I have procrastinated on writing this summary. Our second questionnaire sought data on the current state of staffing and recruiting for restaurants. (For those who missed the first summary, there are 25 respondents to these questionnaires, representing thousands of restaurant units in all segments.) I wanted to write something profound and perceptive about the labor crisis that restaurants are experiencing. I wanted to write something that hasn’t been written already. But I have no new answers, no new insights.
By now, most everyone is aware of the scarcity of candidates for open restaurant positions. The reasons are numerous, including concern about COVID infection, lack of childcare options keeping people home, ease of obtaining unemployment benefits and relocation to areas of the country where cost of living is lower or where job opportunities are more lucrative. But the most significant reason appears to be that many have abandoned the restaurant industry as no longer a reliable and consistent way to make a living. Even the most conscientious of restaurateurs had to furlough or layoff team members at some point during the pandemic, some by choice, more because of municipal mandates on how restaurants could operate. Of those restaurant workers who were able to remain employed throughout the pandemic, most tipped employees saw a decline in earnings from lower sales resulting in lower tips and a decrease in hours worked, which impacted non-tipped employees as well.
Here’s the data on how our group is seeing the situation;
- 71% believe that restaurants should be fully staffed by Memorial Day 2021
- More than half of those respondents feel restaurants should be fully staffed right now
- Only 21% are currently fully staffed
- Two-thirds are at 75% of normal staffing
- 93% are finding it difficult to fill open positions in their restaurants
- 93% are sensing an overall increase in Labor Costs
- 93% feel that finding qualified candidates is difficult
- 53% felt that filling BOH positions was difficult while 76% felt the same about FOH positions
- Management positions were deemed easier to fill with only 14% having difficulty filling those positions
- However 64% felt that they needed to increase compensation for qualified managers
- Only 25% of the respondents operate in municipalities that mandate a $15 minimum wage
- The majority of the respondents felt that a $15 Federal minimum wage would result in the need to reduce scheduled hours to keep labor costs in line.
- Several suggested that it would force them to look very carefully at their operating hours and operations, eliminating the least profitable meal periods and finding ways to reduce labor hours by increasing efficiency through technology.
- A few operators suggested that those employers currently paying $15 per hour or better in areas where it is not mandated, are seeing better sales and better employee retention rates
- Many of those in the full-service segment said that they are seriously considering a mandatory service charge fee that will then be used for wages throughout the restaurant and even the pay disparity between FOH and BOH.
- In consideration of the proposal for elimination of the “tip credit” towards minimum wage, most respondents said that if such wage law went into effect, they would absolutely adopt a service charge model.
Finally, as restaurateurs grapple with the need to adjust to the shortage of eligible workers, here’s a sampling of some of the comments from our respondents;
- Federal funding with no requirement to work will make hiring even more difficult
- Finding staff will likely be the biggest post-Covid challenge for the next 1 to 2 years. Being aggressive early will pay off. There is an extra $2T in family savings on the sideline and families are eager to get out, eat and spend money. Restaurants may go from famine to feast fast, staff will be key.
- The pandemic accelerated the pace of change for restaurant employees. They will be paid more and have better benefits as a result.
- Overall, we have been able to retain out entire BOH staff because our owner kept everyone fully employed during the past year. It has been a big hit to the labor percentage, but an investment in our staff. Now that it is getting busy we are ready. The morale of the staff is high because they understand they have been looked after and are grateful. FOH is very different story. It has been very difficult to find good qualified FOH employees. I think the wage expectations are not lining up with what FOH folks expect to make. Even before Covid it has been difficult to get solid FOH employees. I would say overall the industry has not been kind to FOH folks and many have left the industry.
My two cents? Between the effect of COVID on the industry and the social forces that have been at play for some time, I believe that the basic operating practices of the restaurant industry will undergo dramatic change over the next five years.
In order to bring people back into the industry, restaurants and all food service employment, will have to increase wages and benefits. Service charges will become standard practice in full service restaurants, while the very highest-end restaurants will continue to build service into the price of their menus. More casual restaurants will adopt technology (e.g. self-ordering on your phone) to reduce labor. In the not too distant future, tipping in the US will resemble the European practice of a small token of appreciation for a job well-done but the standardized 20% gratuity will already be included as a service charge.
Thought or comments you want to share? Please do!