High turnover rates in service industries are nothing new but recently restaurants are struggling particularly hard with employee retention. From chefs to line cooks to wait staff to delivery – the problem has become more acute in the last two years, reaching crisis levels.
The industry has found itself in the middle of a labor shortage and it looks like things are set to get worse before they get better. Since 2010, QSR jobs have grown nearly twice as fast as overall employment and, according to the National Restaurant Association, over the next 10 years, the restaurant industry is expected to add 1.8 million jobs to the already strained workforce. If restaurateurs thought things were bad now, it looks like they will be vying for staff from an even more limited labor pool.
The factors behind the shortage have been numerous from low wages, to high turnover rates and a shrinking pool of applicants amid the country’s immigration crackdown all contributing to the labor shortage. Here we take a look a few of them.
Unprecedented Competition: One issue is there is a surplus of restaurants with not nearly enough talent to go around. According to the Deloitte 2018 Travel and Hospitality Industry Outlook report, “There are now more than 620,000 eating and drinking establishments across the United States, with restaurants currently growing at about twice the rate of the population. … The level of competition within the restaurant industry is unprecedented.”
For the first time, there are more job openings than there are eligible workers to fill them – and with unemployment at a 17-year low exacerbating the issue, businesses everywhere are struggling to find workers.
High Cost of Living: The improving economy is hurting the restaurant industry. For many restaurants the reality is that they are located in high-rent neighborhoods and expensive cities. Even though political pressure to increase the minimum wage is growing at the federal, state and local level, restaurants typically have tight margins, so it’s hard to offer higher compensation and sustain higher wages.
With the cost of living continuing to rise and the restaurant industry’s long hours and low pay leaving employees unable to afford to live in the area they work, the service industry has become less appealing.
Immigration Laws: Traditionally, a large vibrant part of the restaurant staff community are immigrant workers. But the number of both legal and illegal immigrants who work in the restaurant industry is shrinking. Recent amendments to America’s Visa program and crackdowns on domestic, undocumented workers have significantly impacted restaurants coast to coast. Along with amnesty programs for existing workers who can now pursue more skilled jobs, is also shrinking the labor pool even more.
Teenagers: Yes teenagers! Who would have thought it! Teenagers are turning their backs on working in the service industry. According to the Bureau of Labor Statistics there are fewer than half as many teenagers in the service industry than there were just a few short decades ago. An increased emphasis on education and earning college scholarship are factors in the decline in working teenagers, reflecting both the rising costs of education and the low wages most teens can earn.
If the trend continues, it will only be a matter of time before restaurants are left struggling to maintain high-quality of customer service and product offering resulting in slowing service, deteriorating meal quality and, perhaps, forcing restaurants to close their doors. However, it does not have to be all doom and gloom. While you can’t keep a labor shortage from happening you can take steps to minimize the impact. Check out our next blog where we look at solutions on how to mitigate turnover.