As the service and hospitality sector continues to face workforce challenges coming out of the COVID-19 pandemic, restaurant operators are putting in extra time – and money – to be an employer of choice.
One tactic that has gained traction, even in the years prior to the pandemic, is offering access to health insurance and benefits. But even as demand for full health care coverage has increased post-pandemic, it remains one of the most expensive investments an operator can make.
“The restaurant industry, because we deal with heat, fire, grease and knives, we run into higher pricing than what you’d find in a different industry that may be more desk-based, as an example,” said Susan Quam, executive vice president of the Wisconsin Restaurant Association.
As the need for talent recruitment and attraction has increased, so has the importance of investing in employees’ wellbeing. These days, however, in an industry where average profit margins already range from 3% to 5% percent, investing in health insurance may seem all the more unattainable.
“Right now, we’re seeing that our inflation in the restaurant industry for food and other products is twice the consumer price index, so we’re running at about 15% or 16% inflation for our goods,” said Quam. “And then you throw on a 25%-30% increase of wages paid and then all of the extra costs like gas, electricity and other overhead and other insurance, so they’re having a hard time raising their menu prices high enough to cover all of those costs, and then try to add in (employee health) insurance.”
Through a partnership agreement with the National Restaurant Association, WRA has worked with Minnetonka, Minnesota-based UnitedHealthCare for nearly a decade to offer discounted health care options to its members. Those options range from employer discounts on medical rates for fully insured groups to individual and family health insurance that both full- and part-time employees can purchase on their own at a special rate.
The newest offering, Teladoc Health, was added just before the pandemic hit. Priced at $9 per employee per month, the employer-sponsored program offers unlimited access to virtual doctor visits for mental health and medical conditions for all employees (full time, part time and furloughed) and their families. The program’s mental health service particularly gained traction during the pandemic, said Quam, as employers and employees alike dealt with the stress of keeping a business afloat or making enough money to support a family.
She said Teledoc continues to be a popular “entry-level” way into the world of employee-sponsored health insurance.
“It’s a program that has a lot of promise, especially for our very small operators who don’t have a lot of employees and have a hard time trying to connect up with the full insurance,” said Quam.
WRA is also seeing operators who can’t afford full medical coverage but, as an alternative, are now offering other kinds of less-expensive insurance, such as dental, vision, disability and life.
For at least one Milwaukee-based restaurant group, a recent additional investment in employee benefits is seeing a slow return, at least on the hiring front.
Black Shoe Hospitality, which owns Buttermint, Maxie’s, Story Hill BKC and Blue’s Egg, has offered health insurance to its full-time employees for almost all of the 15 years it’s been in business, but earlier this year, in an effort to increase full-time staffing, the company bulked up its compensation packages with dental, vision, disability and life insurance as well as 401(k) matching.
“I would love to be telling you about a success story that it’s made all the difference in recruiting people, but unfortunately it has not,” said Dan Sidner, co-owner of Black Shoe Hospitality.
Sidner says he’s proud of the group’s current base of 160 employees. But unfortunately, from an operational standpoint, the ratio of full-time to part-time staff has shifted drastically – from 65% full time to 35% part time pre-pandemic to now 45% to 55%.
And even after increased pay, additional time off, and what’s amounted to hundreds of thousands of dollars’ worth of insurance and benefits offerings, “we are not seeing the benefit of additional (job) applicants,” said Sidner.
It’s a different story for employee retention and satisfaction, however, especially for employees with families.
Sidner pointed to one example of an employee who now provides health insurance for her two children and husband, who does not receive benefits through his job. One of her children has some health issues, and with access to medical coverage through her job at Black Shoe, doctor’s visits are now less of a headache. There’s also the employee who recently had a baby and was able to have insurance cover most of the pre-natal care and hospital expenses.
Following the addition of the 401(k) match, Sidner said he got positive feedback from several managers saying the benefit was something they never expected from an employer in the restaurant industry.
“(Adding more benefits) has meant a tremendous amount to the employees we already have, especially managers, because a restaurant manager is a restaurant professional – someone who wants to make a career of it,” said Sidner. “I’m very proud to offer those benefits to a restaurant manager because we’re asking them to do everything that exists in any other professional career. … We need people who want to make a career in the hospitality industry.”
