The Coming Restaurant Labor Shortage

Restaurants around the country are experiencing major labor shortages, especially in the highest paying and lowest paying positions. Managers and owners face real difficulties staffing their restaurants because of a lack of qualified workers, the demand for higher wages and increased health insurance costs.

The number of both legal and illegal immigrants who work in the restaurant industry is shrinking due to anti-immigration laws and amnesty programs for existing workers who can now pursue more skilled jobs.

Rising Costs of Hiring Skilled Restaurant Employees

Even entry-level jobs at restaurants now command higher salaries that are higher than the minimum wage. Political pressure to increase the minimum wage is growing at the federal, state and local level.

The most skilled restaurant positions command high salaries to attract and retain qualified workers. Even entry-level restaurant jobs often pay 200 percent or more of the federally mandated minimum wage. The following increases in the minimum wage have passed or are being considered:

  • President Obama recommended raising the minimum wage from $7.25 to $10.10.
  • Los Angeles is considering raising the minimum wage to $13.25 by 2017.
  • Seattle and SeaTac of Washington State have approved hourly wage minimums of $15.00.
  • Other cities like New York and San Diego and Richmond in California have approved increases in the minimum wage.

Consumer demonstrations throughout the country have started demanding that the minimum wage be doubled. Restaurants face not only a labor shortage but also higher salary demands and employee-benefit costs. Even restaurants that aren’t required to offer health insurance often do to attract skilled and loyal workers.

Reasons for the Labor Shortage in Restaurants

Several factors contribute to the shortage of restaurant workers. The increasing visibility of celebrity chefs and relatively low costs of buying food trucks and working as a personal chef convince many aspiring entrepreneurs to start their own businesses instead of learning the business by putting in years of experience. Other causes of the shortage include:

  • An improving economy and dynamic restaurant growth have created an unprecedented need for skilled workers at all levels.
  • Amnesty for illegal immigrants promises to send many of the restaurant industry’s entry-level workers, which are often filled by immigrants, to better paying jobs.
  • Restaurants are finding it necessary to pay higher salaries to keep their employees.
  • Despite plentiful jobs, qualified applicants for the most skilled restaurant positions are in severe shortage due to a long-term skills gap.

How to Deal with Rising Costs and the Labor Shortage

Labor expenses and managing employees are among any restaurant’s most pressing concerns. Some restaurants fear that rising costs and labor shortages will cause them to close their doors. Fortunately, there are solutions for these problems that managers can adopt.

Improving Efficiency

Restaurants usually operate on thin profit margins, and labor costs are critical. However, labor costs don’t just include wages but also training and hiring expenses. Generating a fun, team-focused environment makes working more appealing, even if wages are lower.

If employees are well-screened and properly trained during the hiring process, the turnover ratio drops, which saves money. Paying qualified people better salaries often saves money over time by reducing the costs of hiring new people, increasing efficiency and reducing waste from employee mistakes.

Using Technology

Technology applications allow restaurants to function more efficiently with fewer staff members. Customers can preorder their meals, order carryout food at kiosks, place orders directly from mobile devices and dramatically decrease the need for servers. Technology can speed routine tasks like taking inventory, ordering supplies and automating many business processes. Intuitive restaurant software helps restaurants run tighter inventories and schedule workers for greater efficiency and lower payroll costs.

Flexible Scheduling

Offering flexible hours and allowing employees to work longer or fewer hours attract more qualified workers than imposing strict, rigid schedules. Restaurants can implement thoughtful scheduling as an employment perk. Restaurant employees often quit because they don’t get enough hours or work too much, especially on weekends and holidays. Enlightened scheduling can be a major advantage for employees, and more flexible schedules allow managers to use fewer workers.

Putting People in the Right Jobs

Qualified workers need the right skills for the job, or they become frustrated. Training and educating employees, responding to their concerns and offering bonuses for cross-training result in better production, greater employee loyalty and lower labor costs.

Give employees the tools they need, and allow them to work smarter. Try to accommodate each employee’s desire for fewer or more hours. Use technology to reduce boring, repetitive tasks so that staff can concentrate on cooking, interacting with guests, thinking creatively and working at a more professional level. These strategies will reduce labor costs and create an appealing working environment no matter how tight the labor market might grow.