Costly & complex labour laws burden QSR industry say KFC, QSRH, Pie Face & GYG

Too costly labour will negatively affect job creation, says leaders of the QSR industry.

Major players of the industry discussed the impact of costly labour at the recently concluded QSR Media leaders luncheon.

According to Steven Marks, Managing Director of GuzmanYGomez, labour is a big issue in how management organize its days and they are trying to figure out how to logistically pull off paying high priced labour. “What I don’t understand in the quick service industry, why on a Saturday, you have to pay a one and quarter time, and on Sundays, one and a half time. When you have these young kids that want to work, and we can’t hire them, or your business can’t really grow in certain areas because labor price is too high. I think, as a group, labor is a huge issue in Australia, and we have to come together and say something,” he said.

Marks adds that as the company grows, the legislation imposed by different states on labour has been proving to be a challenge. “Why can’t I hire a kid who wants to work on a Saturday at minimum wage, whatever the wage is. If he’s agreeing to work and I don’t have to pay 1 and a quarter times or 1 and a half times, why can’t that be between the employee and employer to figure out. It’s illegal to do it any other way, which, to me, doesn’t make any sense,” Marks said.

Pieface is in agreement and points to the US where labor laws offer a lot more incentive, Ben Macpherson their CMO commenting “For us, we’re paying around 20% less rent in New York, in a high traffic location, than we are in Australia. And we’re paying about 40% of the wage cost”.

Tony Lowings, Managing Director of KFC Australia, believes this is the biggest challenge facing the industry right now. He says that fair work practices that are coming to play and legislation are putting pressure on the entire industry. According to Lowings, “It is a decision which is going to affect the work force specifically. It’s actually going to have a negative impact on job creation. There’s going to be less people wanting to employ on weekends. They’ll have to come up with creative ideas to make use of their existing labor force more efficiently. So I think it’s just a real big negative in terms of impact on business.”

Mark Lindsay, CEO of QSRH says the government started out with good intentions with the Modern Fast Food Award to simplify the process but it is still too complex. Talking about the transition to the modern fast food award Lindsay comments “Now, under this change, and transition, my franchisees who come into the system can’t be part of that, so now I have differentiation between one franchisee versus another. I also have a situation now where there’s a franchisee who is actually on our enterprise agreement, opens up a new store and can’t be part of that agreement,” he said.

“And it’s bad enough that they’re trying to deal with their business on a day-to-day basis, without the complexities being created unintentionally, as a result of this. And I think when they thought this through, they didn’t think about how they can bring existing businesses under an existing instrument into an operation of that transition to the end game,” he adds.

Lindsay further illustrates the complexity of the current labor laws by citing another example where 3 separate parties, the union, the QSR companies, and the fair work ombudsman cannot agree on how to calculate a particular rate. “We’ve got our franchisees looking for advice all the time. We’re trying to provide them leadership and direction and we can’t even do much about it. The union supports us, by the way, but these are the complexities that happen because it wasn’t thought through." 

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Tags: Mark Lindsay, QSRH , Pieface, Tony Lowings, KFC Australia, Ben Macpherson