Navigating increasing labor costs in quick serve restaurants

Rising labor costs in Quick Service Restaurants (QSRs) don’t just concern franchise owners. The impact of the increase ripples through the industry, touching such areas as operational efficiency, profitability and a QSR’s ability to remain competitive. And, of course, these effects eventually trickle down the line to the consumer.

While costs have been rising across the country since the labor shortage began, QSRs subject to the outsized recent California minimum wage increase are disproportionately affected — and they’re feeling the pinch. On April 1, 2024, QSRs with 60+ locations were required by law to raise their minimum wage to $20/hour, leaving owners and managers struggling to stay profitable while complying with the new legislation — or close up shop completely. It’s an emotional issue for many owners, managers, and employees.

The complexity of managing restaurant labor costs

But labor costs don’t exist in a vacuum.  There are a host of inflation-driven factors that come together to drive costs higher across the board.  Fuel and transportation expenses raise ingredient and product prices, utility costs have increased, rent and taxes have gone up, and employee turnover — which has always been high in the QSR industry — is even higher now, leading to an increase in onboarding expenses.

The impact of California minimum wage increase on restaurants

Franchise owners in California are scrambling to stay afloat, finding solutions that often involve reducing the number of workers they employ. In fact, around 9,500 fast food jobs were eliminated from the time the California Assembly Bill 1287 was signed into law in the fall and January 2024. Other restaurant owners find the rising labor costs in quick service restaurants too much to bear. Often, their best solution is to shut down their operations within the state lines, leaving the same workers the bill was designed to protect unemployed.

A chain reaction

But the problems currently felt in California are just the tip of the iceberg. The increasing labor costs in quick service restaurants ripple outward from the source, affecting labor dynamics and cost structures within the QSR industry.

As the minimum wage increases, the wage structure also compresses, causing resentment among more experienced staff. Managing restaurant labor costs also involves adjusting compensation upward toward the top of the structure to keep operations running efficiently.

Efficiency in quick service restaurant kitchens

As employers work to do more with less, they need to develop operational strategies that help them reach their goals. Some ways QSRs can cut labor costs without compromising service quality are streamlining the menu to make item production easier, offering mobile ordering apps so customers can place orders without human intervention and simplifying processes by adding automation.

The right equipment reduces labor

Foodservice equipment can be a significant solution that not only reduces the amount of needed labor in a QSR, but also improves product consistency and enhances efficiency in quick service restaurant kitchens.

Examples of labor-saving equipment:

  • BBS
    Our Breader Blender Sifter breading machine comes in a variety of models to fit the needs of any size operation, cutting the amount of time needed to hand-sift breading by up to 80%. Using a BBS breading table improves the quality of the final product while reducing ingredient costs up to 40%.
  • DrumRoll
    The DrumRoll automated breading machine uses a double-helix component to gently tumble the product in the breading mixture, creating a consistent coating and flavor while reducing the physical toll hand breading takes on employees.
  • Vacuum marinator
    The vacuum marinator combines vacuum pressure with a tumbling action to speed up the marinating process, efficiently achieving the flavor that normally requires overnight marination in as little as 20-25 minutes.
  • Mixstir
    This commercial blender/mixer/stirrer constantly stirs batters, liquid seasoning mixes, or any other menu item that requires mixing, without injecting air into the blend and disturbing the flavor profile. Automating this tedious task frees employees to do other things, while ensuring the highest food quality.

Enhancement, not replacement

Automation sometimes gets a bad rap, but that’s because not all automation is created equal. Good automation increases efficiency in quick service restaurant kitchens by adapting to and enhancing the user experience rather than forcing humans to adapt to reduced service.

One example of poorly conceived automation that fails to understand customer need is self-ordering kiosks — showing up everywhere from global to regional QSRs. The impersonal monoliths are not user-friendly and leave customers alone to struggle when they need to edit or customize their orders.

The right solutions manage restaurant labor costs by taking on the repetitive tasks that employees dread while reducing production time and improving food quality. Good automation strikes a balance with human interaction while maintaining customer satisfaction and service standards.

Investing in employee training and development pays off

Although it may seem counter-intuitive to invest even more in employee training and development in the face of rising labor costs quick service restaurants, investing in your employees has a direct impact on labor efficiency and service quality.

Having a well-trained staff contributes to faster throughput, fewer errors and improved customer satisfaction, while reducing employee turnover. Creating a supportive work environment helps retain talent, managing restaurant labor costs by improving production rates and quality while reducing onboarding costs.

Industry insights from real QSRs

A popular fried chicken QSR could produce perfectly crispy, delicious chicken some batches but seemed to miss the mark on others. AyrKing’s Drumroll helped them find consistency, so they could achieve the mouth-watering flavor they were striving for at a fraction of the ingredient and labor costs. Read the case study.

When Chef Anthony Head needed to improve the efficiency of his newly opened restaurant to be profitable during the pandemic, he knew an investment up front would give him the scalability he needed to succeed. Find out how.

A brighter future

The increasing labor costs in quick service restaurants may seem like an insurmountable problem, but it’s not one you need to solve alone. At AyrKing, we’re dedicated to providing solutions that help improve your operational efficiency and reduce waste, managing restaurant labor costs so your operation can produce more high-quality food faster and more profitably than ever before.

Have an idea for a piece of commercial equipment that could streamline your operations but can’t find the right fit? We can help. Our experienced team is nimble enough to create customized solutions to correspond with your workflow. Reach out to chat.

Connect with AyrKing

No matter where you are around the globe, AyrKing is always ready to help you find the best commercial food prep equipment for your operation. Use our convenient online locator to connect with a distributor or representative in your area.