Retail supports around 1 out of 4 Americans, which is 52 million jobs. On the other hand, the restaurant industry contributed USD 80 billion in 2020. So, both sectors have a deep significance in the US economy.
If you live in the United States, then the appalling situation of restaurants or the retail business in the country isn’t hidden from you. Both sectors are reeling under tremendous pressure due to the labor shortage.
The rising inflation and fluctuating demand and supply make it difficult for businesses to sustain themselves in the market.
In addition, the labor crisis is causing serious trouble. However, despite all the grievances and problems, scaling success is one of the biggest challenges for businesses.
Effect of the COVID 19 Pandemic on Retail and Restaurants
When the coronavirus hit in 2020, around 10 million Americans filed for unemployed in March. At the end of the week, on April 23, 2020, the jobless claims totaled approximately 4.4 million. So, the effect has been massive.
In July, the number reached 31.3 million when people reported that they could not work for 4 weeks because their employers incurred heavy losses.
Until December 2020, around 17 percent of restaurants closed permanently in the USA following no business due to the spread of fatal coronavirus.
That accounted for 110,000 of them. So, it was not so that business owners deliberately sacked their staff. Instead, they were compelled to call it quits.
Thus, the skilled laborers became jobless in a few months. Hence, the loss was more than a personal one. Due to the pandemic, a 4.5 percent GDP drop was estimated in the US, which amounted to 2.96 trillion U.S. dollars.
Hence, skilled and non-skilled laborers had to find other ways to meet their ends. Letting go of experienced employees is always difficult because not everyone is accustomed to the art of work.
The number of restaurant workers in the USA fluctuated massively during 2020. It dipped to 11.26 million, witnessing a loss of 2.23 million in the month of May during the same year.
In the state of California alone, retail business workers lost 2.7 million jobs during March- April 2020. It happened to the imposition of lockdown during the period.
As per the start revelation by the National Restaurant Association, compared to the pre-pandemic level, during COVID, around 2.5 million jobs were lost in the industry besides a loss of USD 240 million in sales during 2020.
However, several bars and restaurants did everything in their capacity to keep their customers safe. But that was not enough. Despite their best efforts, the business kept losing its sheen and clients.
It happened due to the safety of life and strict regulations and lockdown forced by the government following the rising fatalities in the country.
The research found that visiting restaurants was four times dangerous compared to gyms. Moreover, the CDC established that people who caught the coronavirus infection were twice likely to visit a restaurant due to people working in a closed space. Also, in March 2020, the foot traffic to retail stores dropped by 58.4 percent during the third week.
Why is There a Labor Shortage for Restaurant and Retail Workers in North America?
North America is facing a galvanizing issue of labor shortage of retail and restaurant workers. Businesses are unable to find people who can comply with their needs. The latest variant of COVID 19, Omicron, is expanding quickly. Cases have started to simmer around a million in a day while the number of deaths is increasing simultaneously.
Additionally, many restaurants and retail business owners do not have much to pay as salaries. Thus, several workers are not willing to work at low wages. Also, due to the stiff competition and low vacancies, the market has become tough for employers. Therefore, they can be seen negotiating and underpaying employees, despite the rules in place.
However, the market is opening up, and so are the job opportunities, but laborers are demanding more money to compensate for the lost time due to COVID.
As per the Bureau of Labor Statistics, the unemployment rate for drinking and eating stations (restaurants and hotels) and the retail industry was higher than the overall USA rate. The latter was 5.4 percent, while the former rallied around 8.4 percent and 6.4 percent. The reports are from July 2021.
It shows the reluctance of labor coming to the place for working due to two reasons primarily; working conditions and minimum wages.
The year 2022 is witnessing an unprecedented shortage of laborers in restaurants due to incessant resignation. On the other hand, it is due to the barrage of new openings that offer a great opportunity to these workers.
Labors are clinging to better chances offered to them, and their current employers are facing the heat of them leaving in the midst. So, the equation is changing drastically.
Today, restaurateurs in the USA are trying everything to bring the best and skilled labor on board to upscale their business. The shortage is something that has never been seen in decades. Moreover, the kitchen business has been hit across all segments in the country.
Notably, a TouchBistro annual report in 2019 highlighted that one of the top 10 restaurants in the U.S. filed for a shortage of laborers. The reason for it was changing dynamics of the retail business and restaurants, as laborers felt the urge to get better pay.
The report highlighted that the restaurants lost the essential workers, including chefs who cooked food. So, it hurt the prospects of the kitchen and food.
Shockingly, the report states that as the revenue for the restaurants surged, the loss of labor surged in the same proportion.
Those restaurants that fetched USD 2 million as annual revenue or more lacked a line chief, at least 39 percent of them. Likewise, 25 percent said they did not have chefs and cooks.
Thus, one thing can be drawn that, for the restaurant owners, situations worsened during the pandemic. However, things were never better in terms of laborers and workers from the last few years. They had been reeling under a lot of pressure and rising competition in the sector.
Investment in Training
Losing trained labor is a big loss, and when the restaurant trains labor on its money, it is even bigger. As per the 2019 report by Touch bistro on restaurants, 5% of labor had to spend 1 hour on house training, while 28 percent of laborers invested 12 hours on it.
Restaurants with 120 seats and more trained their staff for more than 12 hours. So, when those trained laborers resigned or quit working, it added salt to the existing wounds of restaurant owners.
Unchanged Minimum Wage
Not getting any hike in salaries is one of the critical reasons for laborers turning away from the restaurant or the retail sector. When the staff saw no improvement in their salaries year after year, despite the profits in the food business, it turned them against their employers.
In 2021, inflation in the USA eclipsed the 39-year-old record by touching a whopping 7 percent since 1982. It was the biggest annual leap.
Moreover, the low-wage workers have several options like getting into a factory for work to sustain themselves, unlike those earning hundreds of thousands of dollars per month as engineers or doctors.
Thus, after going through the phase of the problem, they now feel liberated in switching jobs more comfortably because the market flourished slightly after the lockdown was removed.
Restaurant operators need to work harder
Running a business requires several aspects more than money to connect with the targeted goals. They need to consider elements like rendering better facilities for workers or laborers to prosper that were left before while catering to the needs of the customers.
Moreover, to be in the competition, several strategies should be chalked out by them like raising wages. Additionally, their employees’ timely and good wages, healthcare, insurances, and other facilities can reinstate the trust. Thus, these factors can retain the services of the skilled labor force and stop their migration.
Every mainstay enjoys professional development. So, if restaurant owners can look out of the box and pay heed to the requirements of their staff, things can change drastically for both parties.
Labor Statistics in the US
According to the U.S. Bureau of Labor Statistics, the employment rate of head cooks and chefs is slated to grow by 25 percent between 2020-2030. As per the report, there will be 18,800 openings every year for head cooks and chefs. So, the vacancy numbers will proliferate compared to jobs in any other sector.
It will also result in increased GDP of the country. However, the substantial income growth will come from the demands of consumers eating outside their homes and trying cuisines in different restaurants.
Now, as the COVID subsides, consumers will look forward to healthier options to boost their immunity more than ever. And that’s already on the cards. So, the restaurants that will comply with the requirements of their guests will sustain even with lesser labor.
However, appropriate staff strength keeps several factors in check, and one of them is cleaning. The food may be tasty, but if the place is not hygienic, the repeat value is zero. The restaurant labor is crucial here because a chef or a cook cannot indulge in cleaning work, leaving the cooking aside.
Cooks need to overlook the high-quality recipes that reach the hearts of eaters through their stomachs. Thus, a restaurant owner needs to back its limited resources and make the best out of them to navigate the labor shortage.
Fatality increased during COVID
Another reason that is holding back the restaurant laborers to return to work in the US is the high mortality rate. In every 111 minutes, a worker died in the retail industry in 2020 due to work-related injuries, further complicated by COVID-19.
So, who would want to risk lives during such unprecedented adverse times? Thus, restaurant owners should make it mandatory to apply the highest possible safety measures to keep their employees safe.
Notably, line cooks had a 60 percent increased risk of mortality during the pandemic, and that’s horrifying given how deadly the virus can get. Furthermore, a cook’s job was among the top 5 occupations that felt the mortality sting, including line workers in warehouses, construction laborers, agriculture workers, and bakers.
How is that impacting small business owners?
As per a report by Business Insider, small business owners feel that they are incurring heavy losses, and their businesses are plummeting and shutting down due to the growing labor shortage.
The supply chain disruptions, on the other hand, are adding to their troubles. Several small firms are experiencing operational issues. Thus, they have no option to temporarily or permanently halt their activities to lay off the burden of debts.
Over 60 percent of business owners reported labor shortage, as per a report in Forbes. Moreover, 20 percent of them characterized that as critical for running their businesses.
Out of them, 19 percent incurred colossal losses, while 80 percent witnessed a loss in existing sales.
Unfortunately, the situation got grim following the rising coronavirus cases in the US. However, the solution to the labor shortage won’t come in a day. So, business owners will need to use their acumen for sorting the matter.
10 Ways Restaurant and Retail Owners Can Tackle the Labor Shortage
For restaurant and retail owners, labor shortage can be tackled in the following ways:
1. Automate Time Consuming Admin Tasks
Restaurants and Retail owners should focus on automating their time-consuming administrative tasks that will not only help employees but also save a lot of time for the skilled staff.
For example, restaurants making pizza can automate their repetitive tasks such as rolling out the dough, adding and applying the ketchup, and taking each pizza in and out of the oven. Restaurant owners can also use AI and voice recognition to streamline incoming orders.
2. Be Smart with the Recruitment
Recruitment and retention are two of the industry’s largest concerns. They’ve become even more important in light of the labor shortage.
There was a time when you see people lined up to get a job at your restaurant or retail business. But now if that’s not the case, don’t worry at all. Advertise employment openings online, with local restaurant staffing agencies, and through local schools and community centers.
Your job descriptions should stand out from the crowd. Job descriptions are typically dull and uninspiring. Make your job ad humorous and fun and include the things you offer and other restaurants & retailers don’t.
3. Time to Change Your Management Style
Conventional management approaches keep employees in the dark about elevated choices, even when they affect the entire team.
Confiding your workers and including them in decision-making has been shown to encourage employees to perform more by demonstrating how their efforts affect the restaurant’s overall performance.
The relationship between you and your employees will be strengthened by open communication and transparency. It promotes a culture of shared ownership that is beneficial to all parties involved.
For example, Open-book management is popular among restaurant owners and employees because it fosters a sense of ownership among employees by showing them how the restaurant is doing and how their work affects outcomes.
4. Give Employees What They Want
As per the study published by Harvard Business Review, 88% of workers want flexibility in their working hours and location. Retail staff can successfully engage with customers remotely, as seen by the example above.
That can help in achieving the desired growth rate. Live video gives employees the option they want while also keeping them and their clients secure while yet giving individualized service. It’s time for brands to take a leap into the future if they want to succeed in 2022 and beyond.
5. Offer Incentives
With the labor shortage in restaurants and the retail sector, the best way to tackle it is by offering the employees the incentives like overtime opportunities, professional training and development opportunities, and many more.
People are always hungry for appreciation. So, show your employees how valuable they are for your business. Find unique and creative ways to appreciate your staff.
For example, the employee of the month is an award given to an employee who has performed especially well for a month. You can also make a great social media post by highlighting the employee of the month! Such activities will encourage your other employees to do their best too, allowing you to manage your restaurant more efficiently with the services they offer.
6. Make Proper Staff Schedule
Your staff is a great asset to your business growth. So, give your staff a bit of freedom in their work schedule.
Even when someone says they perform effectively in the evenings, scheduling them for early morning shifts a week isn’t going to be good for employee satisfaction or efficiency. Make it easier to keep skilled workers by taking into consideration their work preferences as much as feasible.
Have a procedure in place for accepting and processing employee requests for time off, as well as for dealing with emergency and non-emergency scheduling problems. Employees will feel motivated and encouraged when they know you care about them.
In today’s market, job flexibility is a major value for many workers, so be persistent in obtaining their opinion for your staff calendar.
Scheduling open shifts is a good idea. Every two weeks, post your schedule with a few unassigned shifts and a deadline for your employees to register for them. This is a fantastic method to meet the needs of employees who want to work as many hours as possible while also ensuring that your less-available employees get the shifts they desire.
When employees have the option to choose these extra shifts, they are able to work because they want to, not because they have to.
7. Hire employees from different walks of life
Hiring folks who are a good fit for retail companies or restaurants.
However, creating a more dynamic and equal workplace not only expands the range of employees from which you may hire but also provides a richness of unique viewpoints that can help your company grow. A larger pool of candidates ensures improved employment.
Consider the message that an all-male staff may give to potential female candidates. Or consider how a highly talented person with a disability might feel about applying for a job at a restaurant that isn’t handicapped accessible.
Incorporating some more variety into your employment methods will expand the number of candidates from which you can choose and improve your company’s overall performance.
8. Hire On-demand Workers
Hiring contingent labor is, of course, one of the simplest methods to fill a skills gap. You may swiftly and cost-effectively cover enormous gaps in your operation by using freelancers, consultants, contractors, and other resources.
Many businesses are turning to contingent workers as a viable option. In 2020, 59 million people worked as freelancers in the USA. It states the unprecedented contribution to the US economy. Their knowledge, availability, and flexibility enable them to operate within any timetable, budget, or project constraints.
Unlike many other aspects of the labor market, contingent workers are on the rise. As a result, there are enough contingency workers available to meet your requirements for as long as you require them.
9. Partner or Collaborate
See if you can partner with local businesses, high schools, college career fairs, after-school programs, and other grassroots efforts that have developing talent in addition to advertisements. In exchange for a period of employment, provide free training or skill-building programs to persons entering the workforce.
Apprenticeships, co-op work placements, and internships are all options for nurturing the next generation of competent workers at your business. Best of all, you maintain a close eye on your industry’s future.
This opens the door for restaurateurs and their culinary and bar-focused staff to collaborate with local suppliers to create not only unique meals, but also a series of educational events where, for example, a farmer, chef, and bartender may teach customers about the product during the dinner.
10. Offer Training to Your Staff
Many organizations have begun offering training to their existing employees in order to customize them to meet current shortages in order to compensate for a shortage of competent people.
This could include in-house training when a competent employee shares valuable knowledge with others. It’s a terrific approach for businesses with a few good resources to boost their worth without investing a lot of time or money.
Restaurant owners can try out various audio-visual training methodologies as well as the latest technological training platforms to train their staff.
Outside training is another possibility. Several companies offer incentives to encourage their employees to obtain the degree they desire. While this strategy may be more costly and time-consuming in the short term, it may pay off in the long run.