Near full employment and an explosion in the number of restaurant and caf outlets has put a squeeze on recruitment in the chain sector over the past decade, creating a staff-retention problem the industry is finally facing up to. While exact figures for those working in the chain restaurant sector are unknown, the number of people working in restaurants and cafs is known to have overtaken the hotels and the bars, pubs and nightclubs sectors in the past five years.
The most recently available Government statistics on staffing levels in the restaurant and caf sector show it grew by 80% to 545,000 in the 11 years from 1992 to 2002. This compares with increases of just 34% in the hotel and accommodation sector and 29% in bars, pubs and nightclubs.
A huge influx of new staff came into the UK from the 10 new countries that joined the European Union (EU) last May. However, opinions are divided as to whether this latest wave of migrant workers - principally from the former Eastern bloc - has done anything more than plug the gap created by an increase in the amount of restaurant and bar vacancies.
British Hospitality Association (BHA) chief executive Bob Cotton believes it has helped to ease the shortage in staffing and skills. "While there are still a lot of vacancies in the industry, the feedback I am getting is that the staffing shortage issue is not at the top of the agenda in the same way that it was 18 months ago," he says. "Now restaurant managers are feeling the pressure of other issues such as gas and water bills, rather than an immediate shortage of manpower."
Cotton adds that while these new staff are not filling middle management roles - where real shortages remain acute - their contribution in the short term is crucial. "The long-term problem of skilled supervisory staff still remains, although I would not underestimate the quality of the people coming in from eastern Europe," says Cotton. "But in a tight labour market, with near full employment and a sector that is still growing, the immediate priority of getting meals served to customers today, tomorrow and the next day has been largely solved by this influx of new workers."
A number of employment agencies specialising in the chain restaurant sector are capitalising on the opportunities created by the 74 million new EU citizens. They are targeting these highly motivated workers, who are poorly paid in their own countries, by setting up recruitment offices in those regions. One such company is the Trouble Group, which recruits in the former Eastern bloc, particularly in Poland and Latvia. Chairman Adrian Park says the advantages of matching highly motivated, well-trained staff with posts in the UK far outweigh any perceived language and cultural problems.
"We are interviewing people overseas to make sure we have the right quality of candidates for the specific job in the catering sector. We can be getting people with four years' experience at catering college overseas who are motivated in a way their UK counterparts are not," says Park.
But while the frontline staff shortage may have been addressed by a wave of new overseas workers, high employment across the entire economy is putting pressure on recruitment for mid-management chain restaurant workers. In the three months from November 2004 to January 2005, the number of jobs in the UK stood at 30.35 million, the highest level since records began in 1959, according to figures from the Office for National Statistics (ONS). The number of job vacancies in the UK rose by 5% to 645,200 in the year to February 2005.
Employment agencies see this tight job market translating into upwards pressure on salaries - ONS figures show UK earnings rose by 4.4% last year - leaving good staff able to pick and choose jobs. Restaurant personnel specialist Holly Addison, operations director for Berkeley Scott, is seeing something of a talent war among chain restaurant staff. "Junior management candidates are getting three or four offers if they are any good, which means salaries are going up," she says.
One of the problems the chain sector faces is the public's perception of the industry as a place to work. Research carried out by Pizza Hut two years ago revealed what the company's head of resources, Emily Cadwallader, says are a series of misconceptions.
"People thought working for a global brand would mean managers could not run their own business. They thought working for a company like Pizza Hut meant managing a disincentivised workforce and working unsociable hours in a company with few training and job progression opportunities," says Cadwallader. "But none of these things are true, so we have worked hard to develop an employer brand that nails these myths when we advertise for staff."
The problems caused to chain restaurants by near full national employment mean staff retention is paramount to a company's profitability. While companies are loath to reveal their own staff turnover figures, it is clear the chain restaurant sector has a problem.
Unions which represent workers in the chain restaurant sector say this is down to the fact that an "us and them" attitude still exists among workers and management, with low pay and harsh management the main reasons why staff leave. Transport & General Workers Union regional industrial organiser David Turnbull, who represents workers in the restaurant sector, says: "A lot of chain restaurant posts are at or close to minimum wage and there is still a reliance on tips and service charge, as well as poor maternity leave and holiday pay. Second, management attitudes do not help. There are a lot of middle managers who lack training in people management, meaning a ‘jump when I say jump and if you don't like it you can leave' attitude still exists."
There is also a debate between employer and employee groups about the correlation between poor staff retention in the sector and low union membership, currently at about 5%. Union representatives such as Turnbull say engagement between employers and employee representatives can create productive working relationships. He cites the positive attitude toward unions of profitable companies such as contract caterer Compass Group - noted for its enlightened record as an employer - as an example.
Turnbull also points to agreements unions have with supermarkets where working conditions have improved in recent years, and says this is largely lacking in the hospitality sector. He says: "We think it's fair to compare the supermarket and the hospitality sector and we see agreements there working to create fairer employment practices. We also see employers getting more back in terms of productivity than the restaurant sector."
Yet Cotton rejects the suggestion that the low level of union participation in the industry has left its workforce unrepresented and unmotivated, arguing it is management culture that is important. "There is no correlation between the staff turnover of unionised and non-unionised businesses. It is simply a question of good companies and bad companies," he says.
"More important than union participation is that managements adopt best practice procedures. Companies such as Compass and Whitbread are models - the best in the field - and they have seen reductions in staff turnover which in turn have translated into increases in profit," he adds.
So while both Cotton and Turnbull agree that management culture needs to change to improve staff retention, which in turn will improve profitability, is the industry doing anything about it?
The hospitality sector has seen a string of initiatives designed to bring about improvements in the way businesses are run. The launch of People 1st, the Government-backed Sector Skills Council organisation aimed at training, educational and career support organisation, Springboard UK and the BHA's Best Practice Forum initiative are all designed to address these issues (see page 30).
And just last month the BHA launched another industry initiative, the Hospitality Skills Academy, aiming to bring together craft associations to promote practical skills in the industry.
So the industry knows what the problem is, but whether these initiatives will spread better employer practices beyond those companies that already want to improve remains to be seen.
Training is another key area for staff retention and productivity and Trouble Group chairman Adrian Park believes many chain restaurant managers are missing a trick when it comes to what is available. "For no investment on the part of the employer, I can get staff put on an NVQ course, training on the job, with money that is available from the UK Government or the EU," says Park. "Staff productivity will improve and they are less likely to leave if they think they are going to get a qualification they can take elsewhere after two or three years."
The BHA thinks the fault for this lack of understanding lies with the Government. It is concerned that funding for staff training and business development is available from such a confusing array of sources - local and national government departments as well as from the EU. It is in talks with the Government on simplifying these funding streams, although progress is not expected this side of the general election.
While the desperate immediate need for frontline staff may have abated with the arrival of a new wave of migrant workers from EU accession countries, it is clear more must be done if the hospitality sector is to change its image and attract middle management. The industry has clearly woken up to the problem - but chain restaurant managers will be hoping that the string of initiatives launched to address that problem will be able to make young UK citizens see hospitality as a sector that can offer them a future.