Labor shortages have been an issue in the restaurant industry since the late 2010s, which was only further exacerbated by the industry shutdown during the pandemic years of 2020 to 2022. The good news is that in August 2024, overall restaurant employment reached or surpassed pre-pandemic levels. However, those gains were not equally shared across the industry, as full service restaurants (FSRs) are still struggling to fill open positions. This article explores critical data behind the restaurant staffing shortage, its impact on daily operations, and some practical strategies for attracting and retaining staff.
Key Takeaways:
- Automation is increasingly filling in for employee shortages.
- Service sector job growth will continue in 2025.
- Learning how to help workers navigate the Immigrant visa process could help resolve some staffing problems.
Current State of Restaurant Workers
Statistics show that in September 2024 alone, almost 70k jobs were added to the restaurant industry; however, the demand for more workers is not being met. Service work continues to be one of the hardest sector jobs to fill. The good news is that people aren’t quitting as much as they did from 2020 to 2022.
Bars and Quick Service Restaurants Have Bounced Back
As of September 2024, bar staff were 7% higher than in early 2020. Limited-service establishments that do not serve alcohol (like ice cream shops and snack bars) have increased their employment by 17% above pre-pandemic levels.
Full Service Restaurants are Still Struggling for Staff
According to National Restaurant Association research, full service restaurants lost more jobs during the pandemic than limited service restaurants. Full service restaurants are still experiencing staffing levels 4% lower than pre-pandemic levels.
Full service restaurants were less well-equipped to pivot to off-premise service when pandemic-related shutdowns began. These restaurant types have the most ground to cover, but they also have the most flexible business models. So, while change has been slow to come to FSRs, many are making the shift now.
When asked about hiring and retaining restaurant staff, Hudson Riehle, Senior Vice President of the National Restaurant Association, said, “It is better than it was two years ago, but [labor] is still the No. 1 ranked priority for operators.”
The good news is that the food and beverage industry is on track to grow in 2025. Food and beverage data company Datassential projects 1% industry growth in 2025, with restaurant spending expected to reach $921.7 billion (up $26.6 billion from 2024). This spending will continue to strengthen the job market.
Impact of Understaffing
Labor shortages affect everyone involved; they lead to understaffed restaurants, which leads to frazzled, tired employees. When restaurants are short-staffed staffed, it can have detrimental effects on your business, such as:
- Employee burnout: Overworked staff leads to higher employee walk out and call outs, creating a snowball effect for your staffing problems.
- Poor customer service: Short staffing leads to longer wait times in your dining room, whether it’s slow drink delivery and order taking or longer ticket times at the window. Slow service leads to less table turnover leading to fewer sales for your business and unhappy guest reviews online.
- Reduced hours: Some restaurants have been forced to open late or close early because of short staffing issues, turning away sales and customers in the process.
Historical View of Restaurant Labor Shortage
The pandemic years of 2020 to 2022 rocked the restaurant world. Lockdown orders led thousands of restaurants to lay off employees in waves. Many of these unemployed workers left the industry entirely, taking years’ worth of expertise with them.
Between October 2021 and March 2022, the hospitality industry posted half a million open positions every month. A few years on, the industry has recovered, with 300,000 new jobs opening in 2023 and another 200,000 projected to open in 2024.
Factors Affecting the Restaurant Labor Shortage
After reassessing their lives, a lot of workers decided to move into other industries. Restaurants are fast-paced and can be taxing on employees. There are a number of factors that made large numbers of restaurant employees seek out other work.
- Worker expectations: Workers are often looking for more benefits like 401K, life, and health insurance that independent restaurants struggle to provide. According to Pew Research, 51% of workers say employer-sponsored health insurance is important to them. As of March 2024, 72% of private sector workers in the US had these benefits (US Bureau of Labor Statistics), but according to benefits analytics firm Mployer, only 35% of US restaurants offer health insurance.
- Flexibility: Work-from-home positions became incredibly popular during the pandemic, and a number of positions opened up, giving employees more flexibility and time with family. The gig economy is also popular, offering people work anytime they want, delivering food or rides for tips on top of delivery fees.
- Industry burnout: Restaurants can be physically and mentally taxing. Long hours on your feet can end in injury or exhaustion. Working late nights and weekends takes a toll on families and relationships.
- Competition for talent: Other industries were open to new employees, and a large number of people changed careers or retired from their old positions.
- Worker experience: Experienced employees are hard to come by now, as so many have jumped to other industries and career fields.
- Rising costs: The rising cost of living has affected everyone. Many workers are leaving tipped positions for jobs with more steady incomes.
- Shifting customer preferences: Thousands of customers have changed their dining habits since the pandemic. Quick service dining and delivery meals have increased in popularity, causing a shift in the types of workers restaurants need.
Tips for Navigating the Restaurant Labor Shortage
Retaining staff members takes a little imagination; restaurants are giving more benefits than ever before to attract and maintain quality staff members. It may cost more upfront, but it’ll benefit you and your business in the long run if you don’t have to shorten hours or spend your time hiring and training large amounts of staff to make up for a high turnover rate.
I once took a job solely because the owner took the entire wait staff on an all-expenses-paid wine-tasting weekend out of state.
- Higher pay: If you can swing a pay increase, it will help you retain your current workforce. Higher hourly rates also attract qualified career candidates who are more likely to stay for the long run.
- Employee referral program: Give your staff a small bonus if someone they recommend for an open position makes it through the training period and a set number of days after.
- Set schedules: If you can guarantee a set weekly schedule, you’ll likely be able to beat out the competition for good staff members.
- Perks: Free staff meals during shifts and honoring ten-minute breaks go a long way to ensure employee mental health and happiness.
- Visa assistance: Restaurant owners can work with the State Department to sponsor employees from other countries. These workers have moved for work and tend to have a lot invested. Many are highly skilled and willing to stay for the long run if granted a visa in the United States.
- Automate: An online reservation system will reduce the need to answer phone calls. QR codes, self-service kiosks, and online ordering can reduce the number of servers you need at any given time.
Restaurant Labor Shortage Frequently Asked Questions (FAQs)
These are the most common questions we get about restaurant labor shortages and understaffing:
Last Bite
Restaurants lost a lot of workers between 2020 and 2022. While full service restaurants are still posting many open positions, the restaurant labor shortage is currently less dramatic than in 2023. If you are struggling to staff your restaurant, offering set schedules, higher base hourly wages, or even health benefits can help you attract and retain staff.
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