Diving Brief:

• Sbarro has in partnership with DailyPay give employees access to a wage demand.
• The company, citing its own commissioned research, claims that more than 90% of users say DailyPay helps them pay their bills. Four out of five users no longer have to take out payday loans or pay overdraft fees with pay-as-you-go, according to DailyPay.
• Sbarro hopes DailyPay will strengthen its recruitment and retention efforts, according to the press release. The restaurant industry has been under significant labor pressure since the start of the pandemic. Last year, about 40% of restaurants reported being understaffed, and the Dropout rates in catering is nearly twice that of the overall economy.

Overview of the dive:

Pay-as-you-go is not new to the restaurant industry. Several companies, including Checkers, Bloomin’ Brands, Church’s Chicken and Pizza Hut, began exploring the option in 2019 as an incentive to retain employees, as turnover rates were costly for operators even when the labor market was tough. relatively stable, according to Hotel Research Center at Cornell University.

Since the pandemic pushed food stops to historic highs, some Wendy’s have began offering same day paymentwhile Jimmy John’s, Torchy’s Tacos, Manna Inc. and Piada Italian Street Food have also recently added DailyPay.

DailyPay is not the only company to provide this service to brands. Some institutions Taco Bell, McDonald’s and Applebee’s have adopted Branch, for example, while others added Instant Financial. Toast added a new product, PayOut, to give restaurant workers instant access to a portion of their earnings after each shift.

A recent study by Ceridian conducted by The Harris Poll finds 80% of workers prefer to have their pay automatically deposited into their bank account as they earn it, while 78% said free access to pay-as-you-go would increase their loyalty to an employer.

Free access is a key factor in this benefit and saves employees from having to rely on expensive payday loan companies to cover their bills. In Texas, for example, the typical APR for a payday loan is over 600%, according to CNBC. In addition, the average overdraft fee now exceeds $33.50, a record high.

In a statement, Sbarro chief administrative officer Rohan Shearer said the partnership “supports the financial health of our teams by rewarding them with faster, on-demand access to their earned salaries.”

Operators have provided anecdotal evidence that remuneration on the day improves retention. A McDonald’s franchisee in Florida discovered that her the turnover decreased by almost 10% year after year after adopting Instant Financial, for example.

Pay-as-you-go is just one of the many perks operators offer to navigate the job market. The chains raised wages, offered bonuses, added childcare allowances, gave iPhone and provided reimbursements for studies and holidays, among other benefits.