One of the trickiest costs to juggle in the hospitality industry is staffing. In the highly competitive foodservice market, many venues are operating on minimal margin with little room for error when it comes to wage and food cost percentages. Our foodie cultured customers have come to expect competitively priced meals and a high level of service. Getting that balance just right is clearly putting a lot of pressure on operators. It seems this unprecedented pressure is causing many business owners to take the awful risk of underpaying their staff.
George Calombaris’ Figures Shock the Nation
Unfortunately in recent years we have seen this pressure translate into the underpayment of hospitality staff. Most recently and probably the most shocking is the revelation that one of Australia’s favourite celeb chef’s George Calombaris’ restaurant group underpaid workers to the tune of $7.8 million in wages and superannuation. It was found that over 500 employees were affected. This really makes you wonder how it could have gone on for so long. While a very high profile case, it’s certainly not an isolated incident.
As outlined in an article from The Guardian on the Blitz on the hospitality industry, last year the Fair Work Ombudsman audited 243 hospitality businesses in Melbourne, Sydney and Brisbane to find that 72% had breached workplace laws. The findings revealed that 616 workers were owed almost half a million dollars. Alarming statistics have uncovered that although hospitality workers account for only 7.2% of the workforce, 39% of complaints and 17% of disputes come from workers in the sector.
Linking base wages to incentives
Some business owners have been caught out making agreements with staff involving incentives. Employers were making arrangements with staff for their base wage to be below award rate; but they will provide meals and drinks. Regardless of whether or not the employee agrees to the arrangement, if there’s a future dispute the employer will be found to be in the wrong they’re paying less than the award rate.
What is causing such prevalent underpayment in Hospitality?
Neil Perry of the famed Rockpool eateries also camp under fire for the underpayment of wages. While he said the group has made changes to correct this, Neil was quoted as saying they were one of the “very few, if any” restaurants that comply with workplace laws. Ominous words from an industry leader. If some (several) of the biggest names in the business are doing it…what hope does the rest of the industry have?
The food services sector has the highest rate of failure of all industry sectors. Bureau of Statistics data shows profit margins at a low 5% with no indication that figure will improve. Approx 50% of foodservice businesses will remain open after four years of trading.
Should consumers be paying more? Or do venues need to plan and budget better so as not to cut corners?
How Can Venues Handle Staffing Costs?
As suppliers of highly experienced and talented hospitality staff including Bartenders, Waitstaff, Hosts, Event Staff and Kitchen Hands, we have seen a rise in the venues recruiting temporary staff more regularly. The simple fact is that for most venues, they’re not flat out busy every day all year round. Staffing your venue with a full deck of employees to account for the times that ARE busy can really start to skew your labor cost percentages in the quiet times.
Many venues are running lean staffing numbers for their general operations so they can remunerate their permanent staff properly. They then recruit professional temporary hospitality staff as needed on those busy weekends, for functions and events, and buser times of the year such as Christmas. Not only does this save busy operators the pain of recruitment and screening – wages, compliance and all that horrid paperwork is handled by the agency.
We have the pleasure of working with thousands of happy faces. We’re so proud to help hundreds of businesses who have their temporary staffing systems down to a fine art. Hospitality staff!! If you’re looking for ethical professional venues and a fair go get on the right side of the books with AMS Promotions! Venues, if you’re looking for talented hospo’s to support you in the busy times, we’ve got you covered.
AMS Promotions is a team of Account Managers, Marketers and Promotions specialists. Operating nationally with a pool of over 6,000 beautiful and talented promotional staff and models, we’re driven by exceeding your promotional goals and celebrating your success. Get in touch.
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