaurant industry coalition to stop the law, exceeding the needed total by just shy of 90,000. 

The secretary of state’s announcement drew celebration from industry groups.

“Had this ruinous policy gone into effect, not only would food prices rise and jobs be lost, but big labor would already be exporting it to other states and industries,” Glenn Spencer, SVP of employment policy at the U.S. Chamber of Commerce, said in a Save Local Restaurants press release emailed to Restaurant Dive. 

Sean Kennedy, EVP for public affairs at the National Restaurant Association, said the law would have threatened to increase costs throughout the industry, and pledged continued support to efforts to overturn it.

Supporters of AB 257, on the other hand, expressed a commitment to fighting it out in the referendum process.

“We are undeterred, and we refuse to back down,” Angelica Hernandez, a California McDonald’s worker, said in a statement emailed to Restaurant Dive. “Nothing will stop Black, brown and immigrant fast-food workers across the state from having a seat at the table and gaining power over our working conditions.”

Mary Kay Henry, president of the Service Employees International Union, predicted the referendum would have a different outcome than Proposition 22, the state’s previous electoral battle between labor groups and a major industry. A California judge ruled that proposition was unenforceable. 

“Fast-food corporations think they can buy their way out of anything, but California voters are about to teach them an expensive lesson: no corporation is more powerful than half a million workers joining together,” Henry said in a press release.

Some politically active unions, frustrated with the National Labor Relations Board’s election process and facing declining private sector density, are turning toward labor law reform as a path to revising the power relations between organized labor and employers. That strategy may make it possible for unions to organize workers in industries historically immune to organizing under NLRB process — such as the restaurant sector — but it risks expensive political confrontations between labor and industry.

Virginia has introduced a bill that would create a council to regulate wages and working conditions for fast food workers. HB 2478 would impact any fast food chain with more than 100 restaurants nationwide.

The bill is markedly similar to California’s controversial AB 257, or the FAST Recovery Act, which will be voted on in November 2024 and has drawn fierce opposition from chains and the National Restaurant Association. 

When AB 257 passed in California, the NRA predicted other states might follow California’s lead. Both labor and industry representatives have told Restaurant Dive they expect similar battles in other states.

With Virginia’s House of Delegates and governor’s mansion in Republican hands, a sweeping change to labor law is unlikely to pass in the state. But there’s no guarantee a battle over such a bill will be limited to a single legislative term.

The bill would establish a commission to regulate fast food workers’ hours, working conditions and compensation. The council would also be required to hold public hearings and certify organizations to carry our biannual workers rights trainings.

This commission would include four state legislators, the governor or a cabinet-level official, two local elected officials, four representatives of the fast food restaurant industry, four fast food worker representatives and an unspecified number of citizen representatives from different geographical regions in Virginia.

Delegate Irene Shin (D-08) introduced the bill on Jan. 20, public records show. Shin’s top donor so far in the 2023 election cycle, according to the Virginia Public Access Project, was the Service Employees International Union, which donated $5,000 to Shin’s campaign. SEIU Local 32BJ, a building services local union concentrated on the East Coast, gave $5,000 to Shin in a previous electoral cycle. Among labor unions, SEIU has been the most public advocate for fast food industry council laws.

Virginia’s legislation signals that the political fight between organized labor and the restaurant industry over fast food standards continues to grow. 

Only 54% of QSR employees reached 90 days of working before quitting in 2022, according to an HourWork report emailed to Restaurant Dive that is based on surveys of employees at over 8,000 QSR restaurants. Prior to the pandemic, the segment’s 90-day retention rate hovered at 58%.

QSR workers are five times more likely to quit over miscommunications with management during their first 90 days than after, the report found. 

Wages, management and scheduling are top concerns for QSR employees, the report states, based on HourWork exit interviews and a review of text messages exchanged between employers and employees.

Hourwork predicts that QSR wages will continue to increase in 2023 due to elevated consumer demand, a continued worker shortage and increasing inflation.

In December, 80% of QSR positions offered higher pay compared to December 2021, according to the study. Across all of the category’s positions, worker pay rose 1.3% monthly in the latter half of 2022.

These pay bumps may be key to adequately staffing fast food chains as growing numbers of diners are trading down to the category as discretionary spending shrinks. 

The cost burden of wage hikes is pushing restaurants in all segments to rethink the structure of roles within their business. Twenty-five unit casual chain Bartaco, for example, eliminated its traditional wait staff roles in favor of order-and-pay via QR codes, combined with new management positions called “service leaders.” This change allowed the company to offer competitive wages without damaging profits. 

Other restaurants are paring down their hiring plans. Only 39% of restaurant operators said they planned to staff up significantly at the start of Q4 2022, according to an Alignable report, compared to 56% of operators who planned to do so at the start of Q4 2021. Though that hiring slowdown may be due to an increase in overall restaurant workers as the sector gradually approaches pre-pandemic levels of employment, preliminary data from the U.S. Bureau of Labor Statistics showed restaurants employed about 622,000 more workers in December compared to December 2021. 

Nov. 10 marked one year since ballots went out in the first Starbucks union election. Since November 2021, the upstart campaign that started at just a handful of stores has become a powerful national drive, with Starbucks Workers United winning the majority of elections for which it has filed. SBWU now represents about 6,500 workers at over 250 cafes, stoking a sprawling, nationwide battle with the coffee chain.

This string of election victories signals the kind of progress labor leaders once thought to be almost impossible. But election wins don’t guarantee a contract that improves working conditions, which is what many Starbucks baristas are rallying for. It can also take years of collective bargaining to reach an agreement, if the parties reach one at all.

Time isn’t on the union’s side. Just as workers can vote to be represented by a union, they can also vote to cease representation, as outlined under the National Labor Relations Act. Decertification elections can start one year after a union has been certified, or in SBWU’s case, on Dec. 17. That means the union has little time to bargain before anti-union workers could begin decertification campaigns in some shops. 

The union’s electoral momentum may have already begun to erode, with election filings reaching a low of 8 in August, before rebounding slightly to 12 in September and 12 in October. At the peak of its organizing momentum in March, SBWU filed 71 petitions for elections according to NLRB data. 

Unions, experts say, tend to be strongest at the beginning of campaigns. Employer action, turnover and the stress of a campaign can all degrade worker solidarity.

“The day [union supporters] file… with the NLRB, their momentum is at the absolute highest, because from then on, the employer is going to give information [that dissuades workers],” Sid Lewis, an employer-side labor lawyer and union consultant, said. “A lot of employees are going to change their minds.”

The bargaining table is set, and the stakes are high for both corporate and unionized workers. Two meaningful questions remain: Can Starbucks Workers United win a contract? And what strategies could pull it off?

Bargaining is bogged down by accusations of bad-faith negotiations

Bargaining for a first contract, according to labor law experts, follows a fairly set process: the union requests information, the company releases some, and then both sides formulate proposals and agree to meet. Bargaining usually begins with an exchange of non-economic proposals — such as “just cause” termination clauses or sensitivity and non-discrimination training — before proceeding to economic proposals, such as wage and benefits changes.

"Nothing requires an employer to say yes to anything at any time,” Lewis said. Lewis doesn’t represent Starbucks, but spoke to Restaurant Dive about the rules governing bargaining and what employers generally seek in a first contract. The only meaningful requirement during negotiations is that both the union and the company bargain in good faith, he said.

“Good faith bargaining, generally, means bargaining with the intent to reach an agreement, but you're not required to reach an agreement,” Gay Semel, a retired labor lawyer for the Communications Workers of America, said. 

This process has already been contentious. In September, Starbucks announced it was willing to begin bargaining at 41 stores in October. As of Oct. 30, the coffee chain is also working to set bargaining dates at 43 additional cafes, Starbucks spokesperson Andrew Trull said.

The company and the union agreed to several dozen bargaining sessions beginning on Oct. 24, said Megan Brown, Starbucks barista and SBWU national bargaining committee member. But since then, both Starbucks and the union have accused each other of bargaining in bad faith, NLRB records show. 

Starbucks refuses to engage Zoom participants in sessions

Starbucks charged Workers United with bad-faith bargaining because the union included members of its national bargaining committee on Zoom at bargaining meetings around the country. Prior to those meetings, Starbucks asked that bargaining be conducted in-person. 

Trull said Starbucks’ bargaining team has walked away from any table where the union was using Zoom to include workers who were not physically present, whether that included workers unable to schedule time off, or members of the union’s national bargaining committee. 

The company objects to the use of Zoom, Trull said, “because negotiations that may happen at the bargaining table may warrant discussion of individuals by name and could address sensitive topics.” Starbucks also feels there’s no guarantee that workers on Zoom are who they say they are, and no guarantee they aren’t recording sessions — which is prohibited by the NLRB — via Zoom feeds. Starbucks accused SBWU members of recording bargaining sessions, referencing a TikTok showing Starbucks representatives leaving a bargaining room without any discussion of proposals.

But the union, according to national bargaining committee members, did not agree to terms barring Zoom participation. Bargaining sessions in Buffalo, New York, and Mesa, Arizona, were conducted with Zoom participants this spring, as were some bargaining sessions over store closures. Starbucks said remote bargaining was acceptable in earlier meetings because the company was still responding to COVID-19 as a pandemic.

“Starbucks will get up from the table and walk out as people are speaking,” said Julie Langevin, a Starbucks shift manager and member of the union’s national bargaining committee, who has worked with the company for 17 years. She added that no bargaining session for the national contract has lasted more than a few minutes.  

“One of the Starbucks lawyers in Philadelphia went so far as to say ‘you might as well go read [the union’s non-economic proposals] in another room, we are not going to listen to you until you turn the Zoom camera off,’” Langevin said. 

The company’s first proposal for large-scale bargaining included a range of dates that left workers insufficient time to request hours off for bargaining, Langevin also claims. Starbucks said it worked with the union afterward to find dates when the workers were able to meet.

SBWU condemns corporate walkouts

The union, on the other hand, filed “failure to bargain” charges against Starbucks because of the dozens of instances where Starbucks representatives have walked out.

The NLRB has little power to intervene in bargaining, which is essentially a private negotiation, Semel said.

“If they [the NLRB] find that one party has been in violation of the good faith obligations, the remedy is to tell them to bargain in good faith,” she said.

Both parties are firm in their positions: the union members want to bargain together, including their peers at other stores by Zoom, while Starbucks refuses to agree to hybrid bargaining.

Jennifer Abruzzo, the general counsel for the NLRB, issued a memo in June 2021 outlining potential remedies for “failure-to-bargain” unfair labor practices her office was considering. That list included a requirement that parties submit bargaining progress reports to the agency, reimbursement of bargaining expenses and the creation of bargaining schedules. 

Earlier in 2022, Abruzzo’s office said the NLRB’s regional offices have obtained some of those remedies in settlements between unions and companies.

Union’s prospects may be undercut by turnover, limited financial power

While the scale of SBWU’s electoral gains are significant, its structural constraints reflect the struggles of most unions. 

To put the scale of this campaign into perspective, 837,000 workers in foodservice quit their jobs in August — making monthly foodservice turnover over 125 times larger than the union’s membership. A Starbucks spokesperson, speaking on background for an earlier article, also alleged that turnover was higher at union stores than non-union stores, though he declined to provide specific data.

The power of organized workers comes from their ability to withhold labor by going on strike, Lewis said. But that may only work if the financial cost of a strike really stings.

“There's no special tools,” Semel echoed. “How much they [the union] get depends on how strong they are.”

The NPD group estimates that Starbucks’ average unit volume was about $1.52 million in 2021. Assuming unit volume is comparable between union and non-union stores, units represented by SBWU would generate about $380 million in sales per year, equivalent to about only 1.3% of the company’s total revenue of $29.1 billion in 2021. Even a national strike closing every unionized store would amount to a very minor disruption to Starbucks’ sales. 

Were such a strike conducted for economic reasons, like pay, rather than a bargaining impasse or unfair labor practice, the company would be able to replace strikers permanently — destroying the union. With less than 3% of company-owned North American Starbucks locations unionized, striking presents a strategic risk, and a protracted campaign may not succeed in an industry with such high turnover.

Still, single-store strikes have worked for SBWU in the past. In one instance in Boston, Starbucks workers said a 64-day work stoppage won them a change in attendance policy, though Starbucks maintains it never enforced the policy. There have been, by the union’s count, dozens of other strikes, most of a limited duration with specific objectives. 

Semel did point to examples of comprehensive campaigning where unions were able to impact the broader conditions of an industry, or fight major employers. The Service Employees International Union, Workers United’s parent union, is in the middle of a campaign to overhaul California’s fast food industry through a combination of workplace agitation and political pressure. That drive resulted in the controversial passage of Assembly Bill 257 in August, which would create a council to regulate fast food working conditions in California. SEIU is also conducting a corporate campaign against Chipotle in New York City, using the city’s regulatory bodies to punish the chain for violating labor laws.

Starbucks has finite influence

Though the door will soon be open for anti-union employees to kick off a decertification campaign, it would be illegal for Starbucks to openly organize such a drive, both Semel and Lewis said. 

“You can just answer questions without really helping them, you can't really help the process along. It's up to the employee[s] to really do that,” Lewis said.

But employers can, and do, circulate materials telling workers when the one-year post-certification period ends, Semel said. Companies can also share how to contact the NLRB to facilitate decertification elections. 

The rules for such elections, Lewis said, are the same as for regular elections: at least 30% of workers in a bargaining unit must petition for it, and a majority of voters must vote for decertification for the union to lose its status as bargaining representative. 

The union may also be able to use NLRB charges to prevent some decertification campaigns. In some instances, in bargaining units where a sufficient number of unfair labor practices complaints have been filed by the NLRB regional offices, the board will not allow decertification petitions to proceed, Semel said. 

Still, SBWU’s path forward is perilous. The union could fail due to the slow attrition of the labor market and decertification elections, or it could go down in a single decisive strike against the company. 

Even if the union wins a first contract with Starbucks, Semel said, that contract may only apply to basic matters, and it could take long cycles of negotiation, confrontation and conciliation to develop more comprehensive terms. 

But it’s an uphill battle some workers are determined to fight. 

“I don't want to live in a world where I don't get a say in how my life functions and operates. And I've done that for too long,” Langevin said. “I have found a renewed dedication to fighting for people who are being taken advantage of.

Peet’s United, a group of workers organizing Peet’s Coffee locations in Davis, California, won its first union election at a Covell Boulevard store Friday in a 14-1 vote, the union announced on Twitter.  

In a statement emailed to Restaurant Dive, Peet’s said it had hoped for a different result but would “follow the legally required next steps with the union at North Davis” and would “continue to work for and with our employees companywide.”

The Peet’s United organizing committee was aided by Starbucks Workers United organizers, union supporters told Restaurant Dive in December. The Service Employees International Union, which is the broader union Workers United is part of, was also part of the Peet’s United National Labor Relations Board filings.

Two Davis, California, Peet’s locations filed for union elections in December, but one withdrew its petition for representation in the lead up to the election, the company said. Petition withdrawals are common when unions feel their shop floor support has eroded or that they need a greater depth of organizing to avoid electoral defeat, though there are other tactical reasons unions withdraw petitions.

Peet’s obliquely conceded the election in its statement. The union’s victory may lead to further election filings. Peet’s workers told Restaurant Dive in December that the conditions which motivated them to organize, including scheduling and safety issues, pay and managerial difficulties, are widespread in the coffee sector. Trinity Salazar, a barista at the North Davis Peet’s location that voted to unionize, worked in several cafes in Davis before ending up at Peet’s.

“I felt unionizing was the next step. Because it seems like a lot of barista jobs are like this,” Salazar told Restaurant Dive in December. “Instead of moving to the next location, it's time to like, actually start changing the culture within the place that I already work.”

Outside of Starbucks’ high-profile union drive, independent cafes and small coffee chains have faced a wave of union organizing in recent years. The International Brotherhood of Electrical Workers organized Colectivo Coffee in Chicago in 2021, and UNITE HERE has organized several cafes in Boston.

Oil hissed as the White Castle fry cook lowered a basket full of chicken rings into the vat. Next, the cook pulled a basket of fries out of the fryer, letting hot oil drain off for a moment before dumping them at the station where fries are packed and served.

From there, the cook continued to load, drop and pull fryer baskets. It’s a tough job — repetitive, hot, and greasy. But this cook doesn’t pause or flinch at a splash of grease because, instead of skin and muscle, this cook is made of cast aluminum. Called Flippy 2, the robot worked with a mechanical whirl, unceasing, unbothered by the heat and the noise.

Flippy 2 is the second iteration of Miso Robotics’ fry station robot, and a refinement of early attempts to build a labor-saving machine for QSRs. The technology looks to build a cook that never gets sick, never undercooks an item and is never a “no-call, no-show.” Miso’s robot could serve as a two-in-one solution for the restaurant industry, which is the only major business sector to have wage growth outpace inflation, and is struggling to reach pre-pandemic staffing levels. The product is resonating with major chains: White Castle will deploy Flippy 2 in nearly one-third of its stores by the end of 2023. White Castle is the earliest adopter of Miso’s technology, but Wing Zone has committed to deploying Flippy 2 in all future restaurants, and Chipotle is testing Miso’s chip-making robot as well. 

Automation is easing White Castle’s labor pressure and improving efficiency

The Mokena, Illinois, White Castle is the third of the chain’s stores to install Flippy 2. It’s also short-staffed. Diana Williams, the district supervisor responsible for 14 White Castles straddling the border between Illinois and Indiana, said the location has faced fluctuating employment levels since the start of the pandemic. In May, the store had 32 employees, about 8% below Williams’ desired staffing level of 35 workers. 

Traditionally, the fry station required two employees to oversee it. One of the workers’ main tasks was just to handle the baskets in the boiling oil.

“The one that's always managing baskets and dropping frozen product is really just always in front of that fryer. That's the work environment. A very, very challenging work environment,” Mike Guinan, White Castle’s vice president of operations and services, said. 

Flippy 2 frees up workers who would normally be responsible for the fryer to work at what Guinan refers to as the “hospitality door,” a door next to the drive-thru window where workers can carry food and drinks out to cars and greet customers. This, in turn, alleviates pressure on the drive-thru employees, who must take and collect orders, make drinks, hand off food and attend to customers at the window and over their headsets. By reallocating labor from the fryer to the drive-thru, White Castle has improved drive-thru speed of service.

“We're seeing somewhere between 15% and 25%, faster [order] times,” said Jacob Brewer, chief strategy officer at Flippy 2’s parent company Miso Robotics. “And traditionally, a hang up is the fry station. You're often waiting on fries, even if it's one, two or three seconds. Three seconds out of a 90-second order is still meaningful.” 

Miso refined the robot to mitigate training needs

An earlier version of Flippy was less efficient from a labor-saving perspective, Brewer said, because workers had to fill the fryer basket before the robot picked it up. Operational testing, as well as testing at Miso’s Pasadena, California, laboratory, allows the robotics company to continually refine the design and software that powers Flippy 2. 

“Masters and PhD roboticists and software engineers will interact with something far different than [restaurant workers],” Brewer said. “If you want to see if something really is tough, put it in a restaurant.”

Brewer said high turnover in restaurants also drives Miso to improve and simplify its user interface.

“What we didn't plan for is once we trained everyone, turnover is still 100% [at many restaurants], which means everybody is leaving every year,” Brewer said. This turnover figure wasn’t specific to White Castle, which he said had some of the lowest turnover among QSRs. In light of the industry’s turnover rates, Miso designed Flippy 2 so it is intuitive to use and easy to train workers to interact with. Employees need to feel like the robot is a productive team member, he said.

The Flippy 2 arm moves faster than the original Flippy, Brewer said, not because it’s necessary to speed up throughput, but because slower movements led workers to feel the robot was sluggish and inefficient.

Williams said Flippy 2 works well in the kitchen, and has integrated into the operations at White Castle smoothly. In Mokena, one worker feeds product into the machine, while a second, who previously would have been assigned to handle baskets, expedites drive-thru orders and interacts with guests. 

Robotics costs can be competitive with wage costs

White Castle’s configuration of Flippy 2 frees up one worker for redeployment from the fryer, making the robot something of a replacement for an individual worker. But how does the cost of a worker compare to the cost of a robotic arm across a full year’s operations?

Miso charges restaurants a $5,000 installation fee for Flippy 2, and a $3,000 monthly service charge, Brewer said. That cost structure is intended to make it easier for franchisees to adopt Flippy 2. Brewer said this cost — $41,000 per unit in the first year and $36,000 each subsequent year — is lower than the equivalent labor costs of a staff member manning the fryer.

A restaurant with three dayparts, operating the fryer during two hours on peak and one hour before and after peak, has someone dropping and pulling baskets at the fryer station for 12 hours every day. Stretched across 365 days and multiplied by the $15 hourly wage that is increasingly prevalent in major markets, that adds up to $65,700 in raw wages. For a restaurant with two dayparts, the same assumptions yield about $44,000 in wage costs. It is, in Brewer’s telling, a math argument.

“You're cleaning up,” Brewer said. “You're getting a killer ROI from day one.” Brewer added that the choice to reallocate labor, as White Castle says it is doing, or to cut jobs is up to the brands themselves.

But a closer look at labor market data reveals a more complicated equation. Fast food cooks in the U.S. earned on average $11.63 an hour, the lowest wage of any job class in food preparation and serving-related occupations, according to the U.S. Bureau of Labor Statistics. This would yield a wage cost of $50,939 for a restaurant open for three dayparts, closer to Flippy’s first-year costs. A restaurant open through just two dayparts would see average wage costs for a fry cook around $33,959, just below Flippy 2’s cost in its second year of operations.

The hourly wage at which it becomes cheaper to install Flippy 2 than to employ a fry cook for three dayparts is $9.36 in the first year, and $8.21 in subsequent years. For two dayparts, the break even point for wages compared to Flippy 2 fees is $14.04 in the first year and $12.32 in following years.

But this comparison of hourly wages and costs doesn't account for expenses that vary on a store-by-store basis. For example, installing Flippy may cause a restaurant to pause operations for a day or two, or require kitchen renovations to make space for the robot. Restaurants would also need to train staff on how to interact with Flippy. But Flippy 2, as Brewer said, does not come with some of the more costly aspects of labor, like training workers to operate the fryers, which can add up for brands like White Castle that cross-train their employees so they can fulfill any back-of-house role. 

Robotics could shape the restaurant labor market

Major publications have argued since at least 2015 that wage increases would spur automation in fast food. Miso’s deals to bring robots to hundreds of units in the next few years, and the number of robots working the floor at the National Restaurant Association Show, suggest a growing swath of the industry is embracing automation. Recent surveys have indicated restaurant operators are hungry for technology that can reduce inefficiencies across management, back-of-house and front-of-house roles.

Brewer also touted Miso’s crowdfunding, totaling more than $50 million raised from 18,000 shareholders, as indicative of a larger acceptance of automation in restaurants.

“People get the product, people get the problem,” Brewer said.

Before the COVID-19 pandemic, wages were growing steadily in foodservice, according to the BLS. Employment in foodservice grew steadily too, peaking at 12,360,000 workers in February 2020. Both fell in the months that followed, according to BLS data. Since then, foodservice wages have outpaced broader inflation, and the growth in compensation has exceeded the recovery in employment. The number of foodservice workers, about 11,566,000 in April 2022, lags behind pre-pandemic peaks by more than three quarters of a million workers.

Rising wages haven’t drawn workers back into foodservice fast enough for many operators, who have cut hours, simplified menus and leaned into operational efficiencies. Now, a number of chains are betting on back-of-house automation to solve operational problems — including White Castle. 

“At the end of the day, we want to have Flippy in every Castle,” Guinan said

After more than a year of only modest improvement, the restaurant industry’s labor shortage has become a familiar burden. Employment levels and wages have inched upward, but a gulf remains between current staffing levels and pre-pandemic labor availability – stoking operator anxiety. 

In August, foodservice added about 6,000 jobs. But restaurant industry employment still lags some 564,000 jobs behind its pre-pandemic high, or about 4.5% of the February 2020 foodservice workforce, according to the preliminary October jobs numbers from Bureau of Labor Statistics. In September, wages in foodservice edged up about 0.75%, keeping just ahead of the consumer price index. 

At the 2022 National Restaurant Association Show in Chicago, Restaurant Dive spoke to operators, executives and specialists about strategies restaurants can use to succeed in a tight labor market. Throughout these discussions, four key areas of focus emerged: recruitment, retention, operational efficiency and employee communication.

Recruitment

Recruitment efforts don’t need to be limited to corporate marketing campaigns, Jill Waite, Portillo’s chief human resource officer, suggests. Restaurant employees can be effective recruiters if they’re happy with their jobs, Waite said during an NRA panel. 

“Thirty percent of our team members that work for Portillo’s came because they either wanted to work with a friend or a family member. So they're a great brand ambassador for you,” Waite said. Referral bonuses and other incentives can help enlist current employees in the recruitment process.

Jordan Ekers, COO at Nudge, an employee communications and training platform, said clients of his are interested in recruiting through employees’ personal networks. 

“We rolled out a recruitment module. So I can nudge frontline staff to encourage individuals in their network to apply for a job at that brand,” Ekers said. 

Transparency about DEI initiatives offered at a company can also draw applicants, Sue Petersen, executive vice president of inclusion, diversity and people at Noodles & Company, said. 

“We have people who come to us and specifically apply because of what they see us doing in this space,” Petersen said during an interview at the NRA Show. “Whether it's because they were in the restaurant and [saw] team members with the pronoun pins, or, you know, they see us celebrating the different heritage months.”

Waite also said Portillo’s will rehire past employees who left the company in good standing, as they require less training and are already familiar with the brand’s operations. Sharing individual workers’ stories through company channels can also generate applications, Waite said, as many prospective employees are more interested in learning what a shift at a brand looks like rather than hearing a pitch from HR or executives.

Once applicants have turned in their applications, employers can incentivize applicants to show up for interviews by dangling a sample of the restaurants’ fare, Patrick Yearout, director of innovation at Ivar’s Restaurants, said at the same panel as Waite.

“Instead of inviting them in for an interview, we invite them in for a conversation and a meal. So we definitely bribe them with free food,” Yearout said. 

Retention

Keeping employees after they’ve been hired is another challenge, as turnover in the industry has eroded many staffing gains, with about 5.7% of workers leaving their jobs in foodservice in September 2022.

One key tool that can aid in both recruitment and retention, Petersen said, is aligning benefits with demographics. 

“We've started tracking or trending our benefits to [see usage by] the segments that we feel are targeted by that benefit, and then we look for gaps,” Petersen said.

Noodles immigration reimbursement plan, for example, filled a gap in benefits for immigrant workers. Sometimes, Petersen said, tracking benefits reveals programs with little usage, such as its backup childcare for employees. The program was only used by two employees in a whole year, Petersen said.

Compensation and employee recognition are two drivers of retention, Ekers said. Responsiveness to employee feedback is another major driver of retention, as it makes employees feel valued. 

Finding ways to boost revenue and ensure staff have meaningful work can help maintain staffing levels, Rishi Nigam, founder and CEO of host kitchen platform Franklin Junction, said. 

“Everybody wants to make more money, I don't think restaurant employees are afraid of working,” Nigam said. “But when you make them do stuff that doesn't produce results, then you cost yourself a lot of goodwill. So you're making people work extra, but you're not earning the revenue to pay them better.”

To that end, adding new revenue streams or improving the profitability of operations can help improve morale, Nigam said.

Operational efficiencies

One way to improve profitability is to find new efficiencies, freeing up labor for other tasks in the restaurant.

While robots are an obvious example of a labor-saving solution, little changes like QR code menus, which make it easier for customers to order and pay, can also help take pressure off staff. 

“QR code menus, that don’t just display the menu, but actually allow the diner to place an order and process their payment seamlessly, takes a lot of the burden, from a staffing perspective, off of the restaurant,” Brian Cotlove, chief business officer at restaurant tech company BentoBox, said. 

Answering calls, for example, can be a major pain point for restaurants that take orders or reservations by phone, said Brendan Sweeney, CEO of Popmenu, a company that offers a phone-answering automation tool. By ensuring customers always get an answer from the phone system, even if it’s just a text message with a link to a direct ordering platform, small front-of-house automations can draw customers in and free up workers elsewhere, Sweeney said.

“It's always just a series of these small inefficiencies and small opportunities to gain revenue and gain margin. Every single phone call is a transactional opportunity,” Sweeney said.

Sometimes efficiency can come from unit design, especially in the QSR segment, Frank Inoa, Inspire Brands’ vice president of design and engineering innovation, said during a panel conversation. Inspire has created modular designs for drive-thru only units, which saves construction time and eliminates the need for some front-of-house labor, allowing workers to focus exclusively on off-premise orders. Dunkin’, one of Inspire’s chains, opened a digital-only store last summer that has a similar staffing level to traditional units, using workers who would otherwise focus on the front-of-house to prepare food.

Shaun Jackson, executive director of risk management at Panda Restaurant Group, echoed Inspire’s emphasis on nontraditional units driving efficiencies.

“We've never seen the kind of efficiency numbers that we get out of a [ghost kitchen] out of a standalone,” Jackson said. “When you eliminate the dining room, and you really have just third-party orders, it's a phenomenal model for sustainability. And that's one of the drivers of ghost kitchens.”

Employee communications

Marginal efficiencies, recruiting through employees’ social networks and targeting benefits to specific populations can all help restaurants save on labor costs and reduce turnover. But a major factor in retention, at least according to Ekers, is how restaurants communicate with workers.

Employee communication is second only to pay as a driver of employee longevity, Ekers said. Many restaurants think they communicate effectively, but a sizable gulf exists between management and employee perceptions, Ekers said.

“A fraction of the employees believe that they get effective communication that helps them better perform. A fraction of employees believe that they're being asked for feedback,” Ekers said.

For Petersen, consistency is one cornerstone of good employee communication. Workers should know what to expect out of a shift regardless of which managers are on duty. Personal relationships also impact whether employees listen to, and are heard by, management.

“Don't just sit down and learn about what shifts are available and what [candidates’] prior work is. Get to know the individual. Learn one or two things about them personally, what was important to them, and then carry that through,” Petersen suggested. 

Ekers, whose company makes an employee communication platform, also said a personal touch matters, even if it's from a digital tool.

“The more targeted information is to a particular individual and their role and their skill set, the more impactful it's going to be to drive a behavior,” Ekers said. Digital tools are more effective than bulletin boards, and more consistent than verbal briefings, Ekers said.

Even with all these strategies in place, the overall labor market is still tight, Nigam said.

“There's always a labor issue of some sort or another. I think that what's always important is having that contact with your ground team, and knowing what's going to make their lives easier and better,” Nigam said.

Shortages of delivery drivers, which have been worsening since 2021, are taking a toll on top pizza chains. Pizza Hut and Domino’s both posted negative same-store sales during the first quarter of 2022, attributing these financial dips to prolonged labor pressure. 

But despite these challenges, one pizza restaurant continues to grow: Papa Johns reported a 1.9% increase in North American same-store sales during Q1. How? In part, because the chain has been working with third-party delivery aggregators for the past three years to support stores during peak hours. This move initially aimed to mitigate sky-high driver turnover, which reached 220% in 2019, but now it appears to be a farther-reaching strategy. 

“Staffing is always a challenge in our industry and continues to be so. In addition to our integrations with the aggregator marketplaces, our nationwide integrations with deliver[y] service providers have been a key tool allowing us to continue to serve our customers during peak times,” Papa Johns CEO Rob Lynch said during the company’s Q1 2022 earnings call.  “Though these delivery-as-a-service transactions are a slightly lower margin versus using our own drivers, they are incremental, profitable orders that otherwise may have gone unfulfilled.”

Papa Johns' premium pricing has also helped alleviate some staffing issues since the company needs fewer transactions compared to more value-centric competitors, Lynch said. 

The chain has also been using a third-party call center since 2020 to take orders instead of requiring individual stores to field phone calls, freeing up employees to complete other tasks. A little over half of Papa Johns' domestic stores, or roughly 1,600 in North America, are using the Papa Call phone service, and more are expected to sign up, Lynch said. Domino’s also plans to deploy its call center to up to 3,000 stores by mid-May. 

“We continue to invest in tools to increase productivity in our restaurants,” Lynch said. “And as labor becomes more expensive, those tools become more valuable.”

The benefits of aggregator partnerships

Some Papa Johns operators say third-party delivery partnerships account for 6% to 7% of sales while others say it represents about 15% to 16% of sales, BTIG said in a May 2 report emailed to Restaurant Dive. 

Franchisees' relationships with delivery firms have improved over time, Lynch said.

“We've learned a lot about how to work most effectively and productively with these aggregators. It's not a perfect relationship. There were some bumps along the way that we had to work collaboratively with them to iron out, to get to an operating model in the customer service level that allows us to continue to leverage it at the scale that we do,” Lynch said.

Despite apprehension among some operators, increased partnerships could help improve Papa Johns' supply of drivers. 

“We continue to be bullish on these growing partnerships as we execute on additional opportunities to reach new customer segments,” Lynch said.

Papa Johns began its foray into delivery partnerships with a relationship with DoorDash in 2019, and added Uber Eats and Postmates later that year. Moving away from exclusivity with DoorDash to partner with additional providers may also allow for increased competition that could alleviate jumps in commission rates, which franchisees have expressed concerns about, BTIG said in a May 5 Papa Johns report emailed to Restaurant Dive. Multiple delivery deals ensure Papa Johns isn't beholden to the pricing of just one company, and it could use relationships with different delivery providers to negotiate costs down.

“We expect Papa John's to continue to focus on ways to increase driver pay, to lower turnover, driving sales through its own higher-margin channel,” BTIG said.

During a restaurant’s dinner rush, a ringing telephone can go unheard, pushing customers waiting on a busy line to visit a competitor or cook at home. As inflation forces consumers to be cautious with their spending, the competition for consumer dollars has grown more intense. Restaurants can’t afford to miss phone sales, nor can they afford to leave their front-of-house understaffed.

Companies like Goodcall, Popmenu and HungerRush have landed on a possible solution to capture consumer spending and ease labor pressure: automated restaurant phone systems.

While not as eye-catching as a fry cook made out of machined aluminum, or a robot busser, these systems are designed to meet specific operator pain points. Automated phone tech uses conversational artificial intelligence to take customer orders, answer questions about operations or direct customers toward digital channels.

“We came up with the idea because of firsthand experience of sitting with restaurant owners and watching the disruption that they had to experience,” Tony Roy, Popmenu’s president and co-founder, said. “Because they didn't have enough staff to simply answer the phone.”

Some large chains have recently invested in voice ordering tech, with McDonald’s testing AI drive-thru voice ordering. But others are deploying automated phone answering systems. Pizza brands like Jet’s Pizza and Marco’s Pizza have both tried phone ordering systems. Applebee’s offers phone ordering at about half of its locations, according to the Wall Street Journal.

Automated phone answering companies are still relatively new, and when given a choice, many customers still opt to talk to workers or managers. But these firms claim to offer several advantages for restaurants.

Labor savings

At the most basic level, phone automation tech offers labor savings by freeing up staff from answering the phone. At Bevri, a Georgian restaurant in California, owner Pavel Sirotin said staffing shortages following the COVID-19 pandemic made it difficult to answer the phone and balance other tasks, like front-of-house operations or preparing pickup and delivery orders.

“We were hit with the labor shortages and essentially, sometimes there would be like one server. Sometimes it's just one of us,” Sirotin said. “We could never answer the phone. And it was just ringing and ringing. People had all sorts of questions: they wanted to place an order, they wanted to check if we're still alive.”

Sirotin knew Goodcall’s founder and CEO Bob Summers, and was excited to try Goodcall’s automated calling system at Bevri. Once installed in September 2021, the system, which Summers said would be able to answer thousands of calls simultaneously, proved an aid to Sirotin’s operation.

“Goodcall helped us answer more than 4,000 calls,” Sirotin said in August. “Multiply that by about, on average, five minutes per conversation, [and] that's how many minutes we freed up.” He added that this phone technology has led to improved experiences for customers who dine in, as servers are freed up.

Labor savings may be difficult to quantify, Aaron Nilsson, COO at Jet’s Pizza, said. Jet’s Pizza uses HungerRush’s automated phone answering system at about one-third of its 400 stores. Despite the difficulty determining the precise savings from one tool, Nilsson said, the automated phone systems can relieve pressure on the staff by directing customers to digital channels. 

Jet’s Pizza uses HungerRush’s text-to-order feature, in addition to its phone answering tech. The text-to-order feature works with customers to ensure their orders are comprehensible and accurate before sending them on to Jet’s. That feature compliments the labor saving potential of a robotic phone answering system by diverting customers from the phone.

Consistency

In addition to labor savings, AI-powered phone answering systems offer another advantage: consistency. A computer won’t forget to upsell, and can follow the rigorous instructions laid out by operators. This means the technology can add incremental sales while preserving order accuracy, at least in theory. 

“The bot is smart enough [to know] if you order X, that means you may want Y, and then at the end…[ask], would you like a two-liter Mountain Dew with that,” Perry Turbes, CEO of HungerRush, said.

Nilsson said the bot’s consistency is a more significant feature than its labor savings.

“We always ask for an upsell,” Nilsson said. “There's actually a ticket improvement for using this right now, compared to [an employee] taking it over the phone, because the robot never has a bad day.”

Jet’s orders taken by the robot are about $1 larger because the robot tries to upsell on every order, leading to a marginal gain in sales, Nilsson said. Turbes noted that the voice-recognition technology underpinning automated phone ordering systems becomes more accurate as more customers use it, since data gleaned from interactions can be used to improve the robot’s responses. But those answers are only as accurate as the data the bot can access.

Much of that information the bot pulls from Google listings, as Popmenu’s platform is integrated with Google, Roy said. But operators have the ability to change or customize that information, enabling the bot to keep up with menu shifts, hours changes or other operational differences.

If the robot doesn’t know what a customer is asking, the systems used by Popmenu, Goodcall and HungerRush have failsafes that connect calls to the store. 

“We don't guarantee that it can manage every call,” Summers said.

Price points

Most of these companies are trying to keep costs low enough to encourage adoption. HungerRush charges a fee consisting of a small percentage of an order total, rather than charging a subscription or a per-call fee. But HungerRush declined to specify how large the per-order fees are. 

Popmenu’s phone tech offering costs about $349 per restaurant unit per month, though the company frames this cost as about 47 cents per hour, as the phone system can answer calls 24 hours a day. The company does offer some cost breaks for large multi-unit operators, but did not specify what those were.

Goodcall’s costs scale depending on how many calls the robot is expected to receive, and how many skills it comes programmed with. Each skill is a discrete function, like the ability to answer questions about pet allowance in stores, or the ability to take orders, which, Summers said, is the most used feature. The company offers eight skills and 60 calls per month for free, and 16 skills and 600 calls cost $19 per month per location. The company’s premium offering — unlimited calls and some features not available on lower plans like a hold function — is available for $49 a month. 

Limits

All three systems still use the restaurant’s employees as the ultimate backstop, as conversational AI isn’t something all customers are comfortable interacting with. At Jet, which uses HungerRush, the company’s phone system offers customers a coupon if they order through the phone bot. Currently, Nilsson says, a minority of callers order through the bot, but that number is rising, and customers who order through it once are likely to do so again. 

While Summers touts the ability of automated phone systems to convert phone orders to digital orders, thereby securing for restaurants valuable customer data, he said only between 10% and 20% of callers shift from ordering by phone to ordering digitally.

Popmenu has tried to circumvent that low level of adoption by sending customers an SMS message directing them to order online. Tony Roy, Popmenu’s president and co-founder, demonstrated the technology for Restaurant Dive during a video call. Roy called a restaurant that uses Popmenu’s product and asked the bot if the restaurant served liquor. The bot said it did and rattled off several name-brand tequilas carried by the restaurant. When Roy asked to place an order, the bot told him the restaurant accepted online ordering and offered to text him a link. He asked to speak to a manager, and the bot put the call through to the restaurant. 

There are other limits to the technology, however. Phone bots don’t always understand accents, and process a limited number of languages. Popmenu, HungerRush and Goodcall were limited to English as of October. And it’s not clear if the claims to accuracy and labor saving will hold up on a larger scale.

 

Over the course of the union campaign, Starbucks employees told Restaurant Dive about small problems disrupting their work —  issues such as an unclean grease trap, threatening customers, deluges of mobile orders, bees in stores, lack of emergency planning and managers who took down Pride paraphernalia. These problems pushed them to ask for changes, unionize or, in some cases, strike. 

For the workers and organizers participating in the campaign, the process has often proven personally transformative. The Starbucks employees who spoke to Restaurant Dive tend to be younger, ranging from 17 to 37 in age, and are often college-educated or are attending Starbucks for its college benefits.  

“It made me stronger,” Aleah Bacetti, a union organizer who was fired for what Starbucks described as “use of harassing or abusive language,” said. “I endured racism and harassment by my peers, by my management team. And even though I was fired, I overcame it. And my union is still going strong, and we won. We got our certification. And we're bargaining.”

For younger workers, the campaign has become a way to connect with others. Sam Shields, a barista in Washington, D.C., who sings opera off the clock, said she feels like she’s a leader now. Megan Brown, a Starbucks Workers United national bargaining committee member in Illinois, found a calling.

“This is just what I want to do with my life. I really enjoy advocating for workers’ rights, and bargaining contracts, and all of this,” said Brown, who is still in high school.

Casey Moore, a Buffalo, New York-area barista who delayed law school to throw herself into organizing, said the factors that drove the campaign haven’t dissipated. The physical intensity of barista labor reaggravated back injuries she sustained in a car crash, and gave her new injuries, requiring her to wear a wrist brace to deal with pain caused by the job. The nature of QSR labor itself, which combines physical difficulty with emotional performance, also drove Moore to push for a union contract.

“When I was a waitress, for example, I had a bit more incentive to be nice to people so they [tip] you,” Moore said. “No matter how nice I am to people, they're still going to be awful to me here. And I'm still gonna leave [for] home with the same amount of money at the end of the day.”

For her, the campaign has offered a way to deal with that drudgery.

“I'm doing things that I never thought that I would do,” Moore said. “It's super empowering, and fun and scary.”

Other workers have seen the campaign transform their lives. Julie Langevin, a Starbucks shift manager and member of SBWU’s national bargaining committee, has worked at Starbucks for 17 years. Though her store lost its election, she has found a sense of meaning in the campaign.

While the union campaign is seeking changes that would impact corporate culture and labor relations, Starbucks Workers United members are also seeking changes at the store level. With bargaining organized and led by workers, SBWU’s proposals often focus on specific changes to systems that workers interact with all day, every day. These are some of the topics workers mentioned as personal priorities in contract negotiations.

1. Wage hikes 

Every worker Restaurant Dive interviewed about contract demands mentioned wages. These baristas want Starbucks to pay its employees more by basing compensation on living wages in different regions. But most said pay hikes aren’t an immediate priority compared to operational changes at stores.

2. Ability to turn off mobile ordering 

Currently, Starbucks stores can’t shut down mobile orders without direct permission from a manager and a district manager, according to Langevin. Customers can grow frustrated with the wait times, but there’s nothing workers can do, she said.

“We have to ask permission to turn mobile [ordering] off when we're drowning, when we have a wait time of 40 minutes on our line, and we have customers standing there asking, ‘Where's my drink,’” Langevin said. “We're not allowed to turn that off because it cuts into Starbucks’ bottom line.”

3. Improved equipment

For workers at the 1429 P Street Starbucks location in Washington, D.C., the union campaign is about safety and functioning equipment. Tae Cunningham, a barista and SBWU member, said he wants to see the company fix equipment in a timely manner. 

“It always [breaks] on a day where we need it the most. A day where every customer wants a specific item, but we just can't make it,” Cunningham said.

When the P Street location’s cold brew machine broke down in mid-2022, Starbucks didn’t fix it for over a week, Cunningham said. This led customers to get frustrated or become confrontational with workers. Worse, Cunningham said, the machine didn’t function properly even after the repair, and it took the company two months to replace it.

Sam Shields, who also works at the P Street Starbucks, said she wants her store to be renovated. The store is a small location on the first floor of an apartment building. Shields and Cunningham both emphasized the cramped nature of the work. Shields wants other minor changes, like soft-close cabinets that would prevent painful injuries. 

For many, smaller proposed changes like this are part of a transformational promise by the union, that employees can exercise power together, rather than relying on sending reports up the corporate chain in the hopes of change. 

4. Fewer out-of-pocket uniform expenses 

Kylah Clay, a barista and organizer in Boston, wants Starbucks to wash the aprons it provides to her. Clay has two aprons the company gave her, but in Boston at least, Starbucks does not launder aprons for workers. In Clay’s experience, the company rarely has backup aprons at her store. Clay wants the company to buy union-made aprons and wash them at unionized industrial laundries.

“We have to wash our own aprons. It's not the biggest deal of all things, but these things get dirty so quickly,” Clay said. In Boston, where a single load at a laundromat can cost $5, this can absorb a good chunk of workers’ pay. Clay makes about $15 dollars an hour, slightly more than the Massachusetts minimum wage of $14.25.

Bacetti wants Starbucks to pay for non-slip shoes. The company’s dress code asks employees to wear non-slip shoes made of nonporous materials, as is common in foodservice settings. But Starbucks does not reimburse workers for the expense.

“If you're going to ask for people to wear non-slips you should provide that, like, if it is going to be a safety measure, provide that. Don’t cop out to be cheap,” Bacetti said. 

Langevin, who is a shift manager in Massachusetts, said the non-slip issue can make it hard for new workers, who have to pay for dress code-compliant clothing and equipment before receiving any pay from the company.

5. COVID-19 leave

Workers have criticized Starbucks’ COVID-19 and emergency responses since the start of the union campaign. Now that Starbucks has ended COVID-19 catastrophe pay and many other emergency protections, SBWU members want the company to improve its sick leave policies and overall planning for emergencies. 

Clay said Starbucks’ COVID-19 leave policies are inadequate, sometimes leaving sick workers responsible for finding coverage for their shifts when they run out of paid sick leave. Starbucks said workers with COVID-19 can take short-term disability if they have no more sick days. But Clay said workers’ ability to receive a leave of absence depends on healthcare providers, and that the length of leave time can be limited.

“I just want to make sure that people can take the time that they need to get healthy again,” Clay said. “If people can't return to work right now, they should be able to take a protected leave.”

At the start of October, Starbucks discontinued self-isolation pay, vaccine pay and side effects pay. Starbucks ended those benefits without bargaining with SBWU, but said it had no obligation to bargain over those changes because the COVID-19 benefits and catastrophe pay offered to workers were always intended to be temporary.

Workers want to hold Starbucks accountable to progressive values

The campaign has changed many workers’ relationships with Starbucks, and many see the union drive as a way to make the company live up to its self-professed progressive values.

“We started this campaign saying, we love Starbucks,” Moore said. “It's very hard to say that now after seeing everything that they've done.”

Langevin said that when she started at the company in 2005, its benefits and pay really were superior to what other foodservice jobs offered. She also found it to be a welcoming place that met people’s needs. 

“I refer to myself as somebody who drank the Starbucks Kool-Aid real early,” Langevin said. “I really, really thought that Starbucks’ values were the heart of the company, and they tried to honor those.  And I do not believe that at all anymore. ... I still strive to reach and meet those values. But I know that it's not coming from higher up, and that just hurts.”