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Technology offers critical lifeline in wake of minimum wage hikes

This year, some of the lowest paid workers (mostly in the retail and hospitality industries) will receive a basic pay rise on both sides of the Atlantic. In the US, wages are set to raise to $15/hour from a federal minimum of $7.25 and in the UK a national living wage of £7.20/hour (up from £6.70) come into force this month for anyone 25 years or over.

This is great news for staff and some operators have even seen it as an opportunity to foster a positive and motivating culture for their employees as per YO! Sushi who will pay the National Living Wage to all staff ages. But how can the many operators, struggling with wage hikes transform this huge challenge into a revenue generating opportunity for their business? The answer: customer-facing technology.

As positive as this wage increase is for the hard grafting workforce, a collective industry cost of over £1Bn in the UK alone has sparked an outcry from a number of restaurants, bars, coffee shops and retailers, some of whom are determined to deal with this unplanned expenditure in a less than ideal manner. Measures that have been taken by some brands include:

  • Samuel Smith, a North Yorkshire based brewer and retailer, is passing the additional wage costs directly onto customers by adding 10p-12p to a pint.
  • Eat has stopped paying its staff for their 30-minute lunch breaks giving them a saving of £3.60 per employee per shift.
  • Zizzi has cut the percentage of customer tips and restricted free food for their wait staff. Staff will now keep just 50% of credit card tips and 12.5% of service charge whereas before the ratio was 70:30.
  • It’s not just Hospitality, retailers have taken similar steps with B&Q, Tesco, Morrisons and Waitrose all cutting back on extra pay for staff working unsocial hours or pulling other staff benefits.

Iqbal Wahhab, founder of Cinnamon Club and Roast restaurants has even gone so far as to predict the closure of “thousands of restaurants” stating the Office for Budget Responsibility expects 60,000 jobs to be lost as a direct result of these measures.

Any unplanned costs, especially as significant as these, will always be of serious concern to operators as they frantically work to protect their margins and minimise any knock-on effects to other parts of the business. But is there a way to avoid scenarios that might negatively affect employee/employer relationships or risk dissatisfied customers? Can operators turn the situation into an opportunity to not only cancel out the wage costs but potentially bolster revenues?

‘Turn profit from additional costs?’ I hear you ask, incredulously. It does sound too good to be true but then again, technology can be an amazing thing.

Restaurant, stadium, bar and coffee shop owners reluctant to disenfranchise staff, anger customers or generally go all defcon 1 on reputation damage control will be forced to consider creative ways to off-set staff costs. By turning to technology as a buffer against spiralling wage bills, operators can capitalise on innovative self-service models to better deploy their premium guest-facing asset (staff!) and use tech to speed-up service in other areas, push operations to run more efficiently and even trigger higher value sales.

Self-service, whether it be table-side tablet ordering or queue-busting kiosks can help take the pressure off staff during busy service periods allowing them to focus on excellent customer service for higher value customers. The downside is they can be unsightly in your carefully designed restaurant space and they’re not cheap to buy, install, manage and service.

If operators are put off by the initial capital expenditure of kiosk and tablet hardware and associated maintenance fees, why not keep things lean by letting customers use their own smartphone devices to order, pay and otherwise manage their entire experience of your brand themselves. When, where and how they like. Free from the boundaries of your physical store walls. In today’s digitally enabled world, where 62% of customers expect a mobile friendly website and 42% expect a dedicated mobile app from brands, you’d would be missing a serious trick by turning a blind eye to these expectations.

By putting the power of food and drink order and payment in your guests’ hands with a web or mobile app, you can directly affect the value of their checks for the better. Up to 73%* better. Operators are finding their guests tend to order more when they’re left to their own (mobile) devices to browse and buy without the pressure of staff conspicuously looming over them waiting for a decision on their order. Mobile also facilitates more effective, more timely, more personalised marketing offers and upsells. By automatically capturing customer data during the ordering process, operators can use it to drive ever more successful marketing campaigns by basing them on past buying behaviour and preferences.

Should operators be concerned about what impact the wage increase will have on their business? Yes, of course. But does it spell the death knell for thousands of restaurants, cafes and bars from legislation created to benefit staff that actually leaves them jobless instead? Absolutely not. Operators quick to recognise the opportunity to adapt and exploit technology to transform their business will not just off-set out their growing operational costs but could actually enjoy healthier profits thanks to more streamlined operations, more sophisticated, smarter, data-led marketing and the strategic redistribution of existing wait staff to maximise profit from higher value guests through exceptional customer service. And if mobile order and pay leads to a 73% increase in your customer checks, you’ll not only be able to reinstate free staff lunches but lobster tail, prime steak and caviar might even be on the menu!

* Based on 1,000s of transactions by QikServe customers

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