How the Labor Shortage Could Affect Your Restaurant
The good news? Labor shortages aren’t impossible to navigate, but they do require some creative thinking, perseverance, patience, and a hearty scoop of time and energy. Restaurant owners and managers must be prepared to shift their thinking, and, to a degree—their business, to attract and hang on to quality employees.
Though the effects of a labor shortage will differ depending on your markets and restaurant type, here are some ways the current restaurant industry labor shortage could affect your operations.
Guests might have to wait, and you might have to reduce your opening hours.
With fewer front-of-the house staff available to serve guests and fewer back-of-house staff available to fulfill on-and-off premise orders, your guest dining experiences could suffer. Restaurant guests hate having to wait longer than anticipated, whether it’s for a table, for their meal, or their check. Wait times are almost guaranteed to increase when you’re short-staffed.
In front of house, fewer staff members mean larger sections to work. With more responsibilities, your staff will be forced to budget more of their time getting orders, entering them in the point of sale, running orders, and getting payment, and less time connecting with guests over what’s on their plate or in their glass. You could lose that warm connection that guarantees a visit in the future.
In back of house, fewer cooks on the line mean longer wait times for orders to be filled. This will affect table turn times in front of the house, making you unable to accommodate the same amount of checks in a night as before, ultimately costing you money.
I response, many restaurants around the country have had to reduce operating hours due to lack of staff, cutting a whole day or cutting lunch service every day. This reduces operating costs in the short term, but also reduces revenue.
Profit margins could shrink.
Having fewer staff members and slower pace, you’ll decrease the number of checks you do in a night. With less revenue flowing into your restaurant, you’re left with a shrinking operational budget that will substantially affect your purchasing decisions.
The average restaurant profit margin falls somewhere around 5%. With an expected increase in labor overhead as wages increase, restaurants can expect their profits to take a bigger hit in the coming years.
Though a labor shortage could initially mean less spend on labor costs, as you lose employees and need to pay fewer employees to work longer hours, overtime laws will come into effect. Make sure you stay compliant and protect your business. Plus, if you’re providing a less-than-stellar guest experience because of being short staffed, your sales will go down too.
Staff could leave for something better.
For those who rely on the service industry as their primary source of income, it’s unfortunately normal to work long days and late nights only to barely reach the poverty threshold. Excluding tips, the average annual wage of a restaurant employee hovers between $11,000 and $27,000, with servers at the lower end of the scale and chefs at the top.
Today’s restaurant staff are motivated to pursue opportunities that offer competitive compensation, meaningful employee benefits, work perks, and a safe, supportive work environment. If your restaurant offers front-of-house staff standard minimum wage plus tips and your back- of- house slightly above minimum wage, staff might not think working at your restaurant will provide them with a paycheck that covers the bills. And thanks to the COVID crisis, many longtime industry workers have chosen to leave the restaurant industry altogether.
To combat the current labor shortage, restaurants are getting more competitive with offering employee benefits and new compensation models. If your restaurant doesn’t meet the workforce’s expectation, it’s easy for staff to leave and immediately find a better option.