Cost Reduction

Staffing Shortages in the Restaurant Industry

Walk into the BOH of most restaurants these days and you may just find the manager doing the dishes or the assistant FOH manager stepping in to prep. Are they chipping in to help overworked staff? No. They’re filling in and performing tasks that the lack of skilled and unskilled labor force has left undone in their diminishing wake. This labor shortage is nothing new in the restaurant industry. In 2017, however, it is definitely different.

According to the National Restaurant Association, over the next 10 years, the restaurant industry is expected to add 1.8 million jobs to the already strained workforce. In the U.S., this workforce from which the restaurant industry will be drawing is expected to increase by only 10 percent. Because of this, the NRA is asking the present administration to consider a temporary-worker visa program that would allow immigrants to work year round in the service economy.

Keeping politics out of the restaurant labor quandary is definitely a good goal, as difficult as it is for one prone to strong opinions. Nevertheless, whether help will arrive from those searching for a better life from other countries or from our own citizens remains to be seen. The bottom line is this—restaurants will be and are vying for staff from a limited labor pool. Many, however, have still found a way to thrive in the face of employee shortages.

High Rents and Low Wages

Many restaurants are finding themselves in high-rent neighborhoods with employees that cannot afford to live in the area they work. And some fall in between the cracks of big-city high-end establishments that can provide an increased wage and smaller communities that are in high rent districts but can’t sustain higher wages due to slim profit margins.

According to East Bay Times, 60 restaurants in the Bay Area closed from September 2016 to January 2017. One of the main reasons they cited was “the struggle to find and keep good employees.”

The Changing Landscape

Some restaurants are making significant changes and incurring financial obligations by obtaining rental properties for their staff or purchasing property and businesses where staff can live onsite. Others are helping employees by providing resources designed to connect those that need housing with those that need help paying rent. Still others are searching surrounding areas for their staffing needs.

And then there are those that are training grateful employees and helping them work up the restaurant ladder all the way to executive chefs and managers.

Additional strategies designed to cope with a diminishing labor pool include changing business plans and financial strategies in order to be able to offer wage increases and benefits such as health insurance, vacation and sick days, and 401Ks. Of course, not all restaurants can afford this tactic and still show a profit at the end of the year.

The fact is: A diminishing work force and employee pool can leave you struggling to maintain the high-quality of customer service you strive for as well as the quality of the product you are offering. Considering this, it may be time to get out the calculator and crunch some numbers.

The Good Times, an online publication from the beachside town of Santa Cruz, CA recently reported on the restaurant labor crisis that they are experiencing. Alec Stefansky, owner of Matambre restaurant, is focusing on how to offer “regular raises and cost-of-living adjustments” in order to keep his staff motivated, engaged, and committed to staying in one place…at least for a while. Café Cruz took the path of offering benefits to employees working more than 30 hours, and it has worked for them. They have not felt the labor shortage as intensely as other surrounding restaurants.

Full-Service to Quick Service

Many restaurants have found the burden of housing and pay-scale one that is just too much to bear. These establishments have regrouped and redesigned to a less labor-intensive model with customers ordering at the counter or to a ‘hybrid’ that offers table service for lunch and dinner and counter service for breakfast. Between rent increases, rises in minimum wage, and staff shortages, the cost of sustaining one’s restaurant dream is seeing owners making compromises that they would not have considered just a few short years ago.

Tips to Service Charge

Some establishments are trying to even the playing field by eliminating tips and adding a service charge to customer’s bills that is then distributed among all staff. Danny Meyer implemented these changes at his high-end restaurants in New York and has received accolades from both staff and customers. Others have not had the same positive response. Restaurants such as Joe’s Crab Shack and Fedora both went back to the tipping model after trying out the “hospitality included” model for, on average, 6 months. The reasons cited included patrons that were not willing to pay the extra associated fees and the disgruntled waitstaff that experienced a decline in their wages and went elsewhere in search of higher earnings.

So, just what is the answer to the staff shortage that restaurants are experiencing? It may come back around to the age-old truths: Employees want to feel appreciated and a sense of ownership. They want to know that there is room for growth and that by working at your establishment they have the possibility of making their life better. Some in the industry swear by this model—and it has worked for them.


Cost Reduction
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