Restaurant Industry Loses Jobs for First Time Since January

    Food and drink places gained 1.03 million jobs in six months before seeing negative growth in August. 

    Consumer Trends | September 3, 2021 | Ben Coley
    jobs keyboard.
    Adobe Stock
    A recent survey said 19 percent of consumers have stopped going out to restaurants as the Delta variant surges.

    The restaurant industry lost 41,500 jobs in August, marking the first time it's experienced negative growth since January.

    After losing 19,400 workers to begin 2021, food and drink places gained roughly 1.03 million jobs across six months before the reversal in August. There were 11.3 million on payroll during the month, which is still 1 million shy of February 2020. 

    The news comes as the Delta variant continues to surge across the country. The seven-day moving average for cases was more than 153,000 on Wednesday, compared to 15,971 at the start of June, according to the CDC. A recent study by the National Restaurant Association showed six in 10 consumers have  changed their restaurant usage, and 37 percent said they ordered takeout or delivery instead of sitting down in a restaurant. Nineteen percent said they’ve stopped going out to restaurants and 9 percent cancelled existing plans to dine out in recent weeks.

    Erika Polmar, executive director of the Independent Restaurant Coalition, called on Congress to replenish the $28.6 billion Restaurant Revitalization Fund, which fell well short of demand. 

    "Businesses are at the end of their rope," Polmar said in a statement. "The virus is surging, summer weather is ending, and months of debt are piling up. The costs of goods are increasing, consumers aren’t as willing to eat out, and options are growing limited for the over 170,000 restaurants and bars who applied for an SBA grant and are still waiting. These small businesses need financial flexibility to recover from the past 18 months of debt they have accumulated, pay employees competitive wages, and keep their communities safe. If Congress leaves restaurants and bars behind, thousands of small businesses will close, causing economic devastation that we are only beginning to understand.”

    Meanwhile, restaurants are still struggling with lack of staff. The U.S. saw a record-breaking 10.1 million job openings on the final day of July, according to the Bureau of Labor Statistics, with accommodation and food services accounting for a large portion. In response to the paltry labor market, roughly half of states decided to end enhanced unemployment benefits prior to the September 6 expiration date, but that's proven to have little to no effect. 

    "That's what they were hoping for, but it didn't happen," Peter Ganong, an assistant public policy professor at the University of Chicago, told CNN. 

    In the past several months, restaurants—from big to small—have offered a host of bonuses, benefits, and boosted wages to attract workers. McDonald's and Chipotle both made headlines in May when the quick-service giants announced they were raising the average wage of workers. McDonald's moved up to an average of $13 per hour at its company-owned stores while Chipotle increased to an average of $15 per hour

    In late July, McDonald's CEO Chris Kempczinski offered an optimistic view of the labor market's future.

    "While it is a challenge, it's getting better," he said to analysts during an earnings call. "I don't want to declare by any means that it's easy, but we're certainly seeing some improvement. We're seeing applications have increased pretty significantly. Applications in states that have ended early, the federal stimulus, those have tended to do even better. So I do think that there's evidence that as the federal stimulus rolls off, that you'll see an improvement in the application rate."

    Several restaurants have turned to a younger workforce to fill roles. 

    One McDonald's in Oregon gained nationwide attention when it posted a huge sign reading, "Now Hiring 14 and 15-year-olds." Heather Coleman, the store's operator, told Business Insider that her family has never seen this level of staff shortages in 40 years of owning McDonald's franchises. The restaurant raised its minimum wage to $15, but didn't get much traction. However, by allowing younger workers to apply, the store saw 25 new applications in two weeks. 

    Layne's Chicken Fingers, an eight-unit chain in Texas, is implementing a similar strategy. With so much difficulty finding older, experienced workers, the chain has promoted teens and those in their early 20s to managerial roles. The brand is aggressively working on a franchising strategy that envisions 100 stores by 2025, but expansion has faced difficulties because of the labor crisis. 

    “The biggest challenge for small companies to grow right now is your labor force,” CEO Garrett Read told the Wall Street Journal. “We’d be growing at twice the rate if we had more people.”

    In July, Chipotle announced it was using “TikTok Resumes” to recruit “purpose-driven Gen Z applicants.” The brand said TikTok Resumes allows prospective employees to showcase their personalities in ways that aren’t available in traditional resumes or sit-down interviews. 

    Neeta Fogg, Paul Harrington and Ishwar Khatiwada, researchers at Drexel University’s Center for Labor Markets and Policy who annually release a forecast for the teenage summer job market, predict this year 31.5 percent of 16–to–19-year-olds will boast jobs—the best summer since 2008.