Grocerants Should Learn From Fast Food's Labor Woes

At the recent Retail Foodservice Summit, hosted by Winsight Grocery Business in September in Chicago, grocery retailers all agreed on one thing: Labor is their No. 1 issue. Rising labor costs with a $15 per hour minimum wage and reportedly a shortage of almost 1 million foodservice workers had the group very concerned.

A recent CNBC report found that Panera Bread loses close to 100% of its workers every year. For fast-food chains, employee turnover runs as high as 130% to 150%, according to industry measures. McDonald’s is spending nearly $1 billion in 2019 to add ordering kiosks and other tech to stores. Some experts believe it is inevitable that fast food will be the first job sector ruled by robots.

“In the restaurant industry, turnover is 130%, turning over more than a full workforce every year,” said Panera Bread Chief Financial Officer Michael Bufano at CNBC's @Work Human Capital Finance conference. “We are a little under 100%, but still a huge number.”

Rosemary Batt, chair of H Resource Studies and International and Comparative Labor at the Cornell School of Industrial Labor Relations in Ithaca, N.Y., says the model is flawed.

Decades of fast-food industry efforts to standardize and “routinize” jobs—take the skill out of them—has been intended to create turnover-proof jobs. If you lose someone, it is not a real cost, because they are so easily replaceable. “The industry has thrived on this HR model of turnover-proof jobs for many years, because they could get away with it,” she said, through a slack labor market or absorbing the cost of high turnover. But that model is being stretched.

Tony Orlando of Tony O’s Supermarket and Catering in North Kingsville, Ohio, hires carefully. He only wants smiling faces and people who care working for his organization. He pays them well and trains them to be valued employees who stick around. No one who thinks of a job as temporary is motivated to learn and stay.