More than three years after COVID-19 erupted around the globe, fortunately the disease is receding.
But the upheaval the pandemic caused persists.
More than half of Americans in a recent Gallup Poll said their lives are not yet back to “normal.” You can count many restaurant operators among them.
Despite the gradual recovery from the pandemic, the restaurant and quick-service restaurant industry continues to struggle with a diminished workforce, significantly hindering the ability of operators to grow and expand their businesses.
As of July, restaurants were 64,000 jobs, or 0.5 percent, below their February 2020 employment peak, according to the National Restaurant Association. On average between April and July, the industry added fewer than 11,000 jobs each month. That was down from an average monthly gain of 53,000 jobs during the first quarter of the year.
So, what is behind the industry’s persistent labor shortage?
Three key factors:
1. Aging population: A chief contributor to the labor shortage is America’s aging population.
For the first time in modern U.S. history, the workforce is shrinking—there are more people leaving the labor pool than there are workers entering it—marked in large part by baby boomer retirements. The pandemic accelerated this long-term trend.
And the outlook isn’t exactly promising.
Svenja Gudell, chief economist at Indeed, emphasizes that countries like the United States will continue to face worker shortages due to aging populations and other demographic shifts. Gudell says that without sustained immigration or efforts to attract workers from the sidelines of the labor force, the industry will struggle to meet long-term demand.
2. Child care costs: Another significant obstacle for potential employees, particularly parents of young children, is the rising cost of child care.
With the average cost of care at $13.85 per hour, many parents find it financially challenging to accept entry-level positions. As a result, the labor pool available to restaurants and QSR operators has become smaller, making it increasingly difficult to find qualified workers.
The scarcity of affordable, high-quality child care was already a significant issue prior to the pandemic. COVID compelled many providers to shut down or reduce their services.
A report from the U.S. Chamber of Commerce Foundation and The Education Trust says the pandemic has set a detrimental cycle in motion for the child care industry: to make a comeback to work, workers need consistent child care, but the providers themselves are grappling with enormous obstacles, including their own labor shortage.
3. COVID-19 and attrition: The closure of restaurants during the pandemic resulted in many workers seeking alternative employment opportunities. As the industry faced uncertainty, some workers transitioned to more stable sectors or pursued different career paths.
Consequently, the labor pool shrunk further, exacerbating the existing worker shortage.
Of those who did return to the restaurant industry as the pandemic eased, some left again due to lingering challenges like staff shortages, reduced hours and lower tips.
The repercussions of the persistent labor shortage for restaurant and quick-service operators are far-reaching.
A survey by the National Restaurant Association revealed that 62 percent of operators reported not having enough employees to meet customer demand. Both full-service restaurants (63 percent) and limited-service places (61 percent) are operating with fewer employees than required to accommodate guests effectively.
Moreover, sourcing and retaining qualified staff emerged as the No. 1 challenge for owners. The average cost of replacing a single frontline restaurant employee, as estimated by the Center for Hospitality Research at Cornell University, is $5,864. This cost encompasses expenses such as recruiting (20 percent), training and orientation (14 percent) and productivity loss (52 percent).
Paths to success
In such a difficult hiring and employee retention environment, restaurant operators who build a full workforce enjoy a competitive advantage and a rare opportunity to increase market share simply by being open and available.
Many successful operators use a combination of tools, such as offering paid time off and health insurance, providing mentorship opportunities, creating clear promotional paths to management careers, and incorporating a diversity, equity and inclusion program.
Also, companies are looking abroad for help. They utilize immigration programs such as the H2-B and J-1 visa programs to bring in temporary workers, and the EB-3 green card, which allows employers to sponsor workers for permanent positions.
By addressing these challenges, the restaurant industry can create a sustainable and thriving workforce, enabling growth and prosperity for all stakeholders.
John Dorer is CEO of eb3.work, a company that provides employer-sponsored green card solutions for U.S. companies and foreign national workers seeking to work legally in the United States. Headquartered in New York, N.Y., the company is staffed with immigration attorneys and recruiters and works with employers in multi-unit restaurant franchise groups, restaurant groups and hospitality industry.