How a More Financially Stable Workforce Can Fuel the Restaurant Industry’s Recovery
Andrew Garner is senior vice president of business partnerships at Netspend.
The theme of the COVID-19 pandemic for the restaurant industry is adaptation. This theme is particularly apparent in the rapid shift from cash to digital and contactless payments, which has forced restaurants to reconsider how payments are accepted. and how workers were paid.
At the height of the second wave of the pandemic, Netspend surveyed over 900 tip workers across the restaurant, food delivery, hospitality, transportation, salon, and spa industries to get a sense of the financial impacts of COVID-19 and sentiments regarding tip payment methods.
This research uncovered three fundamental trends that have become opportunities for restaurants as they rebuild their businesses and workforces. It begins by helping staff pave the way to greater financial stability and introduces new ways to maximize operational efficiency and drive profitable growth.
Digital tip payments help restaurants and employees overcome cash management hurdles
A shift in consumer payment preferences became evident at the start of the pandemic, as the use of contactless payments increased by 150% between March 2019 and March 2020. And as restaurants accepted more digital payments for meals and tips, they also acquired far less cash, leading to shortages in many places.
With insufficient cash to pay for tips or expense reimbursements at the end of each shift, delays and uncertainty have created strained relationships between restaurants and workers, while placing a heavy burden on this segment of the workforce. workforce already in financial difficulty.
Yet many restaurants continued to tip workers up to 75% in cash or by check, an undesirable situation at a time when many workers were also beginning to make more of their own paperless payments. This is causing a digital disconnect, where restaurant workers must shoulder the burden of costly and time-consuming extra steps to digitize their cash or check payments so they can participate in the COVID-19 cashless economy. In fact, Netspend research shows that workers who need to spend time scanning cash or checks spend up to three extra hours a week doing so.
But now, as restaurants strive to rebuild, more and more are embracing this change by eliminating late payments and giving tip workers access to digital tip payments. This solution both bridges the digital access gap and reduces errors or late payments that were common with cash.
Financial insecurity impacts recruitment, retention, and performance, but faster salary and tip payments can help
The cost and complexity of recruiting and retaining restaurant staff is one of the biggest challenges in the industry today, and a financially unstable workforce only makes matters worse. In fact, there is a direct link between financial stress and workforce retention, and almost a third (31%) of financially insecure workers left their jobs due to a lack of financial well-being.
In contrast, employees who are much more financially stable (87%) are likely to stay with their current employer next year, compared to only 58% of those who are financially unstable.
A restaurant’s ability to provide faster and easier access to wages and tips through digital methods can both help financial stability and boost recruitment, retention, and performance in the workplace. Take note of these data points from the Netspend survey:
● 65% of workers agree they would prefer to work for an employer who tips them digitally
● 49% of workers said they would be willing to stay in their current job longer if they had quicker access to tips
● 48% said they would quit their job for someone who tips them immediately at the end of their shift
● 44% said they would stay longer if they had easier access to tips
● 43% of workers receiving digital tips enjoy their jobs more since they started receiving digital tips
● 39% said they would change jobs if they could earn interest on tips charged to their account
Improved worker attendance leads to more profitable growth
Financial insecurity has reached unprecedented heights across many segments of the workforce during the pandemic, and late payments build on that stress. Workers paid in cash or by check are more likely to let financial stress interfere with their work, while workers with more debt are twice as likely to miss work because of this stress.
The restaurant management already knows that absenteeism is extremely costly: it can reduce more than 15% of a restaurant’s profits each yearand restaurants are losing around $5,864 per worker lost due to financial stress. But embracing the trends that bridge the digital divide can pay off for both the restaurant industry workforce and employers. Payment solutions that help pay wages and tips faster are a simple way to support multiple goals that drive more profitable growth: retaining and recruiting good workers, improving performance, reducing cash management burdens, and throwing away the foundations for a more sustainable future.