What’s eating restaurant profits? Rising rents, food spoilage, and empty tables are the usual suspects but another culprit is also taking an excessive bite.

Labor costs are cannibalizing profit margins.

Recruitment and retention are two of the top five industry challenges, rising above food costs in a 2016 operator survey by the National Restaurant Association. Beyond escalating wages, it’s the stealthier costs of hiring, training, scheduling, and retaining staff that sneak up on restaurateurs. When these costs rise above 20 percent of sales, they can devour the profits of even the busiest establishments.

A big chunk of these costs are the resources (time and money) required to onboard new employees. Younger workers are failing or quitting at a higher rate, so this process gets repeated more often. Part of the turnover problem, according to Restaurant Business, is that millennials and Gen Z workers are seeking gigs, rather than permanent jobs. “Gig seekers” take jobs more impulsively, with less commitment.

Cost containment begins with hiring talented, committed workers.

The foundation of a sustainable labor cost strategy is to build a staff of invested and committed workers. Successful restaurants target talented candidates with long-term ambitions in restaurant service, hospitality, culinary, or business management roles. These employers are no longer fishing where the gig seekers swim. To target the right candidates, restaurants are shifting from an outdated inbound hiring mentality to an assertive outbound acquisition strategy. “Now Hiring” signs are being replaced by targeted listings on industry-specific online talent acquisition platforms.

Acquire the right people with online talent platforms.

Across industries, online talent acquisition platforms like Hoops Talent On-Demand are connecting hourly workers to highly relevant opportunities. By 2025, these platforms could add $2.7 trillion to global GDP and begin to solve many persistent labor challenges. According to this report, they could reduce the cost of recruiting talent by as much as 7 percent while increasing company output by up to 9 percent.

When restaurant and employee objectives are mutually aligned, continued investments in employee retention and leadership development become worthwhile. Turnover is reduced to manageable levels and white-knuckle cost labor cost management becomes a fading memory. With the right talent in place, daily cost tracking and sales forecasting to create schedules can be appropriately used as fine-tuning tools in a sustainable model for long-term profitability.  

Hoops Talent On-Demand is the best way for restaurants to get top local talent for open positions. Sign up today and get connected to job seekers who are screened, available, and ready-to-go!

Motivate and empower individuals throughout their employment journey with Hoops.