A recent November 2022 jobs report from the Bureau of Labor Statistics (BLS) showed employers adding another 263,000 jobs. The leading sectors in job growth were health and education, and leisure and hospitality. Leisure and hospitality ranked number one, with an increase of 88,000 jobs. Despite this growth, there are still about 850,000 fewer jobs in the industry compared to pre-pandemic levels. On the flip side, a few sectors contracted. These were transportation and warehousing, and retail.
Interestingly, the tech sector still showed an extremely tight labor market, despite recent high-profile layoffs from Amazon, Twitter, and others. Wage growth in this sector also shows no signs of abating.
In our arena, eating and drinking establishments added another 65,100 jobs in November. When looking at the last 23 months, we see an additional 2.2 million jobs added to the sector. Despite the somewhat optimistic impressions, this still puts the industry about 462,000 jobs below pre-pandemic levels.
Workforce woes vary significantly in the major restaurant segments, with full-service bearing the brunt. As of October 2022, this segment was about 413,000 jobs below February 2020 levels. The National Restaurant Association reports that staffing levels at quick-service and fast-casual restaurants were around 54,000 lower, a far cry from the full-service quandary.
The Restaurant Labor Crisis Redefined
While these numbers certainly represent an improvement in the restaurant industry’s labor crunch, establishments still feel the effects of the employees who left for good following the pandemic. You can see it when you dine at a restaurant and see servers covering far more tables than they should. Others are still closing sections and increasing wait times, creating a challenging situation that guests don’t always understand.
Bonuses, raises, and benefits have all been strategically implemented in an effort to retain workers and bring new ones in. That said, a recent survey revealed that almost 40% of restaurants are holding off additional hiring plans due to inflationary pressures and protecting margins from increasing wage rates. Which leads us to the question, why is there still a workforce shortage?
Before the Pandemic
To answer that, we need to look at the industry before the pandemic. While somewhat hard to pull up memories in the shadow of such a catastrophic event, many will remember that the restaurant industry has had labor challenges for some time. Though nothing compared to those that recently shook the industry, retaining employees has never been the restaurant industry’s strong suit.
There are, however, some restaurants that seem to stay ahead of approaching storms and possess staff that remained with them before and after the pandemic. What differences do they offer?
The Faithful Restaurant Employee
Operators are the first to admit that the hiring frenzy and limited labor pool left many quickly filling roles by sometimes less than stellar candidates. As a result, some were more apathetic than excited about their new roles, and others had difficulty adjusting to the fast-paced demands of the service sector.
This led to restaurants taking another look at their workforce and exactly what roles were required. Could they pay more for their star employees and ask them to take on additional tasks? After all, customers are currently paying more, and with those increased costs come increased expectations.
In addition, restaurants are zeroing in on digital technology solutions, like server handhelds. Servers take orders on a small mobile tablet that emulates the POS system. These create faster service, and operators find they can add a few more tables to a server’s section without affecting their performance. In turn, staff receive more tips, earn more money, and get more excited about the position. There are also apps that allow diners to pay and order at their table using their mobile device. OneDine is one such technology company that enables contactless ordering and payment.
As we all know, the restaurant industry is made up of creative, dynamic, no-holds-barred individuals who see a challenge and meet it. From an obscure virus to supply chain upheavals and labor shortages, they continue to weigh the options and find solutions.
At EMERGING, our team of data scientists and analysts, real estate experts, and business professionals are solutions-focused, helping our clients coordinate expansion, supply chain, finance, and labor strategies. Target Workforce, a proprietary technology, was created to help operators find the highest quality, trained staff at the lowest recruiting costs. Contact EMERGING to learn more.
Are restaurants still experiencing a labor shortage?
According to the BLS, eating and drinking establishments are still about 462,000 jobs below pre-pandemic levels. That said, when the labor crunch was at its greatest, operators started to look for alternative solutions. This included increasing pay for star employees willing to take on additional tasks and turning to technology. Both actions have paid off.
Is the labor shortage improving?
According to the U.S. Chamber of Commerce, at the height of the pandemic, over 120,000 businesses closed, and more than 30 million U.S. workers found themselves unemployed. Since then, job openings have increased, and unemployment has declined. As of October 31, 2022, there were about 10 million job openings but only 6 million unemployed workers. We also have about three million fewer people participating in the labor force since the pandemic struck. The labor shortage is, however, improving, with 263,000 jobs added in November 2022.