Fifth of fast food restaurants don’t pay minimum wages, quarter don't offer additional leaves

Over a fifth of employers in quick service restaurant business do not even pay minimum wages and nearly a fourth don’t grant any leaves apart from weekly offs to their employees, shows an industry survey conducted by staffing firm TeamLease.

Around 21% of quick service restaurants (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.

India's QSR sector, which is projected to reach a size of $38.71 billion by 2029 from $25.46 billion in 2024, has among the highest rate of attrition. Around 75% of the workforce has tenure less than 3 years, with 36% serving for just 1 to 2 years. The average salary of 88% of the workforce varies between Rs 15,000-20,000 per month.

Around 12% of the workers in quick service restaurants earn less than Rs 15,000 a month, which is lower than the minimum wage threshold for many states in India. Additionally, around 64% of the QSR workforce does not receive any incentives, TeamLease report released on Monday showed.

“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," said Balasubramanian A, vice president and business head of TeamLease Services.

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, the survey data showed.

“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,” Balasubramanian said.

As per the survey data, 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 a month. Gratuity benefits in the sector are also a matter of 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.

“An unmotivated workforce leads to high turnover rates, operational disruption and compromised customer service, thereby affecting the overall profitability," said Kartik Narayan, CEO of staffing at TeamLease Services.

"The QSR sector must prioritise 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,” Narayan added.