With India’s food industry experiencing remarkable growth, the Quick Service Restaurant (QSR) sector is expected to achieve a significant milestone, reaching USD 38.71 billion by 2029, driven by rapid national expansion in the years ahead. As QSR brands rapidly scale their operations to meet this surging demand, TeamLease Services Limited, a pioneer in transforming employment practices in India, highlights the pressing issue of non-compliance within this rapidly evolving sector. Urgent attention is needed from industry stakeholders, as non-compliance poses legal risks, damages reputations, and disrupts operations for QSR businesses.
The Food Safety and Standards Authority of India (FSSAI) actively tackles food safety concerns by educating stakeholders in the food services sector on regulatory adherence. It mandates restaurants to prominently exhibit food safety boards detailing hygiene, sanitation, good manufacturing practices (GMP), and other pertinent guidelines.
Furthermore, restaurants must appoint trained food safety supervisors onsite. FSSAI accelerates the registration process for Food Business Operators (FBOs) to ensure robust compliance with its standards. Presently, among the 2.5 million FBOs nationwide, only 0.5 million (20 percent) possess an FSSAI license.
To effectively manage the workforce within the fast-paced food service industry, it’s recommended that companies in the QSR sector prioritize compliance to safeguard their employees’ well-being, uphold customer trust, and ensure sustained success. Currently, the QSR sector grapples with notably high attrition rates, averaging between 10-40 percent turnover monthly. A significant portion, approximately 75 percent, of the workforce remains for less than 3 years, with 36 percent serving merely 1 to 2 years.
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Substandard compensation practices contribute significantly to this turnover. Alarmingly, 88 percent of employees earn salaries ranging from INR 15,000-20,000, with 12 percent receiving less than INR 15,000, falling below many state-mandated minimum wage thresholds. Moreover, around 64 percent of QSR workers do not benefit from any incentives, compounding concerns regarding retention and morale within the industry.
Alarmingly, 21 percent of QSRs are non-compliant with statutory benefits, failing to meet minimum wage requirements. Additionally, 30 percent of them neglect to provide statutory bonuses. In the absence of bonuses and incentives, employees may struggle to find the drive to perform at their best, impacting overall operational efficiency and customer service quality.
23 percent of QSRs fail to comply with the Employee’s State Insurance Corporation (ESIC) provision, which guarantees medical care for employees earning less than Rs.21,000. This failure compromises employee well-being and demonstrates a disregard for regulatory obligations.
Gratuity benefits within the sector are also worrisome. Although 58 percent of QSR chains offer gratuity benefits to employees with 5-year tenures, the proportion of eligible employees is notably low due to high attrition rates.
24 percent of the QSRs surveyed fail to offer any leave beyond standard weekly offs, which could potentially contribute to employee burnout and dissatisfaction.
Kartik Narayan, CEO of Staffing at TeamLease Services Limited, stated, “As a prominent staffing partner, we have directly observed the repercussions of non-compliance on both the workforce and business operations. Nearly 75 percent of QSR employees have tenures of less than 3 years, with over a third lasting just 1-2 years. This trend is exacerbated by factors such as inadequate pay, absence of incentives, and failure to provide statutory benefits. These discoveries should serve as a wake-up call for the QSR industry.”
He added, “A disengaged workforce results in elevated turnover rates, disruptions in operations, and diminished customer service, ultimately impacting overall profitability. Hence, the QSR sector should emphasize equitable labor practices, competitive compensation, and stringent compliance measures. Tackling these workforce obstacles isn’t solely an ethical obligation but also a strategic business imperative for the industry’s enduring sustainability and triumph.”
Balasubramanian A, Vice President & Business Head of TeamLease Services Limited, remarked, “Despite the rapid growth of the QSR industry, there’s a pressing need to maintain compliance standards. Alarming discrepancies include the failure to meet minimum wage requirements and the disregard for statutory bonuses. Moreover, approximately 24 percent of QSR establishments offer no leave beyond the standard weekly offs, totaling just four days a month. Only a minority prioritize employee satisfaction by permitting leave carry-forwards and accommodating extended absences for personal reasons. This oversight not only diminishes employee morale but also undermines customer trust. These practices largely contribute to the average age of employees in the QSR sector being in the early 20s. Many perceive this as merely an initial step rather than a viable short-term, let alone long-term, career option.”
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By collaborating with seasoned staffing and compliance professionals and harnessing sophisticated tools, QSRs can adeptly navigate this intricate terrain while giving precedence to the welfare of their workforce.
For sustainable growth, it is essential to manage labour policies including pay, incentives, statutory benefits, as well as leave rights. To create a climate that supports fair labour practices & employee welfare, industry leaders, legislators, and regulators must work together to establish strict compliance procedures. Maintaining moral principles and fostering a happy workplace are two ways that QSR companies may develop a driven staff and guarantee sustained success.