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    HR Resources | 3 min read

    How To Offset Rising Labor Costs Without Damaging Customer Experience

    It is not uncommon for labor costs to increase since it is usually adjusted for inflation. For the last quarter of 2020, however, it seems that the cost of labor in the US saw an unexpectedly higher jump of 0.7% as compared to the previous quarter. 

    Needless to say, predictions of accelerated inflation for the year came true. And now, quick-service restaurant (QSR) owners have to grapple with the fact that this leads to higher expenses in their business operations. To make things worse, some QSRs are still getting used to the new normal brought about by the COVID-19 pandemic and the rising costs are definitely not helping, to say the least. With such terrible circumstances, something’s got to give, right? 

    Well, yes. But take note - one thing that you do not want to do is cutting your staff as this will affect the quality of your customer experience. 

    Importance of Customer Experience

    The customer or guest experience is vital to you as it can make or break your company’s image. So trust us when we say that you never want to compromise your customer experience as a means to deal with your company’s rising costs. Doing so may actually bring more harm than good for your brand in the long run.

    So why exactly do we insist that you provide an exceptional experience for your customers? For one, a satisfied customer contributes 2.6 times more revenue than a somewhat satisfied customer. Naturally, customers have a higher chance of becoming loyal ones (and thus spending more money in your store) when they have a good experience in your restaurant. That in itself provides an opportunity for you to stand out from other brands. Moreover, with more competitors cropping up in the market today, you do not want to be known as the restaurant with lousy service and risk losing your existing customers. What’s more, words travel really fast with the rise of social media. A few customers’ bad experiences are enough to deter potential new customers from patronizing your restaurant.

    Now that you understand the importance of preserving your customer experience, let us bring you some ways you can adopt to offset those high, pesky labor costs you can’t avoid.

    Ways to Offset Rising Labor Costs

    Getting the Right Hires

    First and foremost, you would want to ensure that you are hiring the right person for the job. Look for someone who has the relevant skills for the position or the willingness to learn them as they would be able to complete their delegated tasks more efficiently. Additionally, you would want to hire someone who is the right fit for your company culturally. Neglecting this can cost you more as you might be spending time and resources in training the new hire only to have them leave after a short period of time due to the mismatch of values.

    WS Banner Hiring 728x90 v01

    At Workstream, we use smart screening to determine if an applicant is the right person for the job before you meet them for an interview. Applicants will have to answer a series of questions and depending on their answers, they will either be automatically moved to the next round or rejected. These screening questions are also customizable so that you can easily set your own requirements based on the job position you are hiring for.

    The key takeaway here is this - invest in your hiring process to ensure that you are getting the right person for the job. This reduces the likelihood of the new hire quitting after a short while, which in turn minimizes additional cost incurred to rehire for the position. As they say, prevention is always better than cure!

    Use Energy-Efficient Appliances

    What better way to offset higher labor costs by being green at the same time? If you are still using out-of-date equipment in your restaurants, consider cutting your overhead costs by switching to equipment which are energy-saving. By practicing such green habits, you are also likely to improve your staff and guest satisfaction at the same time.

    One particular avenue in which you can cut your energy usage is through the HVAC system. Since it does not have to be completely replaced to produce new savings, it serves as one of the most cost-effective ways for you to reduce your expenses. Transformative Wave’s new Cobalt building management system, for example, uses IoT so that restaurant owners have more control over their HVAC systems. They provide different automated functions such as advanced scheduling and status overviews which help restaurants reduce energy consumption. 

    Rising labor costs will definitely affect your business. While you may be tempted to trim your staff, refrain from doing so as this will affect your customer experience and your brand reputation in the long run. Instead, consider the above to offset your rising labor expense so that your restaurant is able to thrive in the long run.

    Looking for ways to streamline your hiring process? Book a demo with us today to find out how we can help you with your hiring needs!

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    Zakiyah Hanani

    Zakiyah is a freelance content writer. She’s a lifelong learner, looking for opportunities to expand her horizons whenever she can. She loves traveling, playing volleyball and reading up on general developments in the industry.

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