Welcome to Editors’ Roundtable, a not-so-regular feature in which Restaurant Business Editor-in-Chief Jonathan Maze comes down from the mountaintop and annoys his fellow editors with inane questions. In this edition, he is bothering Editor-at-Large Peter Romeo about labor.
Jonathan: OK Peter so literally everybody and their brother is complaining about labor. We have restaurants that are shortening hours, closing for entire days or closing, period. There are social media reports of signs on drive-thru menu boards proclaiming that the staff quit because of a lack of staff. Restaurants are giving out bonuses just for people to interview.
What’s going on here? Why is labor such a problem right now, even though people are getting vaccinated and COVID-19 infections are dropping like a brick?
Peter: Labor has been an issue for the industry since at least the 1980s, but the situation has never been as bad as the present. That’s because the restaurant business is talking itself into believing this is just one more rough patch that they’ll weather just as they have in the past. And that’s not the case.
This is much more of a shift in attitudes than a simple matter of supply and demand. Job candidates abound. Look at unemployment levels—6.1%. Usually in an environment like that, restaurants have an easier time of finding people who need a paycheck. But potential hires don’t want anything to do with restaurants, in part because the industry has not kept up with the wages offered by the likes of Amazon, Target or a host of other employers.
Then there are the non-wage issues. Right now, people might prefer working in a coal mine to getting a restaurant job. The industry’s bad reputation as a place to work—actually, it’s disregard of that reputation—is coming home to roost.
The business is blaming sweetened unemployment benefits as restaurants’ core problem. That extra $300 a week appears to be a factor—but not as big a one as the industry contends. It needs to snap out of the mindset that the American restaurant model doesn’t work unless labor costs are kept at entry levels. It needs to figure out a new model where employees can feel like they’re not one step ahead of a bill collector or in a dead-end situation. And right now, the industry isn’t even acknowledging the challenge.
Jonathan: I believe more operators understand that particular challenge. There are some founders out there that have become increasingly activist on the labor issue—notably &pizza cofounder Michael Lastoria—and many chains that have led with a better labor force.
Many operators I talk with know pay needs to come up and appear to be more comfortable with the idea of bumping prices to pay for it. The minimum wage issue just doesn’t get the vitriolic response it once did. They all see where labor costs are going.
That said, as your survey recently showed, most operators really do blame unemployment benefits for their predicament and it’s hard not to draw a direct line between those benefits and the lack of workers. But they’re going to be in for a surprise when September rolls around and people aren’t lining up for their jobs.
It’s easy to forget that the industry let go of more than half of its workers last March when dining rooms were shut down, and in the months since we’ve been in a pandemic in which hundreds of thousands of Americans died and many others were hit with awful illnesses. The industry probably lost a lot of workers when the pandemic hit, and people were always going to be slow to return until they’re sure it’s truly safe.
Beyond that, I’ve long thought that this industry needed a better model, where working in a restaurant is considered more of a profession. The fast-food business has long thought of its workers as almost temporary. But when you treat workers as transitory you get workers who consider your job transitory.
What about casual dining Peter? Do you see the current issue as changing the environment for tipped workers?
Peter: As problematic as industry pay norms are proving, they’re nothing compared with the recruitment challenges posed by tipping. Unlike what we hear non-stop from the unions, servers and bartenders aren’t the ones complaining about tipping as a compensation model. They love that system because it can be unbelievably lucrative, albeit a physically demanding way of making a living. But the living can be good.
The problem is no one wants to work in the back of house if they can earn two or three times as much as a server or a bartender, if they’re lucky enough to snag a job behind the bar. All kinds of programs have been attempted to channel at least a portion of tips to the kitchen staff, but they all crash and burn. Part of that is the result of byzantine government requirements that are as outmoded as Victrolas, and part of it is the problem of currently tipped individuals not wanting to share their wealth.
Some of the best operators in the business have given alternative models a try—service charges, Hospitality Included fees worked into prices, straight tip sharing. And yet getting kitchen workers is about as easy as lining up a bike ride with the Pope.
There is a solution, but it will change the American industry in an nearly unimaginable way: Pay everyone a salary. Right now, the numbers will only work if menu prices soar to sticker-shock levels. In the meantime, the full-service sector is going to intensify its focus on eliminating the human component of service, and that’s a dangerous quest. I will not listen to a robot say, “Hi, my name is Sprockets and I’ll be your server today.”
Jonathan: I don’t know that I have a problem with paying a higher rate for my casual dining meal if I don’t have to feel pressured to tip 20%. But that’s me.
On the other hand, I would also be OK with a system that I knew was sending tips to the back-of-house. And I think that if those employees were given credit for their good work the way that wait staff do, then that would be fine. But it would seem to be easier if full-service restaurants simply ditched tips and paid workers and raised prices. Customers have been slow to adapt to that.
At the end of the day, however, it’s clear that something about the way restaurants pay their workers has to change—no matter what kind of service the restaurant provides.