The restaurant industry is facing an unprecedented labor shortage.
We’ve all seen the posts circulating on social media. They’re often politically charged, but they illustrate how many restaurants are struggling to operate at full capacity without being able to hire to full staffing levels.
In reality, federal government unemployment benefits and stimulus checks are only small parts of the bigger picture of why restaurants are having such a hard time hiring talent right now. What we do know is that this challenge is widespread, and restaurants need help.
It’s likely that staffing will eventually return to pre-pandemic levels, but in the meantime, here’s what restaurant owners need to know about the labor shortage—and how they can use technology to stay afloat until they can find more employees.
Why Is There a Labor Shortage in the Restaurant Industry?
The restaurant labor shortage is a complex issue that has a lot of possible causes that economists are still investigating; but the bottom line is that COVID-19 exacerbated underlying issues within the industry. Restaurant workers typically earn low wages, so, staff have little incentive to stay at restaurant jobs long term. During the coronavirus pandemic last year, many didn’t feel safe—or valued for their hard (and now dangerous) work.
The restaurant industry as a whole was battered by the pandemic. By May 2020, restaurants had reported a loss of 5.9 million jobs. It’s estimated that 17 percent of U.S. restaurants closed for good in 2020. Even as restaurants began to reopen, demand stayed low throughout the pandemic, as public health organizations repeatedly warned that eating out was a high-risk activity.
But earlier this year, the CDC made a surprise announcement that fully vaccinated Americans could return to most activities—including eating at restaurants—relatively safely. In the weeks since, cities have loosened or abandoned capacity limits and other restrictions. Restaurants are reopening—and seeing a flood of guests pouring into full-capacity dining rooms. In many cases, they haven’t yet been able to hire enough staff to accommodate the sudden change.
It would be a challenge for any industry to hire that many people in such a short amount of time. But many restaurant workers who lost their jobs during the pandemic have moved on to other industries in order to make ends meet for so many months. In cities, like New York City, many have moved away to areas with lower costs of living. Many workers are reluctant to return to restaurant jobs, which are high-risk due to exposure to so many people, and tend to come with a low hourly wage.
And even as demand at restaurants has soared, the industry hasn’t recovered all the jobs it lost during the pandemic. According to the Bureau of Labor Statistics, the food service industry added 186,000 jobs in May, bringing the five month total increase to 830,000 net jobs. But overall, the industry is still 1.5 million jobs short of pre-pandemic levels.
How the Restaurant Labor Shortage Might Affect You
Restaurants are already seeing the effects of higher demand and fewer staff members.
Longer Wait Times
One of the most common ways restaurants (and their guests) are being affected by the ongoing worker shortage is through longer wait times. Without their full staff, restaurants aren’t able to seat, serve, and cook for the same number of tables, which means guests are spending more time on waitlists, and waiting longer for their orders to arrive once they are seated.
Reduced Open Hours
In addition to longer wait times, some restaurants are having to reduce their open hours so as not to overtax a smaller staff. In some cases, as we’ve seen in the news and on social media, restaurants are being forced to close down altogether while they focus on hiring.
With longer wait times and slower service, restaurants just aren’t able to serve as many guests as they could. Longer wait times also tend to mean that guests order less overall. Fewer and smaller checks means restaurants are seeing less revenue, which means less profit overall.
As restaurants struggle to cover their overhead costs with slower table turnover, many are raising their prices to remain profitable during this challenging time. Some restaurants are also increasing price so they can afford to increase wages, offer health insurance and other benefits, or provide perks to entice new hires. Many restaurants are being transparent with guests about the fact that these higher prices are the result of their struggle to find and retain staff.
More Competition for Good Talent
And finally, restaurants are having to compete with one another for the workers who are available. Restaurants that offer more competitive wages and benefits to their staff are the ones that workers are gravitating toward. As the entire industry struggles to find and retain workers, competition is fierce among restaurants.
How to Keep Your Restaurant Running During a Labor Shortage
In recent months, we’ve been seeing businesses all over the country (including restaurants) pull out all the stops to try to attract and retain workers. Small business owners, including restaurateurs, are offering signing bonuses and gifts for new hires to make their workplaces seem more attractive. But will that work long term? Can a signing bonus fix the systemic problems with restaurant staffing that have contributed to this crisis?
In reality, the restaurants who thrive during this labor shortage will be the ones who make big changes to their hiring and staffing models. Here are some tactics to consider.
Make Your Restaurant a Great Place to Work
The federal tipped minimum wage has been $2.13 since 1991—29 years without an increase.
One of the best ways for restaurants to survive this labor shortage and any other future turmoil in the industry is to offer workers something better than the minimum.
Restaurants tend to operate on slim profit margins, so it’s understandable if you feel like there’s just no room in the budget for higher wages or benefits for your workers. But consider this: The Center for Hospitality Research at Cornell estimates that turnover for a single, front-line restaurant employee costs nearly $6,000. If you could avoid that cost by retaining your employees, that money could be reinvested in giving them reasons to stay.
Additionally, restaurant guests are showing more and more willingness to pay higher prices at restaurants if it means food service workers get fair pay and benefits like health care, paid vacation, childcare, and retirement contributions. Some restaurants have even eliminated tipping, and advertise that to guests, who happily pay slightly higher food prices knowing they’re supporting good jobs for restaurant workers.
Focus on Retaining Workers
This goes hand-in-hand with providing restaurant staff with a great place to work. But it’s especially important during times like now, when good talent is hard to come by.
As you’re hiring to return to full capacity, don’t say yes to anyone who applies for a job at your restaurant. Instead, hire with retention in mind. Take the extra time you need to find people who are a good fit for both full-time and part-time roles. Build a team that works well together, and then treat them well so they don’t have a reason to leave for a job at another restaurant.
Create a Staff Referral Program
Hospitality industry folks are a tight-knit bunch. If you already have some great employees, odds are they know other restaurant workers who are also great at what they do. Enlist their help in the hiring process by implementing an employee referral program. Offer a bonus to any staff member who refers someone you end up hiring. They’ll help spread the word about your job openings.
How Technology Can Help Ease the Restaurant Labor Shortage
While the restaurant industry finds its footing, technology can help ease some of the challenges that stem from the ongoing labor shortage. Here’s how to make the most of tech tools to streamline your workflow and take some of the pressure of the staff you do have.
Restaurant Technology Tools for Automation
More and more, restaurants are embracing automation tools to handle the more tedious parts of their workflow. Reservations and waitlisting can now be automated with the use of the right app or platform, for example.
Another great place to implement automation is in your marketing efforts. With the right software, you can automate the process of sending out email newsletters, creating holiday specials, and following up with guests after they place an order at your restaurant.
Restaurant Technology Tools for Efficiency
With fewer staff on the floor, restaurants need ways to reduce the time guests spend waiting. That’s where technology for contactless ordering and payment is really gaining traction. Instead of needing to wait for a server to take their order, guests can simply order whenever they’re ready, either from an ordering kiosk, a tablet at their table, or their own device. The same goes for the check—rather than wait for it to be dropped off, they can split the bill, leave a tip, and pay all from their table.
Restaurant Technology Tools for Productivity
With reduced opening hours, restaurants need a way to boost their productivity that doesn’t overburden their service staff. That’s where direct online ordering comes in.
Restaurants that take online orders from their websites see huge boosts in sales and profit—for takeout and delivery orders. By adding online ordering for your guests, you can serve more of them—and give your bottom line the boost it needs to help you weather this storm.
Popmenu: All the Tech Tools Restaurants Need in One Platform
While technology tools can help ease the burden of the ongoing labor shortage in the restaurant industry, they do have a downside: They cost money, and they take time to learn to use and implement. Restaurants are already struggling. They don’t have the time or the money to implement different tools to solve different problems.
That’s why today’s restaurants need Popmenu.
Popmenu does everything restaurants need in a digital world:
- Website design and maintenance
- Interactive online menus
- Direct online ordering
- Automated marketing tools
Having it all in one platform saves time. And the best part is Popmenu costs restaurants just a single monthly fee.
Ready to see how Popmenu can help you save time and money? Schedule a free demo today.