Florida chain Pollo Tropical says the increase in wages and benefits has helped it reach normal staffing levels when there is a labor shortage.
The Caribbean food chain increases prices by up to 6% in December to finance rising labor costs.
Sales were considerably higher at its well-staffed restaurants, its CEO said.
Pollo Tropical, a Caribbean food chain with 169 restaurants in Florida, says it has almost returned to normal staffing levels after increasing wages, improving benefits and giving sign-up bonuses to new employees.
This despite the enormous labor shortage plaguing the industry: Restaurants across the United States are struggling to find staff amid the current labor shortage as workers leave. industry citing low wages, poor benefits and a lack of flexible working hours.
Richard Stockinger, CEO of Fiesta Restaurant Group, the parent company of Pollo Tropical, said on Thursday in its earnings conference call that the company had raised wages to “at least market benchmarks,” without giving any details. details.
Stockinger said Pollo Tropical has also offered hiring incentives and improved its benefit package by adding childcare leave, company-paid educational programs and more affordable medical plans. These measures would help its restaurants “to remain competitive in these difficult market conditions,” he said.
The company had reached “sufficient staffing levels at the company-wide level” by September, Stockinger said.
Miami Dade is the only large market in Pollo Tropical that still suffers from low numbers, he said. The company offered additional perks there, including higher salaries, incentives for staff working on weekends, and higher registration and referral bonuses, he added.
CFO Dirk Montgomery said restaurant salaries represented 28% of Pollo Tropical’s cost of sales in the third quarter, up from 23.3% in the same quarter last year. He said the increase was mainly due to higher wages and overtime “due in part to labor shortages”.
Restaurants across the United States have increased menu prices to offset their rising labor costs. Pollo Tropical increased its prices 3.7% in August, and Montgomery said it plans to increase prices in December from 4% to 6%.
Like other restaurant chains, Pollo Tropical reduced the opening hours of some of its restaurants during the third quarter due to understaffing.
The company said sales were considerably higher at its well-staffed restaurants. Comparable restaurant sales in the third quarter at all restaurants were up 0.9% from the same quarter in 2019, reaching a 4.3% increase in restaurants with sufficient staff, Stockinger said.
Pollo Tropical has defined an adequate workforce as at least 80% of the optimal workforce, Montgomery said. In October, its restaurants were at around 85% of optimal workforce, up from around 70% in the company’s second quarter, he said.
âWe’re very encouraged by the strong momentum we’re seeing in markets that are more staffed,â said Montgomery. âAs we continue to improve our workforce, we are optimistic about accelerating our sales momentum. “
The company’s incremental approach to raising prices was lagging behind its salary increases, which had squeezed its margins in the short term, Stockinger said. But he added that the company expected margins to recover in the first half of 2022 due to price increases and greater staff efficiency.
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