business news in context, analysis with attitude

The Washington Post has a story about Knead Hospitality and Design, a restaurant group that runs more than a dozen locations in Washington, DC, which "has rolled out a pioneering perks package among its restaurants’ salaried workers."

One employee, for example, "saved a total, Knead confirmed, of $1,651 on dinners, dry cleaning, facials, a gym membership, manicures, massages, parking, pedicures, a Nationals game and a Chris Rock show with his father, and a 'Wheel of Fortune' taping with his mother — all reimbursed to varying degrees by Knead."

The Post story notes that " Knead is part of a radical, once-in-a-lifetime shift in the restaurant industry’s business model as it struggles with nothing short of an existential reckoning … The nation’s 11.6 million food service workers, including managers, earn an average of $18.48 an hour and work an average of 25.7 hours a week, according to May 2022 data from the U.S. Bureau of Labor Statistics. A January BLS report flagged that the restaurant industry’s year-over-year quit rate jumped from 4.8 percent to 6.9 percent — a larger increase than in any other job sector — yet the hiring rate remained steady at 8.1 percent. As a result, restaurant job openings increased from 5.8 to 8.4 percent."

Knead's co-founder, Jason Berry, frames the company's approach to perks through the "lens of retention and cost-cutting, flagging that the hiring of an assistant general manager in 2019 cost Knead $15,000 in recruiting fees and $10,000 in training even before the employee had really started working. Even a server, he said, costs $1,000 to hire and train. 'You can spend this money proactively or reactively,' he explained. 'So why not do it proactively with intention the way you want to do it, instead of spending $100,000 a year advertising on Indeed and $200,000 in recruiting fees? I’d much rather give that money to our teammates'."

A reality check from the Post:  "The package may yet be a game changer. Or not. Despite its legendary perks program, Starbucks is wrestling with widespread unionization efforts (union restaurant jobs make roughly $100 more per week than nonunion positions, according to federal labor data)."

KC's View:

The challenge, even to progressive employers, is that no matter what they do, it may not be enough to meet the moment.

But I have this sense that when the pendulum swings back toward employers - and it will - there may be some blood-letting in the labor markets, and employees (and some labor organizers) may not know what hit them.