Understanding the Staffing Shortage in Restaurants

As one of the industries that were most impacted by the pandemic over the past year, restaurants are now facing another major challenge to their business—a massive shortage of labor. The nationwide shutdown forced restaurant owners to lay off a large percentage of their workforce. Those establishments unable to pivot and provide takeout, curbside, or delivery were forced to close or hang on by a thread. President Biden’s American Rescue Plan Act saved some food establishments through the Restaurant Revitalization Fund (RRF). However, some aid given to unemployed servers and kitchen staff seems to have created a new problem.

The Problem

Staffers are making more money staying home collecting aid than they would by working. According to the U.S. Department of Labor, the Pandemic Unemployment Assistance (PUA) has been extended through September for workers impacted by the coronavirus pandemic. This means already flailing food establishments are scrambling to find qualified workers.

The hardest hit has been the quick-service restaurant sector. However, there are shortages throughout the entire foodservice industry. The toughest positions to fill right now are kitchen roles and servers. Federal unemployment benefits are an additional $300 per week on top of the state benefit amount.

For example, Georgia has an unemployment benefit of $365 per week or roughly $9.13 per hour based on a 40-hour workweek. Most workers will find a job that pays more than that level, providing them with an incentive to get off unemployment and into a job. With the additional enhanced unemployment, this same worker now gets $665 per week or the equivalent of $16.63 per hour, which is higher than the average wage in restaurants (now roughly $12 to $13 per hour). Florida has one of the lowest unemployment benefits in the nation, at just $275 per week, but with the federal subsidy, this more than doubles to $575 per week, which equates to $14.38 per hour.

We Sell Restaurants

The bottom line is the overall solution is to remove the incentive to make more money staying home than going to work, says Robin Gagnon.

Now, there are 22 states are saying it is time to get back to work and want to end federal unemployment benefits by June or July instead of waiting until the fall. The impetus is that with vaccine numbers increasing and the CDC easing COVID-19 restrictions, Americans are getting back out there, trying to resume a pre-pandemic lifestyle. If businesses like restaurants don’t have the labor force in place to resume business as usual, the supply-demand theory will be off-kilter again, which affects that cash register.

The Solution

So, what’s the solution? Right now, the average restaurant is between 25–40 percent understaffed. That’s not a good formula for customer service and satisfaction. But restaurants are resilient and strategic. There is great innovative thinking out there. Ideas encouraging workers to come back include increasing pay. Money talks, and no one is paying minimum wage. Savvy workers are seeing this as an opportunity to be heard and keep the increased pay as a standard. According to an ABC News report, groups are asking for a federal minimum wage increase to $15 an hour. Labor reports show that in March, the demand for workers pushed the hourly wage to just over $16 an hour.

Another option is that some restaurants are offering signing bonuses and referral payments, concepts typically used by larger corporations in order to attract workers. Some are paying a stipend of as much as $50 to simply complete an application, much less accept a job. Others are cashing employees out and paying them at the end of each shift rather than having them wait for their regularly scheduled payday. Those restaurants doing it right are also utilizing social media as essentially an electronic “help wanted” sign. They are using technology to hire and digital advertising to attract workers. The world has changed, and the pivots continue. Brands that are historically doing things as they always did, or pre-pandemic, will not survive. A single online ad or putting applications and a sign near the door will not cut it today. Restaurants are going to have to give employees a reason to join the team, raise the wage overall, and provide incentives for working with the brand.

The bottom line is the overall solution is to remove the incentive to make more money staying home than going to work. The government intervention has essentially stirred the pot by artificially inflating unemployment benefits and inadvertently creating this crisis.

Robin Gagnon is the CEO and Co-Founder of We Sell Restaurants, the nation’s largest restaurant brokerage firm and the only national franchise specializing in restaurant sales.