The restaurant labor shortage has emerged as a critical challenge for the industry, fundamentally altering operational dynamics and profitability for restaurant operators across the nation. Though pre-pandemic hiring was often difficult due to the physically demanding nature of the job, the pandemic and subsequent inflation have exacerbated the situation, leaving many businesses scrambling to fill positions. An imbalance in the labor market, characterized by a surplus of job openings and a deficit of available workers, has created unprecedented strain throughout the industry.
The ability to adapt and innovate recruitment and retention strategies is not just beneficial — it’s essential for your restaurant business to survive. Being short-staffed impacts not only the efficiency and service quality of your business but the inability to meet customer demand may negatively impact your ability to scale and embrace new opportunities in a competitive market. Restaurant owners need to understand the underlying causes, immediate impacts, and potential solutions to navigate the new normal and thrive in it.
Understanding the Labor Shortage
The reduced capacity of the restaurant workforce is rooted in recent disruptions and longstanding challenges within the industry.
Issues like long hours, low pay, and a lack of benefits have historically driven high turnover rates in the hospitality industry. Restaurant jobs often involve working late nights and weekends under stressful conditions, with compensation that does not always reflect the intensity of the work. The absence of health insurance, paid time off, or not automatically adding gratuity to the bill leads many to search for better opportunities and more stable environments.
As the pandemic shuttered businesses and reduced operations, many restaurant workers were left without jobs, prompting them to reconsider their career path. The U.S. Census Bureau estimates that in 2019 8.4% of restaurant workers found jobs and administrative and support services, with another 6.9% making the move in 2021.
Current Impact on the Industry
The restaurant industry continues to struggle with staffing. As of December 2024, the Bureau of Labor Statistics (BLS) reported there were approximately 10,092 open jobs in the leisure and hospital industry, but the industry only hired 942,000 new employees, down from nearly 10,068 in December 2023.
The median hourly wage for waiters and waitresses was $15.36 an hour for waiters and waitresses as of May 2023 (the last year of available data). This wage includes tips; however, the median hourly wage across all professions was $23.11, making it significantly more difficult for restaurants to attract talent.
What’s more, state regulations dictate what tipped employees like waiters and waitresses must be paid. For example, in California, the minimum cash wage for employees is $16.50 per hour. Oregon’s minimum cash wage varies depending on where the restaurant is. Statewide, the minimum is $14.70 an hour, but in the Portland metro area, it’s $15.95 an hour.
Beyond financial strains, staffing shortages impact service and customer experience. Customers face longer wait times, inconsistent food quality, and limited options, which can deter repeat business.
How Restaurant Owners Can Adapt
Staying flexible and proactive can help restaurants thrive and adapt to the changing labor market. Embracing new technologies to streamline operations and creating a supportive culture can go a long way toward filling staffing gaps.
Technological Solutions to Mitigate Staffing Issues
The integration of technology in the restaurant industry can address the challenges posed by staffing shortages. Some examples include:
- QR codes and touchless technology. QR codes provide a contactless alternative to traditional menus and payment processes, reducing the need for direct staff-customer interaction, enabling a more efficient service flow, and potentially reducing the number of staff required.
- Kiosk ordering systems. Customers place their orders through a digital interface, reducing the need for waiter interactions and minimizing ordering errors.
- Mobile pay options. Mobile payment options speed the checkout process, reducing the time customers spend waiting for their bills, leading to faster table turnover during peak dining times.
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Strategies for Employee Retention and Recruitment
To combat staffing shortages, effective recruitment and retention strategies are essential. While some of these strategies may be expensive upfront, they will likely pay off in the long run.
Increase Wages
The restaurant industry isn’t known for its high base pay, but it is known for the potential to earn a lot through tips. However, post-pandemic tipping fatigue has decreased the amount people are willing to tip, and with rising inflation hitting everyone, fewer people are eating out or buying less. These factors make it likely your staff’s potential earnings decrease.
To retain existing staff and fill current job openings, consider increasing wages across the board. Eliminating tipping in favor of a guaranteed hourly wage that’s higher than average is one option. Or consider adding a mandatory gratuity to every bill regardless of party size.
Offer Benefits
Another major issue with restaurant jobs is the lack of benefits. Health insurance and paid time off are highly valued and sought after by employees, allowing them to find work-life balance and take care of themselves in a demanding industry. Offering one or both benefits will go a long way toward filling open roles and retaining existing staff.
Creating a Positive Workplace Culture
Fostering a workplace culture that values openness and respect will assure staff that they are welcome and you value and respect them. Morale boosters, like employee recognition programs, can improve employee engagement, as do clear career advancement opportunities for staff who want to remain in the restaurant industry.
Labor Shortages Are Solvable, Let Us Help
Addressing the restaurant labor shortage takes a multifaceted approach. Competitive wages, enhancing employee benefits, and fostering a positive workplace culture are essential, while adopting new technologies can streamline operations and alleviate staffing shortages.
For restaurant operators facing these challenges, partnering with Kezner Consulting Group can provide valuable expertise and tailored solutions. We are committed to helping you rethink your staffing strategies and implement innovative solutions, ensuring your restaurant business thrives in a competitive market. Contact us today for your free consultation.
