It is projected that in five years the Indian Quick Service Restaurant (QSR) sector will not only expand rapidly but also attain a milestone of $ 38.71 billion. Brands in this space are scaling up their operations amidst a demand surge, but what about compliance? What about those working in this space? Are they happy? If they are, why is the attrition rate so high in this sector? Why is the employee turnover 10 to 40 per cent per month on average?
According to a Teamlease report, about 75 per cent of the workforce serves a short tenure of less than three years in the QSR space. About 36 per cent serves for just one to two years. Why is this so?
For one, compensation isn’t exactly enviable. In fact, the pay and practices are below average. The majority (88 per cent) earns about Rs 15,000 to Rs 20,000 salary on average. What is worse is that about 12 per cent is paid less than Rs 15,000. That means, a significant number earns less than the minimum wage. That is not all; about 64 per cent of the workers in the QSR space are not paid any incentives. Not surprisingly, the sector is experiencing high attrition rates.
Despite mandates by the Food Safety and Standards Authority of India (FSSAI), the non-compliance in the QSR space is alarmingly high. For instance, FSSAI has mandated that restaurants display food-safety boards listing dos and don’ts pertaining to hygiene, sanitation, as well as good manufacturing practices (GMP) along with other guidelines.
As per FSSAI mandates, restaurants should employ trained food-safety supervisors. The Authority is also ensuring that the registration process of Food Business Operators (FBOs) happens faster so that the compliance rate also improves. Right now, only 20 per cent out of the 2.5 million FBOs in India are operating with a valid FSSAI licence. That means, a mere 0.5 million hold a license.
Although FSSAI suggests that businesses in the QSR sector must prioritise compliance—so that their employees’ well-being is ensured and customers are able to trust them—it is a matter of concern that 21 per cent of the businesses are non-compliant. When it comes to statutory benefits, they do not even fulfil the minimum wage requirements. A significant 30 per cent does not offer statutory bonuses. Without bonuses and incentives, employees lack the motivation to do their best, which adversely affects service. And as we all know, quality of service and customer satisfaction are of utmost importance in this sector.
About 23 per cent of QSRs do not comply with the Employee’s State Insurance Corporation (ESIC) provision, which ensures medical care for employees who earn less than Rs.21,000. That means employee well-being is being compromised to a great extent. Rules and regulations are being openly ignored. Fortunately, about 58 per cent of the QSRs offer gratuity benefits to employees who have completed five years of service. However, the unfortunate part is that very few employees are eligible for the same because attrition is rather high.
As per the report, 24 per cent of the QSRs that were surveyed do not offer leaves beyond the weekly offs. Therefore, burnout is rather common in this space.
Clearly, the industry needs to take action, and fast. After all, non-compliance will eventually attract penalties and have serious repercussions. Needless to say, the brand image suffers a beating along with operations being disrupted.