WASHINGTON (Sinclair Broadcast Group) — Restaurants and bars were among the hardest hit industries, losing nearly 6 million jobs during the early months of the COVID-19 pandemic. Now, as more people get vaccinated and states reopen their economies, the industry is poised for a comeback.
Yet restaurant owners around the country are facing a major bottleneck: finding workers.
Carlos Gazitua, the CEO of Sergio’s Restaurants and a member of the Job Creators Network, regularly sees hourlong waits to be seated in one of his Cuban restaurants in Miami. "It's not because we can't fit everyone in," he told Sinclair Broadcast Group. "We just don't have the people to sit you down."
It's a paradox in an economy that is 8.4 million jobs short of where it was before the COVID-19 pandemic and where restaurants and bars are still 1.8 million jobs in the hole. Yet it's a trend that is being seen across the country.
In January, just 7% of restaurant operators listed recruiting employees as their top challenge, according to a National Restaurant Association survey. By March, that number more than tripled to 25% of operators who say they are struggling to attract workers. At the same time, restaurant sales began to tick up, making a slow rebound after losing a staggering $240 billion last year.
"As you would expect, as sales grow and employment demand grows, operators need to recruit additional labor," said Hudson Riehle, senior vice president for research at the National Restaurant Association. "However, finding labor in this market is definitely proving to be a challenge and it is multifaceted."
When Gazitua reopened his restaurants, about a quarter of his staff decided they didn't want to come back. A small number were afraid of the risks of COVID-19, but more told him they didn't need the job because of expanded unemployment benefits.
"They're getting it through unemployment," he said. "I don't know how they're making it, though, because $600 is not a lot."
The staff shortage has meant busier schedules and long hours for the employees who stayed with the business throughout the pandemic or those who were rehired.
"We're all stressed out to the point where it's beyond belief," he explained. In recent months, Gazitua had to close two of his restaurants for dine-in service so his employees could take a few days off. "Burnout is incredible. Especially these managers, they're working seven days a week."
Florida was one the earliest states to reopen its economy and among the first to experience the wave of restaurant employee shortages that is breaking over more states as the summer travel season starts and people are more confident to return to normal life.
Across the country, restaurant owners are going to lengths to attract new workers to meet the pent-up demand. Doug Doyle, the co-owner of the Arizona-based Fired Pie pizza shops, offers wages starting at $15 per hour and bonuses to employees who refer new hires. He has more than 60 positions to fill across his 20 stores.
"Our current employees are being stretched thin," Doyle said. "Stimulus checks, extended unemployment and many of our employees leaving to work for big corporations during the pandemic has left the industry with a shortage of workers."
In the American Rescue Plan, Congress agreed to extend pandemic unemployment benefits through Sept. 6. The federal government provided an additional $300 per week to eligible individuals. The funds are added to state benefits, which vary but average $340 per week. Some members of Congress have demanded longer-term benefits and recurring payments until the end of the pandemic.
Additionally, the Biden administration waived the requirement that individuals on unemployment have to take the first job offered to them. Under the new policy, individuals can continue receiving unemployment benefits if they self-certify that they refused a job over concerns of contracting COVID-19.
According to a body of economic research, there is no direct correlation between more generous unemployment benefits disincentivizing workers from finding jobs. However, anecdotally, restaurant owners have reported being undercut by government programs that have made it more difficult to find workers.
"I’ve been in the restaurant business since 1984 and I’ve never seen a hiring shortage like this," said Joey Giannuzzi, co-owner of Farmer’s Table restaurants in Palm Beach County, Florida.
Giannuzzi said he recently received 30 applications and only one person responded to a call-back for an interview. "We anticipate having this massive issue with hiring qualified staff until September when the unemployment benefits end," he said. Until then, he had to remove seats and shrink the overall footprint of his restaurants, while asking more of his staff.
Even during good economic times, many restaurant operators struggled to recruit and retain staff, so in many ways, the problem isn't new. But the post-vaccine surge in demand creates a unique market for employees who are in a stronger position than ever to demand and receive higher wages and benefits.
"You can pretty much ask for whatever you want, right now. That's why it's great for employees to come back," said Gazitua. "But that's only going to short-term."
If the shortage is driven by workers opting for more generous unemployment benefits, it could lead to a scramble for open positions when the benefits end in September.
There are other factors driving the labor shortage, like changes in regional or local demographics, which can affect the labor pool and customer base. Millions of Americans moved during the pandemic, with significant reported shifts away from urban areas.
In Washington, D.C., the general manager of Pizzeria Paradiso, Lauren Bull Montana, has been trying to hire for the last month but many of her old employees are not available. "We had a lot of college kids prior to the pandemic starting, so we haven’t been able to get those people back," she told WJLA.
Restaurant owners are also struggling with spiraling costs. Despite a dramatic drop in sales for most food and beverage establishments, owners were still paying rent, utilities, paychecks, licenses and fees and the cost of food. In the past year, wholesale food price inflation more than doubled to 3.2%. Shipping costs have increased. Suppliers are seeing fresh disruptions as the economy opens and demand increases—beyond ketchup package shortages.
"2021 is definitely a year of transition for the restaurant industry and its workforce," said Riehle.
The industry remains flexible, more integrated with new technology and is poised to grow. Over this past weekend, the National Restaurant Association found the number of American adults that went out to a restaurant and dined on-premises was at a record high point since the onset of the pandemic.
There are other signs of pent-up demand. On average, Americans have more in savings than any time in the recent past. Experts are also predicting a summer surge in travel, social outings and other experiences that were curtailed over the past year.