The high level of non-compliance in the quick-service restaurant (QSR) sector is alarming. Over 20% of employers fail to pay minimum wages, and nearly 25% do not provide any leaves beyond weekly days off.

TeamLease Services emphasizes the necessity of following FSSAI compliance guidelines to promote employee well-being.

To foster the anticipated growth of the quick-service restaurant (QSR) sector, companies need to effectively manage regulatory compliance concerning salary, incentives, statutory bonuses, ESIC, gratuity, and leave policies.

National, April 29th, 2024: With India’s food sector undergoing explosive growth, the country’s Quick Service Restaurant (QSR) sector is projected to reach a milestone of USD 38.71 billion by 2029, accompanied by rapid national expansion in the coming years. As quick-service restaurant (QSR) brands rapidly expand their operations to meet growing demand, TeamLease Services Limited, a prominent staffing firm in India focused on employment, employability, and ease of doing business, has underscored the critical issue of non-compliance within this rapidly growing sector. Industry stakeholders must address this immediately, as non-compliance can result in legal penalties, reputational harm, and operational disruptions for QSR businesses.

The Food Safety and Standards Authority of India (FSSAI) is taking active steps to tackle food safety concerns by educating those in the food services sector about regulatory compliance. FSSAI requires restaurants to clearly display food safety boards outlining hygiene, sanitation, good manufacturing practices (GMP), and other pertinent guidelines. Restaurants must also hire trained food safety supervisors on-site. Additionally, FSSAI is streamlining the registration process for Food Business Operators (FBOs) to ensure strict adherence to its guidelines. At present, among the country’s 2.5 million food business operators (FBOs), just 0.5 million, or 20%, hold an FSSAI license.

From the perspective of managing the workforce effectively in this fast-paced food service industry, it is suggested that companies in the QSR sector must prioritize compliance to ensure the well-being of their employees, maintain customer trust, and sustain long-term success in the industry. The QSR sector is experiencing high attrition rates with a monthly average of 10-40% employee turnover. Around 75% of the workforce has a tenure of less than 3 years, with 36% serving for just 1 to 2 years. A significant factor contributing to the high attrition rate is inadequate compensation levels and practices. The average salary of 88% of the workforce varies between INR 15,000-20,000. It is even more concerning that 12% earns less than INR 15,000 which is less than the minimum wage threshold for many states in India. Furthermore, approximately 64% of the quick-service restaurant workforce does not receive any incentives.

Alarmingly, 21% of QSRs are non-compliant in terms of statutory benefits as they fail to meet minimum wage requirements. Also, 30% of them neglect to provide statutory bonuses. Without bonuses and incentives, employees may lack motivation to excel in their work, affecting overall operational efficiency and the quality of customer service.

23% of QSRs are not compliant with the Employee’s State Insurance Corporation (ESIC) provision that ensures medical care for employees earning less than Rs.21,000. This oversight compromises employee well-being and reflects a disregard for regulatory obligations.

The provision of gratuity benefits in the sector is also a cause for concern. While 58% of the QSR chains extend gratuity benefits to employees with 5-year tenures, the proportion of eligible employees is significantly low due to high attrition rates.

24% of the surveyed QSRs do not provide any leaves beyond standard weekly offs, potentially contributing to employee burnout and dissatisfaction.

Kartik Narayan, CEO of Staffing, TeamLease Services Limited, said,  “As a leading staffing partner, we have witnessed firsthand the impact of non-compliance on both the workforce and business operations. Nearly 75% of QSR employees have tenures less than 3 years, with over a third lasting just 1-2 years. This is further fueled by issues like subpar pay, lack of incentives, and failure to provide statutory benefits. These findings are indeed a wake-up call for the QSR industry.”

“An unmotivated workforce leads to high turnover rates, operational disruption and compromised customer service, thereby affecting the overall profitability. Therefore, the QSR sector must prioritize fair labour practices, competitive compensation, and robust compliance measures. Addressing these workforce challenges is not just an ethical imperative but a strategic business necessity for the industry’s long-term sustainability and success,” he added.

Balasubramanian A, Vice President & Business Head of TeamLease Services Limited, said, “While the QSR industry is undergoing rapid growth, there is a need to uphold compliance standards. There are alarming gaps like failing to provide minimum wage and neglecting statutory bonuses. Also, nearly 24% of QSR businesses do not provide any leaves beyond standard weekly offs, 4 in a month. Only a few of them prioritize employee satisfaction by allowing leave carry-forwards and accommodating extended leaves for personal reasons. This oversight erodes employee morale, and undermines customer trust. These practices largely explain why the average age of employees in the QSR space is in the low 20s. They see this as a first step but definitely not even as a near term let alone a long term career option.

By partnering with experienced staffing and compliance experts and leveraging advanced tools, QSRs can navigate this complex landscape while prioritizing their workforce’s well-being.”

Effective management of workforce policies regarding salary, incentives, statutory benefits, and leave entitlements is key to sustainable growth. Collaboration between industry leaders, policymakers, and regulators is necessary to develop strong compliance standards that uphold fair labor practices and improve employee welfare. By maintaining ethical standards and fostering a positive work environment, QSR businesses can create a motivated workforce and secure long-term success.