Hospitality Business Leaders 2019: People power

‘The staffing shortage is getting worse'

The scale of the shortfall that is revealed by the survey will come as no surprise to operators who have struggled to fill vacancies in recent years. More than two-thirds (70%) of leaders said that labour shortages were a very significant issue in 2019 – making it the most significant social- and political-related concern of all. This is leading to high levels of concern and pessimism around staffing.

"The labour market is really struggling," one leader told the survey. "The staffing shortage only seems to be getting worse," added another. The rising expense of staffing – driven by increases in the National Minimum and Living Wages – is adding to the headache, with nearly half (44%) of leaders feeling very concerned about labour costs in the next 12 months.

Staff shortages are particularly acute in back of house positions. This is where 61% of leaders think the biggest recruitment challenges lie at the moment – twice as many as think that front of house roles are the biggest challenge (30%).

By sharp contrast, head office and support roles are a concern for only 2% of leaders. But here the challenges are not around recruitment, but diversity and gender equality. In what is still a male-dominated industry at leadership level, half (51%) of survey respondents say they have a plan to recruit or develop more women to senior roles. Depending on your stance, it is either encouraging that half of leaders are now taking action to address the issue of gender equality – or alarming that half of them are not.

There are interesting contrasts in the recruitment challenges between operator types. For example, independent restaurants tend to struggle with front of house recruitment more than chain restaurants – perhaps because they have a wider geographical spread and are more likely to be located in areas of the country where the pool of available labour is smaller. Leaders of hotel groups are more likely than average to face front of house recruitment challenges, while chain restaurants over-index on back of house difficulties. Most multi-site restaurant groups that have tried to fill kitchen positions lately will confirm that.

The Brexit effect

Wherever their recruitment pinch points might be, many operators fear that their difficulties will only intensify after Brexit. Multi-site restaurants, bars and hotels have seen the squeeze on the availability of labour intensify since the UK voted to leave the European Union in 2016 – especially in London. While fears of strict new restrictions on movement around Europe have receded a little since then, thanks to government commitments, many EU nationals will have been put off seeking work in hospitality in the UK, and the mood is unlikely to change once Brexit has been completed.

"It's no secret that hospitality faces big recruitment challenges," says Karl Chessell, business unit director for retail and food at CGA. "What's perhaps most concerning is that leaders feel that the difficulties are only going to get worse in the years ahead, regardless of the shape that Brexit eventually takes."

"There's an understandable concern about recruitment and retention," adds Martin Hilton, director of learning and education at CPL Online. "When you consider the reduction in numbers of EU nationals entering the industry set against the levels of churn and the growth forecasts, there is likely to be a significant gap after Brexit."

A people business

All of this matters because the leaders surveyed by CGA recognise that hospitality is, at heart, a people business. They know that being able to secure and retain the best talent is critical to the health of their business, and they know that competition for this pool of talent is intensifying. The vast majority of leaders think staff availability is either very important (66%) or important (29%) to the success of their business in the next 12 months. And every single leader agrees that engaged and motivated staff are either very important (88%), important (10%) or moderately important (2%) to the operational success of their business over the next 12 months.

The quality of people directly affects service too, which is such a crucial factor in guests' satisfaction levels. CGA's BrandTrack data shows that two-thirds (67%) of consumers say service is a significant contributor to an eating-out experience, making it more important than food range (58%) or presentation (43%). In fact, it is consumers' top factor after the quality of food (78%).

Time to engage

Given the huge importance of people to the industry, it is to be expected that leaders are seeking to make staff engagement a priority. Four in five (81%) of those responding to the survey say they have a strategy in place to improve employee engagement in the next six months. And they are putting their money where their mouths are: two-thirds (66%) of leaders say they are increasing investment in employee engagement in 2019.

As things stand, engagement levels vary substantially across the sector. For example, more than half (54%) of chain hotel leaders rate it as very good – 10 percentage points higher than the sector average (44%). At chain restaurants on the other hand, only one-third (34%) of leaders think their engagement is very good – an indication that there is a lot of work to be done here.

To many businesses, staff engagement goes hand-in-hand with staff training – and this is clearly an important area for investment. Just over half (53%) of leaders say they will increase spending on face-to-face staff training in 2019, and nearly as many (46%) say the same about online staff training – a model that is increasingly popular across the sector.

There is evidence that businesses are investing in technology to support their staff, too. More than half (54%) of leaders say they have implemented order-placing tech, or are planning to do so in the next six months, and nearly as many (49%) say the same about pay-by-app facilities. Table-side technology like this, along with cutting-edge digital training platforms, can undoubtedly improve the skills and motivation of staff, though only if they are properly deployed and supported, of course.

The case for investment

However, is this investment enough? Business leaders seem pretty confident about the standards of their training and development activity: two in five (43%) consider their provision to be ahead of the market in general, compared to just 7% who think it is behind the market – and the first figure rises to 61% for chain hotels. But given the difficulty that many businesses have experienced in recruiting and retaining staff, a case could be made for investing even more time and money in engaging them.

"Perhaps as leaders we need to be a bit more honest with ourselves, and ask whether our communication is as effective as it could be," says Martin Hilton, who recommends reviewing the frequency of things like pre-shift meetings and one-to-ones, and checking there is enough provision for staff wellbeing in a high-pressure environment. "Guests recognise and appreciate engaged teams, and in my experience there's a direct link between engagement and results."

There might be a similar risk of complacency in attitudes to service. Two-thirds (67%) of leaders think that standards of service in their business are market leading, compared to just 2% who think they are behind the market – and again, it is hotel leaders who feel most confident about the quality of their service. Standards may well have improved across hospitality in recent years, but it is dangerous for any brand to rest on its laurels. For any business seeking to generate loyalty, continuous improvements in standards are essential.

There are some signs that some operators are committing to achieving them. Half (54%) of leaders say they are prioritising improved service as a growth opportunity at the moment, and a similar number (57%) are increasing investment here. But for the other half who are not doing so, there is a danger of falling behind the game.

"All our research points to a major correlation between capable, motivated team members and satisfied customers," says Karl Chessell. "If focused investment in staff engagement and training leads to great guest experiences, repeat visits and better staff retention levels, it is money well spent."

The report

The Caterer's Hospitality Business Leaders Report, powered by CGA, surveyed more than 500 top bosses from across the restaurant, hotel, foodservice and pub and bar sectors. They were quizzed on how confident they are about their markets, how their business is performing, what their priorities are for the year ahead, the trends they are experiencing, and what they think are the biggest challenges and opportunities for their businesses.

Read all The Caterer Insight reports