Staffing
Why no workers? Answering a prickly QSR question
At least one organization is reporting 76% of the many current and former restaurant workers leaving the industry said they are doing so because they're not making enough money. But is that really the cause for the current quick-service employee exodus? In the first of a two-part report industry leaders give their take.
May 11, 2021 by S.A. Whitehead — Food Editor, Net World Media Group
Editor's Note: This is the first of a two-part report on the shortage of workers in the quick-service sector.
In North Carolina, a temporarily shuttered Hardee's attributes its closing to "NO STAFF."
Next, a Monroe, Michigan Papa John's franchisee permanently closes her family's store, again citing the lack of willing and able employees.
And in the midst of it all, a QSRweb poll shows that more than 31% of restaurant company leaders have closed stores due to lack of employees, while nearly half of respondents relayed they have been mulling a similar move at one or more of their stores.
In other words, the restaurant industry — particularly the quick-service sector — definitely has a problem that threatens to do some real harm to businesses' bottom lines. And no, not even a vaccine will remedy this conundrum, but some kind of answers are definitely needed and in short order.
Data depicts dire situation developing
Lest you doubt the severity of the current situation, you need look no further than the seemingly ever-flowing spring of statistics about the state of the current labor shortage for reassurance that this is a very real thing. Some of these "read-em-and-weep" statistics include:
- 30% of restaurant workers are actively switching out of the industry according to a recent survey by employment platform Joblist.
- Interest in restaurant jobs has fallen 40% since last June (Joblist survey).
- 76% of the restaurant industry workers blame poor pay as their reason for leaving restaurant jobs, according to "raise the minimum wage" organization, One Fair Wage.
- 40% of restaurant companies reported difficulty finding cooks, counter personnel and other workers (One Fair Wage).
- Currently the staffing deficit for foodservice stands at 3.4 million positions, and growing, according to restaurant industry hiring app, Landed.
The cause: Depends on who you ask
At this point, one of the problems with developing a solid, industry-wide response to the labor shortfall might be that the consensus opinion about the cause of the problem appears to be relatively evenly split down the middle. For instance, many leaders interviewed said they believe the root causes of the shortage of able and willing restaurant workers is a direct result of the increased benefits offered by federal and state governments to restaurant workers in the wake of the disruptions caused by the pandemic.
"The current recession was led by a health shock and for many workers making starvation wages without proper benefits, all while putting your health on the line to ensure the restaurant (chain) success isn't worth it. Not to mention the cyclical nature of laying off and rehiring staff when it was convenient for the employers' balance sheet."
-&pizza CEO Michael Lastoria
This is the argument, for instance, that Rep. David Rouzer (R-N.C.), made in a Twitter post earlier this month, where he posted that aforementioned "Closed due to NO STAFF" photo from a Hardee's outlet in the state. The post and ensuing Twitter-based debate really encapsulated both the division around this whole issue, as well as the very raw emotions involved in it. Many responding restaurant workers made it clear that government benefits had little to do with their industry exodus, rather they blamed the problem on inadequate wages.
This is what happens when companies pay crap wages, and people are still worried for their health because businesses and states open too fast too soon exposing them to risks of covid.
— lawhawk #maskingforafriend (@lawhawk) April 30, 2021
Restaurant workers are among hardest hit group by covid. Not that you care.
No, this is what happens when there is a strong job market and employers are forced to compete for workers. Who the hell would agree to work in an environment where there is daily abuse and exposure to COVID, all for minimum wage?
— 🌊🇺🇸The Masked Carrie Sweet🇺🇸🌊 (@CarrieSweet2017) April 30, 2021
Indeed, there is some data to back up those assertions. Employment listing and search site Joblist, and CEO Kevin Harrington, said a recent survey the company conducted found some truth to the idea that restaurant workers are actually leaving because they believe there are better wages to be made elsewhere. However, he said it's also true that pandemic might have provided a sort of exit-strategy opportunity for restaurant workers, as well.
"On a wide scale, the pandemic created an opportunity for workers — especially in restaurant, bar and other customer-facing roles — to find new jobs outside of the industry," Harrington said in an interview with QSRweb. "Even as those businesses and job opportunities have come back, many of the workers have already moved on. They have switched industries altogether, already found jobs with new companies, or transitioned to remote or freelance work.
"Although the true extent of the labor shortage in these specific industries is not yet known, it's clear from job seeker behavior that some percentage of that workforce has moved on. It's unlikely that these people will come back to their old jobs or get replaced by new workers overnight."
"The magnitude of the problem is huge. It's no secret that at a typical restaurant holding group, there are two to three HR professionals who have to support 300-plus locations. Even against a normal economic backdrop, they don't have the bandwidth to keep track of every location every day. As for the general managers, hiring is perhaps 2% of their job. They were already stretched extremely thin trying to keep up with turnover. Add in a hiring crunch of the magnitude the industry is experiencing today, and the need for scalable hiring solutions becomes crystal clear."
-Landed CEO Vivian Wang
And underestimating the potential of this issue to do some real damage to even the healthiest brands, is a risk that brands can't afford to take right now since those who aren't actively addressing the issue might just be setting themselves up for a powerful fail. At hourly worker employment app, Landed, founder and CEO Vivian Wang emphasized that all of these current signs of a lack of willing restaurant workers should be lighting a fire under brand leadership to think and move to change their internal framework to address the issues.
"The magnitude of the problem is huge.," Wang said in a recent interview with QSRweb. "It's no secret that at a typical restaurant holding group, there are two to three HR professionals who have to support 300-plus locations. Even against a normal economic backdrop, they don't have the bandwidth to keep track of every location every day. As for the general managers, hiring is perhaps 2% of their job. They were already stretched extremely thin trying to keep up with turnover. Add in a hiring crunch of the magnitude the industry is experiencing today, and the need for scalable hiring solutions becomes crystal clear.
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| Is pay the central issue to the current labor shortfall? (iStock) |
"By putting in automated and repeatable processes to get quality candidates for the front- and back-of-the-house, you not only eliminate ad hoc, hit-or-miss recruiting strategies, you also make sure you're not caught out when the labor market turns tight."
But as we said, when it comes to purported causative factors for all these labor pains industrywide, there's a healthy share of the opinion that believes America has brought this restaurant labor problem on itself through making government pandemic relief benefits too plentiful and accessible, as Rep. Rouzer, for one, pointed out.
In that belief, he has plenty of company, including restaurant brokerage We Sell Restaurants and its CEO Robin Gagnon. In her view unless this issue is adequately addressed, the problem will continue, just as federal enhanced unemployment benefits do — through Sept. 6 of this year.
"The main issue is the federal enhanced unemployment benefit. …" Gagnon said in an interview with QSRweb. "While well-intended, this is having a tremendous impact on the industry since restaurant workers literally make more money staying home than taking a job. Federal unemployment benefits are an additional $300 per week on top of the state benefit amount. …
"The overall solution however is to remove the incentive to make more money staying home than going to work. The government intervention has artificially inflated unemployment benefits and inadvertently created this crisis. As the current legislation stands, it will not rectify until September 6 of this year when benefits normalize."
Lest it seem like the forces in this argument are dividing solely around restaurant owner versus restaurant employee, it's worth pointing out that at least one of those on the corporate leadership side of the argument is siding solidly with the argument that "restaurant workers are just not making enough for the work involved." In fact, as &Pizza CEO Michael Lastoria sees it the problem will remain until the restaurant industry as a whole takes some substantial notice.
"Many workers that left the labor force during the pandemic 'could' return, meeting the strong labor demand," Lastoria told QSRweb. "However, a mismatch in compensation and risk/reward will lead to shortages and force wage growth. The current recession was led by a health shock and for many workers making starvation wages without proper benefits, all while putting your health on the line to ensure the restaurant (chain) success isn't worth it. Not to mention the cyclical nature of laying off and rehiring staff when it was convenient for the employers' balance sheet."
Indeed, a recent report from the University of California Berkeley Food Labor Research Center and the non-profit group One Fair Wage found evidence that low wages could indeed be the main cause behind the current shortage. In fact, the report said it's not the number of workers that is insufficient, rather they said 78% of the respondents they talked about the issue with who work in the restaurant industry simply said that they would stay in their jobs if they could be assured of a "full, stable, liveable wage."
"The restaurant industry doesn't have a worker shortage — it has a wage shortage," said One Fair Wage President Saru Jayaraman in a release about the findings. "Tens of thousands of restaurant workers do not want to go back to work to earn poverty wages putting their lives on the line. Now is the time to change that."
In the next part of this series on Tuesday, May 18, we'll look at what some suggest as answers to the problem, including the feasibility of higher restaurant worker wages.
About S.A. Whitehead
Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.
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