Operators say hiring has become their top problem again, even with nearly 2 million former restaurant workers still out of a job.
By Peter Romeo, Jonathan Maze and Patricia Cobe
April 2, 2021
When the newest Winger’s opened in Bountiful, Utah, a few weeks ago, market conditions prompted the casual restaurant to stay closed on Sundays. The needed sales and traffic might’ve been there, but a staff to handle that business couldn’t be scraped together. Bountiful proved a painfully ironic name, at least when it came to labor.
“It’s our biggest challenge right now,” says Eric Slaymaker, CEO of Salt Lake City-based Winger’s. He notes that another branch of the 23-unit chain has limited itself to takeout-not because of COVID concerns, but due to the labor situation.
“We just don’t get the applicants,” he laments.
Winger’s is hardly alone in that respect. As sales rebound from the pandemic-hammered levels of a year ago, restaurants of all stripes are struggling to ramp back up because they can’t recruit enough employees. Even with 1.8 million restaurant workers displaced by the crisis since February 2020, the industry’s labor crunch is back in full force-if not worse than it was before 2020’s shutdowns.
Theories abound as to the why’s. While restaurants were furloughing their whole workforces, employers in other industries kept hiring. Businesses like supermarkets, e-retailers and fulfillment warehouses scarfed up the former busboys, servers and kitchen workers, who welcomed the greater stability those fields afforded.
“The industry lost jobs to the industries that were hiring,” says Victor Fernandez, VP of insights and knowledge for the researcher Black Box Intelligence.
The industry hoppers not only found more job security, but often lowered health risks. At every turn, they heard authorities warning against interacting with the public. Yet restaurant employees were usually characterized as essential workers, meaning they were still handing over bags of food or nearly bumping elbows with kitchen co-workers.
“One of the few places where people can take off their masks is in restaurants,” Fernandez points out.
“Essential workers are more exposed to the COVID-19 virus, and that has made hospitality occupations less and less attractive,” says John Cleveland, executive chef of Post & Beam in Los Angeles. “As a result, people?start to figure out another way of life and they move on.”
In addition, “some worried parents are telling their kids, ‘No, I don’t want you to work anymore because of the danger,”’ says Fernandez.
“It’s our biggest challenge right now. We just don’t get the applicants.” -Eric Slaymaker, Winger’s
He notes that minorities make up a slightly smaller percentage of the industry workforce today than they did at the start of 2021. He suggests their statistically greater danger of contracting COVID might have steered them into jobs where they aren’t dealing with the public.
Ticking through the potential reasons for the current applicant shortage, Fernandez doesn’t spend much time on the theory that sweetened unemployment benefits and other forms of financial aid are providing candidates with the income they’d previously earned.
“There’s probably some truth to that, but you can’t paint everyone with the same brush,” Fernandez says. “It happened, but I don’t see that happening on a wide scale. You’re talking about a lot of young people, and they know they’ll have to decide how to make a living long-term.” The heightened benefits extend for only another six months.
He’s unusual in giving little weight to that factor.
“In Ohio you can make $452 a week in unemployment,” says Carl Howard, CEO of the 200-unit Fazoli’s chain. “The federal government is going to top that with $300. That’s $752. If I pay $15 an hour, that’s $600. They’re making $18.55 to stay home.
“I’ve got to pay $18.55 if I’m going to attract workers. That doesn’t work in our model or anyone else’s model.”
Yet money could be a potent remedy to the problem, says Fernandez. “We’ve seen wages be relatively stagnant in limited service,” he says. “We’ve seen a lot more action in back-of-the-house in full-service.”
Meanwhile, rival industries tried to lock in their employees by raising pay. Target, for instance, temporarily raised its standard pay to $15 an hour. Amazon increased its starting wage before the pandemic to $15 an hour.
All in all, “there may need to be a bump in pay to get that talent back,” Fernandez says.
Finally Restaurant Group, a multiconcept company based in Bozeman, Mont., can attest to that. The 15-restaurant operation isn’t having trouble recruiting cooks, says Director of Human Resources Ashley O’Bryan. That’s unusual for a full-service operation, where tipped front-of-house employees can make exponentially more than their nontipped co-workers in the kitchen. The disparity usually intensifies the difficulty of filling back-of-house jobs.
But Finally pays its cooks $17 to $20 an hour, or considerably above the prevailing wage in its markets. So when the company recently posted a want ad for two line positions, 30 people applied.
Yet it’s all relative. Finally directly pays its servers $10 an hour, or more than the minimum wage of four states where it operates. And that’s in addition to what they collect in tips. The company usually has a bench of 17 to 20 workers per section of its Rib and Chophouse concept. Today, it’s not unusual for one of the 11 branches to have no more than 20 front-of-house employees on staff in total. Applicants just aren’t coming forward.
How to hold ’em
Many operators are betting big that the best way to fill a job is never letting it become vacant. “Retention is key, so we’ve taken the time to strengthen our digital/video training for new employees, implemented in-cafe recognition programs and increased our bonus program for salaried managers,” said Stephen Stoll, COO of restaurants for Maverick Hotels & Restaurants.
Toward the same end, Olive Garden parent Darden Restaurants announced the week before last that it was divvying up $17 million as a thank-you bonus among the 90,000 employees of its 1,822 restaurants.
A few days later, the 840-unit Whataburger quick-service chain followed with an announcement that it had distributed $90 million as a thank you for staff members who’d slogged through the extraordinary conditions of the past year.
Darden also tried to make its jobs a little stickier by announcing that it would pay every restaurant-level worker at least $10 an hour starting immediately and raise the minimum to $12 an hour in January 2023.
“As we continue to grow our business and welcome guests back into our restaurants, continuing to attract and retain the best talent in the industry will be critical to our success,” Darden CEO Gene Lee explained to financial analysts. “These investments further strengthen our industry-leading employment proposition.”
Indeed, the weakling in Darden’s portfolio has been Cheddar’s Scratch Kitchen, the casual-dining brand it acquired in 2017 and has yet to turn around. “The limiter on Cheddar’s will still be the human resources,” said Lee. “We’ve got to build the bench strength so that we can get that system up and running.
“Our greatest challenge right now is staffing,” he declared.
With potential hires in tight supply, many chains are striving to engineer demand out of their operations. “The pandemic was really helpful with that,” says Greg Flynn, founder and CEO of Flynn Restaurant Group, the industry’s largest operator of franchised restaurants. “We got really efficient in our restaurants.” In Flynn’s case, those restaurants included units of Applebee’s, Panera and Taco Bell.
With human contact all but demonized in restaurants as a COVID threat, automation was embraced as budgets permitted. Placing orders, for instance, was shifted from cashiers to smartphone-armed consumers in many instances. And government-imposed business restrictions-the shutdown of dining rooms, for instance-afforded an opportunity to rethink operations nearly from scratch.
How employees were handled during the bleakest days of the pandemic proved to have an effect on how readily employees returned to their former restaurant jobs, operators report. Outback Steakhouse parent Bloomin’ Brands decided not to lay off anyone employed in one of the company’s restaurants. When conditions started easing last fall, bringing staffs back to work was a smooth process, CEO Dave Deno told Restaurant Business at the time.
Retaining the workers “was one of the smartest and one of the proudest moments of our company,” said Deno, who acknowledged that the plan sparked a lively discussion internally. “We really did right by our people and our people did right by us.”
But now the company is looking to expand beyond where it was at the start of the pandemic. It’s holding a three-day job fair next week to staff up its brands accordingly.
Raising Cane’s knows the feeling, according to co-CEO AJ Kumaran, who projects that the chicken-finger chain will open 85 restaurants this year, all of them corporately run.
“It’s crew members first, crew members always,” Kumaran says of his priorities. “We have 34,000 crew members now. We will have 40,000 crew members by the end of the year.”
“It’s the perfect storm,” comments Flynn, who has 2,300 restaurants to run. “Demand is surging in restaurants and [the] labor supply is challenged because of heightened unemployment benefits and stimulus checks.
“If you don’t have concerns about labor, you’re not in the restaurant business.”