Will the Increasing Labor Participation Allow Restaurants to Return to Normal Operations?

According to the Bureau of Labor Statistics, eating and drinking places once again outpaced the rest of the private sector, adding 124,000 jobs in February.

While showing the most substantial gains, the rest of the nation also showed positive job prospects, with 678,000 non-farm jobs added, resulting in an unemployment rate of 3.8%. Professional and business services added the next highest number of employees, with an increase of 95,000 jobs.

The labor participation rate also increased, rising from 62.2% in January to 62.3%. This percentage is slightly lower than pre-pandemic days that saw the labor participation rate at 63.4%. As a result, the number of unemployed persons came down to 6.3 million. Before the pandemic struck, the unemployment rate sate at 3.5%, with 5.7 million unemployed.

More good news came in the form of a reduced number of people unable to work because their employer lost or closed their business due to the pandemic. This figure fell from 6 million in January to 4.2 million in February. Additionally, due to subsiding Omicron infections, the January record of 3.6 million workers who missed work due to illness fell to 1.6 million people in February.

What Do These Figures Mean to Restaurants?

Despite all the good news, the leisure and hospitality sector still shows a higher unemployment rate than the nation, though falling to its lowest since the pandemic at 6.6%.

Hopefully, in the coming months, the labor shortage will further dissipate, allowing more restaurants to return to their regular hours of operation and employees to go back to working their primary roles instead of pitching in where needed.

The advent of the pandemic, however, changed some restauranteurs’ and employees’ viewpoints on profits and work-life balance, resulting in an area of uncertainty for those in the industry. Even with rising wages and a more balanced lifestyle approach, will the restaurant industry attract the same number of workers that once considered a career in hospitality?

What Are the Long-Term Effects of Economic Upheavals?

The last significant economic disruption started at the end of 2007. By 2009, some restaurant operations had folded while others made it through the Great Recession by molding their business and taking different approaches to everyday operations.

One of the by-products of changing operations was the increase in food trucks. Consumers wanted good, quality food at an affordable cost and, for those lean years, the lure of the food truck and its unique flavors and accessibility was hard to beat. That “new normal” remained with us, even as the nation slowly made its way out of the economic crisis.

What Are the Long-Term Effects of COVID-19?

The latest upheaval came in the form of a virus. From the ashes, ghost kitchens arose—a business model in which a brand did not require a brick-and-mortar location. Delivery, takeout, and curbside pickup made headlines. And now, though the labor shortage lessens, restaurants are leaning toward technology to help them through. All of these changes and adaptations will, like the food truck, become our new normal.

As Hudson Riehle, the senior vice president of the Research and Knowledge Group at the National Restaurant Association, said, “Restaurants and their patrons have found themselves in a ‘new normal.’ Given emergent technology, changing consumer behavior and dining preferences, and the extraordinary challenges of the last two years, the industry is unlikely to ever completely return to its pre-pandemic state.”

Change is the nature of our existence. Even back in 1782, Jean-Jacques Rousseau knew this to be true. “Everything is in constant flux on this earth. Nothing keeps the same unchanging shape, and our affections, being attached to things outside us, necessarily change and pass away as they do. Always out ahead of us or lagging behind, they recall a past which is gone or anticipate a future which may never come into being…”

In addition to the rise of ghost or dark kitchens and the advent of a changing delivery model, technology is rapidly advancing as a means to address the continuing labor shortage.

Who Are the Technology Winners?

Restaurant Business reported on several brands that embraced technology due to the pandemic and the positive effects that followed.

In 2021, Chipotle’s digital sales grew 24.7%, representing over 45% of its total sales. Chipotlanes, the brand’s drive-thru model, will likely appear in 80% of all new units. Today, a large percentage of U.S. restaurants offer some type of online ordering, with estimates reaching 80%.

Shake Shack noted that when one of their units offered a kiosk order option, along with digital orders, it made up 75% of their sales. Papa Johns is reworking their design concepts to include digital ordering kiosks.

According to Forbes, customers spend 12-20% more, on average, when they order from a self-service kiosk. Self-ordering technology will, undoubtedly, be one of those new adaptations that are here to stay.

Additional technology adaptations include robots that prepare menu items that are easily automated and artificial intelligence that takes our orders. Times are changing. I think I’ll head to my local mom-and-pop eatery, where I can count on a person taking my order with a smile and food prepared by an experienced chef.

  • Subscribe to our latest insights


Are you capital raise ready?