The restaurant labor shortage is still one of the industry’s biggest challenges even 3 years after the start of the pandemic. The labor market has shown signs of improvement, but most restaurant operators are still looking for restaurant staff. More than 87% say they’re likely to hire in 2023 if they can find qualified applicants, according to the National Restaurant Association.
With the tight labor market, inflation, and the possibility of a recession, finding and retaining great people is more important than ever. Here’s what to know about the restaurant staff shortage and what your restaurant business can do to staff up in 2023.
History of the current restaurant labor crisis
Filling job openings was tough for restaurant owners before COVID-19, but not like this. Labor supply and demand were roughly matched from 2000 through early 2020, according to U.S. Bureau of Labor Statistics data. But restaurant closures and worker layoffs in March 2020 shifted this dynamic.
As lockdowns eased in May and June of 2020, more than 3.5 million workers came back to the accommodation and food service sectors. Vaccines and relaxed pandemic restrictions in 2021 spurred restaurant owners to hire at above-average wages, but open positions remained high.
The gap between supply and demand continued. There were an average of 500,000 more job openings than new hires in the hospitality sector per month between October 2021 and March 2022. Still, restaurant operators continued to fill open positions in 2022, finishing the year with 24 months of job growth in a row.
What caused the restaurant worker shortage?
During lockdown, many restaurant workers realized their demanding, fast-paced jobs had taken a toll on their physical and mental health. Enhanced unemployment benefits gave them time to reflect on how they might reenter the workforce.
Many workers found jobs in other industries offering more stability or benefits like health insurance. Some turned to gig work or self-employment for autonomy and flexibility. Others got job training or education and started new careers in fields like teaching or logistics. Of those who returned to the restaurant industry, some left again due to pandemic-era challenges like staff shortages, reduced hours, and lower tips.
State of the restaurant labor shortage in 2023
Staffing in the restaurant industry was 3.6% below pre-pandemic levels at the start of 2023, according to the National Restaurant Association. That’s 450,000 job openings compared to 2019. Meanwhile, 62% of operators say they can’t staff up to meet demand, and 80% say they have a hard time filling open positions.
To cope with sub-optimal staffing levels, some restaurants have reduced the number of days of the week they’re open or cut their hours. A recent study showed restaurants are open on average 7.5 fewer hours a week than they used to be.
What’s next for restaurants
Despite a possible recession on the horizon, the leisure and hospitality industry added 128,000 jobs in January 2023. That’s the most in any US sector, according to the Bureau of Labor Statistics. Some experts think pandemic-era retirements and recent layoffs in tech could boost the number of workers seeking jobs in restaurants.
Meanwhile, 16% fewer diners are eating in at restaurants compared to pre-pandemic levels. They’re making up for it with off-premise dining, especially delivery and drive-thru.
“The dine-in business is going to be radically smaller than it was, with much more focus on takeout orders, a huge shift in the basis of competition to be all about technology and convenience,” David Henkes, a senior analyst at market research firm Technomic, told the Washington Post.
What restaurant operators can do
With the tight labor market, rising costs, and an uncertain economy, it’s crucial for restaurant operators to hire and retain quality workers. Here’s how restaurant technology can help your business staff up and provide exceptional hospitality in 2023.
Tech tools can reduce labor costs and help things run smoothly even when you’re understaffed. Online reservations offer guests convenience and reduce the need for hosts. Digital ordering platforms you may already use for takeout can free up servers to focus on guest engagement in the dining room. A POS system that integrates with your reservation system can ensure seamless communication between front and back of house, speed up service, and give management instant revenue insights.
Attract top talent
Giving workers the tools they need to succeed is only one part of staff retention. Great pay is one of the best ways to attract and keep restaurant workers, especially Gen Z applicants. If possible, offer benefits like paid time off and health insurance to help your business stand out.
It’s possible to attract workers even if those benefits aren’t in your budget. Mentorship opportunities and strong training programs appeal to those entering the restaurant industry and encourage them to stick around. Other perks like earned wage access, also known as on-demand pay, compensate staff for shifts worked before payday, putting money in their pockets faster.
Clear, easy-to-understand reports can help restaurant owners make smart decisions to increase efficiency and maximize revenue. That’s true whether a business is fully staffed or running lean.
Integrating reservation software with your POS system makes data on everything from turn times to guest revenue easy to understand. Customer relationship management (CRM) software stores guest information while tracking server metrics like check average to help identify top performers and opportunities for improvement.
As labor shortages continue in 2023, operators who can staff up will have the best chance of success. Technology solutions can do more than help attract and retain workers. These tools can ensure your operation is maximizing efficiency, keeping costs down, and getting the most return out of the staff you have.