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Since early 2020, the COVID-19 pandemic has wrought havoc on the food and beverage industry. In addition to shutdowns of restaurants and bars as well as significant changes in how operations are run, the extensive unemployment insurance that has been offered by state and federal governments has kept workers away from lower-paying jobs in foodservice. This was an unexpected challenge for many in the recovering industry as restrictions are loosened and our world returns to normalcy.
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By the end of April 2021, job openings levels rose to 9.3 million. The food and beverage industry alone made up the biggest part of that increase, adding 350,000 jobs in a single month to bring the total worker shortage in the industry to 1.3 million positions. These shortages have been difficult to fill, with teenagers being offered high wages to come in and work these positions. With school returning, however, these shortages will almost certainly return. How will the industry face these changes? We can first look to several businesses in the industry which have already begun adapting with some clever solutions.
How did the labor shortage happen?
Let's start by taking a look at where the labor shortage came from. Though there were a few stimulus checks that came through, many individuals lost their jobs as a result of the shutdowns throughout the pandemic. Between filing for some of the pandemic unemployment packages that have been made available, taking on new educational opportunities to get into a new career path, or shifting into other fields such as grocery delivery, personal shopping, and similar service industry positions that have drastically increased in popularity, people coming back to the foodservice industry has decreased significantly.
These shortages are making it very difficult for some stores, restaurants, and similar establishments to fully return to normal operations. It also creates a significant negative impact on those who are being saddled with extra hours and responsibilities to make the operation run smoothly. This stress can impact the number of people who were able to remain in the industry through the worst parts of the pandemic, driving them out of the industry and worsening the labor shortage problem.
The industry responds.
Combined with increasing inflation, many workers are looking for more money to return to work; the shrinking labor supply has caused a lot of businesses to get creative to bring their employees back while enticing new entrants to the industry into the labor market. Below are a few examples of how some businesses are adapting to the limited labor pool currently available to the industry.
- Taco Bell began holding hiring parties which included job fairs and on-the-spot interview opportunities. Additional paid time off has been offered for employees to be able to take vacations and for those bonding with new babies while providing new short-term disability benefits to its employees.
- Whataburger has decided to improve employee retention by raising general manager salaries to a six-figure level, making them much more likely to remain in service while retaining a pool of knowledge about the business' operations. An increased bonus pool is also available to other employees.
- Chipotle has chosen to maximize its college student employee workforce by providing a range of debt-free college degree benefits, specifically for student employees who are pursuing degrees in agriculture, the culinary arts, or hospitality.
- Numerous other companies have offered a wide range of other benefits. These include bonuses for interviewing or signing on to help increase the talent pool and wellness benefits to support and retain existing employees. Other companies have increased wages, while yet others have offered instant daily pay rather than waiting for a paycheck.
Many of the above options were made possible through loans and grants as part of the Restaurant Revitalization Fund (RRF)--a subset of industry funding included in the American Rescue Plan Act. Eligible bars, restaurants, and other service companies were eligible for up to $10 million (limited to $5 million per location) for use against qualifying expenses through March 2023.
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Though these changes are being implemented across a wide range of businesses in the industry, time will tell whether these changes will have a long-term or even permanent effect on not only the current labor shortage problems but also the industry as a whole, one that has been fraught with labor issues for many years. However, when implementing these types of changes, make sure that the business' overall finances are set up in a way that helps ensure continued financial success.
If you're considering ways to retain and attract employees for your foodservice business, our team of professionals can help. With industry-specific knowledge and expertise, we can help you navigate the maze of government requirements, new programs like the RRF, and a range of similar opportunities to set your business up for success.