You can’t step into a restaurant in America without feeling the effects of the post-pandemic labor shortage. Restaurant workers are at the end of their rope, guests continue to wait (and wait…) in dining rooms, and restaurant owners and operators continue to lose revenue because they can’t staff adequately to meet demand.
Even with all the challenges in the labor market, there’s cause for optimism. The National Restaurant Association (NRA) predicts the food service industry will reach $997B in sales in 2023. As for the labor market, the food service industry workforce is expected to swell to 15.5M workers by the end of the year, surpassing pre-pandemic levels.
Restaurant owners who use this time to innovate and transform their operations will be perfectly poised to win the labor war and seize the opportunities ahead. However, before we dive into what you can do to combat the current labor challenges, it’s critical to take stock of the situation and understand what got us here in the first place.
Why are restaurants dealing with service worker shortages?
In the wake of the pandemic, Americans who had been stuck at home were eager to get out of the house and back into restaurants. Their demand for delicious food and a good time only continues to increase.
Meanwhile, restaurant employees have been slower to come back to work. Many who lost their restaurant jobs when dining rooms closed decided to leave the industry for good. There are many reasons why restaurants are understaffed. Here are a few of the biggest:
- Low wages
- Unpredictable schedules
- Poor communication
- Difficult customers
- High turnover
Restaurant labor shortage statistics
Let’s look at the state of the restaurant labor market by the numbers. From just how short-staffed restaurants are to why restaurant employees keep quitting to the labor shortage’s impact on restaurants, we’ve compiled the latest restaurant industry data in one place.
The numbers: State of the restaurant labor market
The numbers: why restaurant workers are quitting
The numbers: impact of the labor shortage on restaurant owners
How does the labor shortage impact your restaurant?
Longer wait times for food or delivery
With fewer workers in the kitchen and on the floor, customers are left waiting and hungry. The negative customer experiences create a ripple effect, from lower tips to an uptick in negative customer reviews. Those bad reviews will leave a restaurant owner with more than egg on their face. If your restaurant’s reviews dip to three stars or lower, you stand to lose one-third of your potential customers.
Dirty facilities
When your team is short-staffed, all the focus is on food preparation and serving guests as quickly and efficiently as possible. That means the less glamorous duties can fall by the wayside. Unfortunately, there’s nothing like a dirty bathroom to ruin a guest’s appetite. You certainly don’t want them judging the cleanliness of your kitchen by what they might see on a quick trip to the facilities.
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Overworked employees
Fewer employees on the roster means more work for existing employees. Often that results in workers taking on duties that would typically be left for others—something that can be especially problematic for tipped workers. 90% of food service employees said they worked overtime, double shifts, or extra shifts in 2022, and three-quarters did so because of a staff shortage. All of that overwork only leads to one thing: burnout. And that quickly leads to more workers throwing in the towel.
Negative impact on revenue
Long wait times, stressed staff, overloaded kitchens. It doesn’t matter if you’re running a fast-food franchise or a fine-dining restaurant, it all adds up to a real financial cost for restaurant owners and operators. Fourth data shows restaurants typically lose 10–25% of gross revenue per store when they cannot staff adequately against demand. In a highly competitive market, that difference in revenue can make or break your business.
Ways to solve labor shortage challenges
Given what’s at stake, it’s more important than ever to empower general managers to hire faster, onboard smarter, and keep their staff happy. Sadly, there isn’t a magic button we can push to make staffing woes disappear. However, there are things you can do to position your restaurant to overcome staff shortages and create the kind of work environment that attracts the best talent and makes them want to stay for the long haul.
Improve compensation models
Pay isn’t the only thing that matters to restaurant workers, but it’s undeniably one of the most significant pieces of the equation. Nearly half of workers said pay was the most important factor in their job satisfaction. Higher wages and better benefits are also the driving forces behind the rising trend of unionization within the restaurant industry.
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Improve communication
New restaurant employees are 5X more likely to quit within the first 90 days when there’s poor communication with management. General managers can overcome so much of the dissatisfaction in the industry with better communication, whether that’s communicating schedules further in advance or simply making time to check in with employees to find out how they’re doing. The important thing is to keep the lines of communication open between employees and managers so problems can be addressed before employees walk out.
Employee referral program
Employees are happier and more productive when they’re working with people they like. One of the best ways to foster a close-knit team is to encourage employees to help you build a stellar team through referrals. You get more applicants in your pipeline while they get a little extra income and a co-worker they know and like. Everybody wins.
Supercharge your talent acquisition
You and your competitors are fighting over the same limited pool of talented workers. By streamlining and optimizing your talent acquisition process, you can bring in more applicants, hire them quickly, and onboard them smoothly. With Fourth’s mobile-first applicant tracking system designed for hourly teams, you can hire 90% faster and get much-needed talent in the kitchen and on the floor ASAP.
How to retain existing restaurant staff
A big piece of combatting the restaurant labor shortage is optimizing your talent acquisition. Yet, you’ll never overcome the pain of the labor shortage if you’re losing people left and right due to high turnover. Putting a priority on retention will lead to many benefits, not the least of which is major cost savings—Black Box Intelligence estimates the turnover cost for restaurants is $1,956 per hourly employee.
Building a loyal team takes more than just the occasional pat on the back and calling it a day. You need a holistic plan to create a work environment that makes your team feel valued and appreciated. Look at everything from compensation and benefits to predictable scheduling and growth opportunities. Be sure to look at your operations as well. Implementing the right technology can streamline processes and lift the burden of time-consuming tasks from managers, giving them more time to focus on building a winning culture.
Not sure where to start? Learn what motivates restaurant workers to put in their best effort and how restaurant owners and operators can create a workplace employees love.
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Fourth is a workforce management solution built specifically to help you regain control of the employee lifecycle by giving employees the necessary tools, insights, and support to not only get things done faster, but positively impact retention and revenue.
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Restaurant labor shortage FAQs
- Will restaurants struggle in 2023?
- Prospects look bright in 2023, according to the National Restaurant Association. Total industry employment is expected to surpass pre-pandemic levels by the end of the year. Growth will continue with the food service industry forecasted to reach $997B in sales in 2023. One of the keys to growth is retention – finding ways to motivate employees to stay and work at restaurants.
- Why is there a labor shortage in restaurants?
- Several factors have contributed to the shortage of staff in restaurants. Many restaurant employees left the industry during the pandemic. Although some workers returned, record-high turnover shows their dissatisfaction with working conditions and continues to plague owners and operators.
- Why are restaurants having a hard time finding employees?
- The food service industry has the highest quit rate of any industry, according to the U.S. Bureau of Labor Statistics. With so many options available to them, food service workers are quitting in droves to find employment—both within the industry and outside of it—that offers higher wages, more perks, and better benefits.
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