Wrkio Blog

Restaurants have battled wave after wave of global crises over the past three years. The global pandemic had them restructure business models to keep afloat. After two years of supposed recovery, 2022 has thrown myriad disasters, such as supply chain bottlenecks, labor shortages and inflationary pressures.

Labor shortages aren’t affecting only restaurants at the moment. It is now the main course polenta alla spianatora sprawling across many industries such as warehousing, trucking, shipping and hospitality, with a disastrous ripple effect on global economies. For those who don’t know, polenta is Italian cuisine served on tables or planks rather than plates as a communal meal.

Many claim the pandemic can’t be used as an excuse for the industry anymore, but I strongly disagree. Restaurants have had to remodel tenfold primarily because of the pandemic. Pre-pandemic, the work landscape was so different that no one imagined a day would come when “Labor shortages” was a stifling problem. The long waiting lists of people willing to work for a minimum wage were essentially a norm then, and many restauranteurs never had problems hiring staff.

However, at the height of the pandemic, many restaurant workers lost their jobs due to businesses closing, and others didn’t think the meager wages were worth the risk of contracting COVID-19. Today, with the industry running operations at half capacity coupled with supply chain bottlenecks and increased costs, it’s a Christmas miracle many still have their doors open.

How did we get here?

The labor crunch has undoubtedly plagued several industries but has had devastating effects on restaurants. Unlike several sectors that can limp on in the face of labor shortages, most restaurant workers are critical to its survival. And with many restaurants short on chefs, washers and wait staff, the industry is far from its pre-pandemic glory. So, how did we get here?

Photo Credit: Frederic J. Brown/AFP/Getty Images

Food sales were at their highest in 2018, rising by 1.3% in July to $61.6 billion. The uptick in sales hadn’t happened since 1992. The US Bureau of Labor Statistics in early 2020 projected a 14% growth for food and beverage workers, with the restaurant industry poised for a 6% growth by 2030. All was right with the world until the pandemic hit.

Many restaurants closed their doors during the riotous 2020. However, as restrictions eased following mass vaccinations, restaurants that had weathered the storm rushed to reopen businesses to pick up from where they had stopped. And with customers also eager to get things “back to normal,” restaurants had a significant surge in walk-ins.

In the US, sit-ins have primarily returned to 2019 levels, with 70% of Americans admitting to feeling safe dining at a restaurant as of June this year. But despite the shared enthusiasm between restaurants and customers, the increased walk-ins have only seemed to spell trouble for restaurateurs. Labor shortages have bitten like never before, forcing many restaurants to work at half capacity.

Let us delve into the eye of the storm

If you have dined out lately, you must have noticed the “Help Wanted” sign or sticker on the restaurant window. Also, you must have noticed that restaurants that once worked till late now have shorter operating hours. Is it a coincidence? I think not. The staffing challenges have forced several restaurants to take somewhat drastic measures, such as reducing the number of service tables and trimming operating hours.

According to a report by Datassential, eateries have trimmed their working hours by 6.4 hours which translates to 7.5% compared to pre-pandemic schedules. The food analytics firm also reported that 59% of over 763,000 restaurants in the US were operating on shorter schedules as of October 2022 than they were in 2019. In addition, the reports showed that every state except Alaska reported a decline in restaurant operating hours.

Photo Credit: journal-news.com

So, why not just hire more staff and resume the 2019 cycle? You may ask. Well, as humans, we tend to throw money at problems, and it often works. According to One Fair Wage, several restaurants across 41 states have raised wages from the subminimum of $5 before the pandemic to $13.50 for hourly restaurant staff. Yet the labor shortage problem lurks like a dark cloud over the industry.

Another inexplicable fragment of this whole labor shortage fiasco is that US unemployment has remained unchanged over the past year. In normal circumstances, the ferocious competition between food chains should drive the unemployment rate down, with many trying to get in on the higher wages and other perks.

Unemployment has maintained a narrow margin (3.5%-3.7%) since March, which only means that the tight labor market will further contribute to inflationary pressures in the near future. But why is there a labor shortage in the industry?

During the global shutdowns, several restaurant workers shifted to industries that were growing at the time, such as home deliveries. In contrast, others have since been inspired to start businesses. Other female workers, who are parents and caretakers, became wary of going to work due to health concerns, burnout, and frustrating regulations.

Government policy is also to blame for this particular predicament. The federal unemployment program, which ran from late March to late July 2020, gave out $300 per week to those receiving jobless assistance with a $600 supplement. That certainly was a game changer for several restaurant workers, many opting to find better horizons. And as a result, restaurateurs are locked in a fierce battle to staff up and meet the massive walk-ins.

What staffing challenges can be expected in 2023?

Despite the commendable resilience restaurants have shown this year, 2023 could be a defining year for the industry. And inflexible business owners will be forced to close their doors permanently. But, if anything, the pandemic era taught us that there are countless ways to get things done.

With countless industries reshaping operations to suit the new global landscape, traditional workplaces had to adopt remote and hybrid work methods. Also, hotels looked for ways to incorporate technology to enhance the guest experience. So, maybe it’s time restaurants read the room and adjust accordingly. So, what does 2023 have in store for restaurants, and how can business owners navigate the impending storm?

Retaining staff

With a rate of around 75%, the restaurant industry has one of the highest turnovers and restaurateurs have to put in the shift in 2023 to bring that figure down. With the labor market spread thin, business owners can not afford to lose more workers in the coming year.

Photo Credit: dsrfinance.com

Solutions

Like several traditional workplaces, building a robust workplace culture is a proven concept in light of the labor shortages. Your restaurant needs dedicated staff to run effectively; in this case, giving your employees a reason to love their job is a good start.

It may sound a bit absurd to raise wages in a recession, but it is ingenuity if you think about it. How much would it cost you to find a replacement? How much will it take to train them? These questions should play a critical role in determining the appropriate wages for your employees. Also, you should know that economic hardships affect employees just as much as anyone else, and a few incentives, such as a small raise, could be the difference. Other incentives could be;

• Bonuses for employees who have gone above and beyond
• Perks such as meals between shifts and dine-out gift cards
• Encourage their feedback. It gives them a sense of belonging and makes them feel valued in the business operations
• Put their health first and be flexible with sick leaves
• Health insurance

Also, improve communication and build stronger connections with your employees to show them how valuable they are to the business and you. Having an open and passionate dialogue with employees also breeds enthusiasm and improves creativity in the workplace.

Hiring restaurant staff in 2023 will feel like a bidding war, with candidates weighing several offers. But rather than doing that song and dance, restauranteurs should consider promoting from within their staff for any new roles that may come up.

Promotions are among the several motivators for employees, and putting your trust in them will save you the hair-pulling experience of looking for new staff, with employee-related issues such as burnout, onboard AI to help with more straightforward tasks. Pre-pandemic AI was seen as a threat to human capital, but now it can be used as a perfect supplement for smoothly running business operations.

A recent survey by Forrester showed that 69% of the companies that onboarded AI into their operations significantly trimmed their operations. From managing procurement expenditure to improving customer experience, AI is an untapped trove for the industry.

AI helps with tasks such as order placing and could be a useful analytics tool to help ease decision-making. Also, AI helps reduce waiting time with features such as live-tracking of orders and contactless interactions in the drive-throughs. So, rather than having your staff do some of these tasks, onboard AI, allowing them to concentrate on other essential tasks.

To further reduce cases of burnout, you could hire support staff for administrative roles such as accounting to offload some of the responsibilities. While at it, hire a manager and Human Resource manager to also attend to employee-related matters such as onboarding, benefits and others.

Attracting staff

Big or small, restaurants have struggled to attract talent, and a potential recession could be the final knock-out punch that forces many to bolt shut their doors for good. Why is that? To combat inflation, federal governments aggressively raise interest rates which slow down investments. And this ultimately makes it hard for restaurants to attract staff.

Photo Credit: runningrestaurants.com

Solutions

With several high-end restaurants willing to pay over the market price for part-time restaurant staff, you have to make your offer attractive so that you have skin in the game. That transcends wages; it can entail work benefits such as health insurance, paid leaves, and in-between shift meals. Another way to get more employees through the door is by offering your employees referral bonuses. Your employees stand a greater chance of convincing potential staff to join than you do.

With the thin labor market, you must be more flexible with your job conditions. For example, instead of looking for mainly full-time employees, consider part-time restaurant staff so that you can keep the restaurant operational for an extended part of the day. Many people could use the extra cash after hours, particularly during challenging economic times.

Onboarding

Getting an employee up to operational standards can be a daunting experience for business owners, particularly when you have several items on your plate that require your undivided attention. Yet, it is a critical step in an employee’s career lifecycle and can’t be brushed aside. Simply put, onboarding is the process of helping recruits adjust to the social and performance landscape of the company.

How employees feel in the first few days of the new job helps them settle in or consider other options. So, onboarding is crucial to improving retention in the industry. A recent study by Glassdoor found that robust onboarding is critical in improving employee retention in a company. If your restaurant doesn’t have a written onboarding process, it is time to create one so that you rip the several benefits the process offers. In addition, onboarding programs should help new hires:

• Acquaint themselves with their roles
• Get comfortable in their new workplace
• Meet their teammates
• Learn company policies and protocols

As you create one for your restaurant, ensure it caters to the above criteria. With the volatile labor market, running restaurants like traditional businesses may also be wise. That means employing support roles such as Human Resource managers who will allow you to oversee any minor issues you might be overlooking, such as easing the onboarding process for recruits.

Conclusion

It is no secret that restaurants are finding it hard in the current labor market, and with troubled waters predicted in 2023, restaurateurs have their work cut out for them. Hopefully, we can be of help in this grim spell. Our guide to potential staffing challenges and how to solve them is all you need to weather the stormy seas in 2023.