GJ Hart thinks the labor shortage has been a wake-up call to the restaurant industry.
Hart, the longtime industry executive who only last week stepped down as CEO of Torchy’s Tacos, told attendees at the Restaurant Finance and Development Conference on Monday that the shortage has demonstrated why companies need to invest in their people.
“I believe there’s been a huge wake-up call in the industry,” Hart said in a discussion with Alice Elliot, CEO of The Elliot Group. “We have to come to grips with that as an industry. The industry has been good to a lot of people. But it is changing and we need to adapt. The brands that don’t do that will not survive.”
Hart is a highly regarded executive who helped take Texas Roadhouse public, led California Pizza Kitchen and then Torchy’s. Among his most notable strategies is a managing partner model that pays general managers a percentage of the restaurant’s operating profit.
He spoke to the audience at a time when labor has created immense challenges for operators who struggle simply to get people in the door.
There is some evidence of improvement. The industry added 119,400 jobs in October, picking up the pace from the summer. Yet operators have increased pay rates about 10% over the past year to attract workers while upgrading benefits and other incentives.
Much of the industry focuses on their work culture. Hart believes culture is a key element in a restaurant’s ability to compete for workers. “When people come into the organization they want to feel part of something uniquely special,” he said. “They want their work to be part of the solution.”
Hart said investments in people will ultimately bring profitability. Companies do not thrive by cutting, he said. “If you invest in your people, take care of the people, they take care of your guests. If you do those things, the profits will come,” Hart said. “But it is in that order.”
Companies need to constantly work at improving their programs and be genuine. “You want them to be healthy,” he said. “You want people to have time off. You want people to continue in the industry.”
As for that wake-up call, he said the industry is realizing that it needs to change. Companies can’t sell burgers or tacos or pizza if they cannot get workers, and to get them they will need to improve their culture.
“The brands that will be successful will have a unique people culture of their own making. The companies that will make it long term will do that better than others.
“That means an investment in people, a genuine investment, and providing it in a way that values their lives.”
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