The future of the restaurant industry.
In a recent interview with The Wall Street Journal, the chief executive and chairman for Fifth Third Bancorp in Cincinnati, Ohio Greg D. Carmichael offered reasons for wanting a return to in-office work, saying, “We can’t be a great company working remotely. We can get the job done, but it’s tough to flourish.” Then he added that a big reason for bringing most of the company’s 2,500 employees back to its downtown headquarters was to support the area’s restaurants and other businesses.
Overshadowed by many stories about the exodus of urban workers are the accounts of those left behind. Those remote-working employees once supported innumerable businesses from dry cleaners and banks to bars and restaurants. Despite a rapidly improving economy, many of those service businesses are still struggling.
Perhaps no sector suffered during the pandemic more than the restaurant industry. In March, food industry research firm Datassential reported that more than one out every ten restaurants that closed their doors during the pandemic did so permanently. Since the start of the pandemic, more than eight million restaurant employees have been laid off or furloughed according to the National Restaurant Association. The ones that remained at work not only lost money, but also their lives. In California, a line cook had a better chance of dying from COVID-19 than a hospital worker. Now as businesses reopen and we approach some form of normalcy, restaurants are bleeding workers and having a hard time finding their replacements. The sector is at the leading edge of an almost inexplicable trend. Even with a relatively high unemployment rate, millions of job openings remain unfilled. How are so many having a hard time finding work? Are there solutions? And if trends continue, what does it mean for restaurants, their former employees and those of us who love to eat out?
Seismic Shift
New Year’s 2021 was a time for optimism. With vaccines being distributed, surveys suggested many couldn’t wait to eat out again while restaurant owners looked forward to a record-breaking spring and summer. Among their concerns, a survey by the National Restaurant Association showed just eight percent listed recruitment and retention of the workforce as their top challenge. By June, that worry had skyrocketed to 72%. Explaining the eight-fold increase, for the past six months the quit rate among those who work in accommodation and food services has hovered around five percent. In May, (the last month for which data is available) that number approached six percent. That’s over 700,000 restaurant workers leaving their jobs every month. This quit rate is double that of other workers ––– those who already are resigning in numbers not seen in decades.
Although some 7.5 million people quit in April and May, (double 2020’s numbers) many are having a tough time replacing their job. That’s because millions of those job openings are in the… you guessed it… accommodation and food services sector. In the past, most restaurant workers who quit did so to get a better job at another restaurant. Now, many who leave are vowing to never return. Meanwhile, younger people who often fill entry-level positions are avoiding the sector –– especially those who are living at home instead of moving into the city. Even with vaccinations, many parents are nervous about their offspring working in crowded conditions.
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Restaurants and the Future
Let’s face it, working in a restaurant isn’t for everyone. Yes, for those pursuing a creative career, it has flexible hours; for those who love connection and service, it allows that… And yet, the work is physically demanding, and servers often have to deal with customers who can be rude. Servers in some states earn just three bucks an hour, and the bulk of their income comes from often difficult diners. The back of the house is even worse –– hotter, more crowded, and often even lower paying. In fact, if you’ve ever dined at a Michelin-starred restaurant, it’s likely that part of your meal was prepared by someone who didn’t get paid at all. Nearly every top restaurant has at least one kitchen “intern,” a stagiaire who does the job solely for the experience.
Then the pandemic hit. Restaurants that remained open navigated a confusing and ever changing set of health regulations. In Southern California where I lived throughout the pandemic, some owners spent thousands to accommodate outdoor diners, only to have the practice banned completely in December. In the back of the house, cooks often tested positive for COVID while in the front servers did time as the health police –– warning defensive diners to mask up and socially distance. This did not help their tips, neither did devoting a couple hours each shift to packaging to-go orders. An understandable amount of attention has been focused on the $600 weekly unemployment bump (which was halved in December) and its role in keeping people from returning to work or looking for a new job. In a recent survey of some 5,000 people working or looking for work, career site Indeed noted that just 10% of unemployed respondents were urgently looking for a job. In states with enhanced unemployment benefits, job searches were at historic lows this spring. When some states ended the benefit, however, the spike in online searches was only temporary.
Although the numbers of those urgently seeking work may climb when enhanced benefits end completely in September, I suspect many former restaurant workers aren’t using the extra cash to binge watch and nap. They are more likely polishing resumes, networking, and landing interviews. Remember, many servers have university degrees.
Now restaurants are desperately understaffed –– maintaining perverse capacity limits even when diner desires and regulations suggest they could pack their dining rooms. Open restaurant jobs often pay $20 or more per hour, yet remain vacant.That means the dining customer service isn’t ideal, nor are the working conditions for those who stay on.
So what does the future hold?
I suspect the days of bartenders with Master’s degrees may be fading as many find footholds in long-delayed careers. Diners may be expected to foot more of the cost not just through tips but due to increased wages. Automation will accelerate –– expect to use a tablet for your order at all but the toniest of restaurants. In some cities, virtual kitchens and pop-ups are popular with cooks making meals in their homes or industrial kitchens –– some without permits or oversight. Smaller, bare-bones operations will also prevail. How long the jobless will be willing to look for the perfect job and not just “make do” depends on how long personal savings and government incentives continue.
In the meantime, if you feel safe eating out, do so soon. Be kind, be complementary and most of all, tip your server.
