Why restaurants can’t find workers right now
Labor is a problem in the industry right now. Sales are increasing. Operators are hiring. And they are struggling to fill jobs. Help-seeking ads are everywhere, and industry executives are publicly calling it one of the worst shortages the company has seen in years.
The problem was highlighted again on Friday when restaurants added 187,000 jobs. It was robust, but perhaps not as robust as it perhaps should have received high sales levels and demand. Many operators we speak with are squarely responsible for the inability to hire workers.
Labor shortage, despite generally high unemployment, is a complex problem that may take some time to resolve.
A multi-unit metro operator I know sent an email explaining why they think the industry is short of workers. We’ve included a lot of their comments here, to help explain exactly why so many restaurants are having issues.
“I have spent over 70% of my time in the last few weeks recruiting and interviewing. I’ve only been able to hire nine people and we need 40 to 50 people right now. Team members on time more than supervisors, assistants and managers are the area we don’t seem to recruit. “
By the way, I know a lot of metro operators. All of them seem busy all the time right now, mostly working in their stores because they can’t find staff.
This franchisee paid $ 3 an hour more than the local minimum wage and recently added a premium of $ 2 an hour while excess unemployment benefits last. “Very limited success.”
A refrain of many people is for the industry to simply “pay higher wages”. But he is. Wages rose 4.6% between January and March, according to federal data. That’s 18% on an annualized basis. David Maloni, executive vice president of analytics at Arrowstream, said the industry has not exceeded 1.8% since 2007.
It should be noted that Subway operators run low volume restaurants and have customers who are reluctant to order more expensive items. It is not that easy for the company to offset higher labor costs against the price. Still, most of the operators we speak with have said they just can’t find workers, period.
“We currently have three stores closed for lack of team members. We have a number of stores with very limited hours (open 11 a.m., close 7 p.m., closed Sunday evening, closed all day Sunday). We have disabled third-party delivery to reduce the load and stress on teams. “
Other efforts won’t work either.
“Last week, given that we had only had a handful of applicants in the previous seven days, we instituted a $ 300 signing bonus for a number of our sites.”
“What I told our team was: for now it’s not about sales and profits, it’s about keeping our managers and key people until the autumn. If we find ourselves in September without some of our great team members, then we will have real problems. “
So why is staffing so difficult? This operator mentioned a few factors: anxiety over COVID – which is legitimate, as many people refuse to work in restaurants as long as the coronavirus is an issue – childcare issues and opportunities in other better paid industries.
“Construction labor without skills costs $ 18 an hour here,” the operator said. “Then we have the government which does not help companies in their actions.”
Concerns about the impact of excessive unemployment benefits and stimulus measures on employment are common among operators, most of whom blame payments for lack of manpower. “Long-term unemployment where team members earn $ 15.50 an hour to stay home and watch Netflix or play video games.”
The operator noted that stimulus checks and child care tax credits also hurt the workforce, and said the credit should be based on need and repealed excess benefits. But “even if they did that, we would still have a hell of a lot of staffing time right now. Let the markets dictate and government shouldn’t be a major factor in this equation. “
We believe there are other factors at play as well, including the lack of working teens, in part due to COVID.
But it is also the subject of a sharp increase in demand and the need for labor. Restaurants created more than 600,000 jobs in December. It accounted for 70% of all job growth in April, the second highest on record for a single industry after… December, according to Maloni.
The economy needs to fix all of this, and it probably will in the next few months. In the meantime, just keep the right employees.