C-Suite Wednesday — Restaurant Paycheck Trends Accelerated by the Pandemic 

May 19, 2021

Caity Roach
Editor

C-Suite Wednesday — Restaurant Paycheck Trends Accelerated by the Pandemic 

Historically, restaurants are the largest recipient of SBA 7(a) loans and a profitable lending niche when underwritten correctly. Therefore, it is important for SBA lenders to stay up to date on how the industry has been changed by the COVID-19 pandemic.

The pandemic has had a profound impact on the restaurant industry and its workforce. Months-long lockdowns slashed profit margins, and even as restaurants were allowed to reopen, workers had fewer hours coupled with new, time-consuming cleaning procedures. However, according to a recent whitepaper published by Netspend, the pandemic also accelerated three key restaurant industry workforce trends that have the potential to drive profitable growth. 

Netspend reports that the use of contactless payments increased 150% between March 2019 and March 2020. However, 75% of restaurant owners polled said that they still pay their tipped workers in cash or with physical checks. This shift to contactless payments has left many restaurants with insufficient amounts of cash on hand to pay out tips in a timely manner, thereby creating a huge burden on already financially stressed workers. To solve this issue, some restaurants have adopted a paycard system where tips can be digitally deposited to workers at the end of their shift.

According to Netspend, restaurant employees also represent a large percentage of the United States’ unbanked individuals. For these individuals, transacting in an increasingly digital world is more challenging and time-consuming than ever, adding to their financial stress. This financial stress leads to increased levels of work attendance problems which costs the industry a 15% loss in profits each year. To solve this issue, some restaurant owners have taken the initiative to close the digital access gap by adopting an online payment method through various apps to make budgeting and saving easier for their employees.

Even before the pandemic, the restaurant industry had a high employee turnover rate. According to Netspend’s findings, each employee loss costs the restaurant roughly $5,864 in lost profits and training costs. To reduce turnover, restaurant owners are moving to digital access to benefits and online scheduling systems. This creates more financial stability and reduces the overall employee turnover rate significantly.

To learn more about SBA lending to restaurants in a post-COVID environment, sign up for Coleman’s 11th Annual SBA Restaurant Financing Webinar which will be held Wednesday, May 26, 2021, at 2:00 p.m. Eastern.

Source:
Netspend Whitepaper