With a labour shortage sweeping North American foodservice, the pay that restaurant workers receive, particularly the wages of hourly employees, is under review. New research suggests, rather unsurprisingly, that higher pay positively impacts customer service.
Researchers at the Cornell SC Johnson College of Business compared restaurant reviews where the minimum wage has increased versus those where pay was stagnant and found an improvement in the perceived quality of service with higher wages. Higher wages also led to a reduction in negative reviews about workers’ friendliness and courtesy.
The researchers believe that changes in minimum wage can especially affect consumer experiences at independent restaurants, which can control experiences and quality more than national chains.
Cornell Professor Vrinda Kadiyali said: “For a particular class of restaurants, consumers benefit from an increase in [minimum] wage because employees are motivated and owners are motivated to provide better service. The discussion around minimum wage has been all around how prices will go up and consumers will be worse off. But we find, in our research, that consumers are happier with the overall quality.”
In an attempt to solve the current labour pressures, restaurants across the industry have been increasing their wages. The Washington Post reports that the past three months have marked some of the fastest wage growth in the U.S. since the early 1980s, and that average pay in the restaurant industry in May was above $15 an hour for the first time.
Further, recent data found that wages jumped by 10 per cent in the second quarter, the biggest increase in years.
Those higher wages have been facilitated in part from strategic menu price increases. Business Insider reported that about 17 out of 24 restaurant chains have increased prices, with the quick-service segment making the largest increases, including 10 per cent at Taco Bell, 8 per cent at McDonald’s, and 4 per cent at Chipotle.
These bumps have not seemed to put off customers, with many of these chains seeing increased business. Indeed, one in four hospitality customers say they are willing to pay up to 31 per cent more for “excellent customer service,” according to Forbes.com, and that number increases to 70 per cent if convenience is incorporated. That means diners are more than likely to be less price-sensitive in exchange for a better restaurant experience.
A recent study from JLL’s Big Red Rooster backs up this conclusion by finding that a majority of consumers want an increase in staffing during peak traffic times so they can receive a more positive experience.
Meanwhile, Black Box Intelligence found that 90 per cent of all restaurant companies are now offering referral bonuses to their hourly employees to help improve staffing levels. Compared to 2019, the percentage of companies offering these incentives increased by almost 20 percentage points.
