SPECIAL REPORT
THE RESTAURANT LABOR LANDSCAPE HAS VASTLY IMPROVED SINCE THE PANDEMIC After a tumultuous five years, recruitment and retention is back to pre-Covid rates. But labor costs are more than 30% higher and employers are still struggling to make the math work.
S t. Patrick’s Day is traditionally the biggest day of the year for the Tulsa, Oklahoma-based McNellie’s Group, a multi-concept operation named for its core Irish pubs. But for founder and CEO Elliot Nelson, St. Patrick’s Day 2020 was one of his worst days ever. That was the day he was forced to fur- lough about 1,000 employees after state of- ficials ordered the shutdown of restaurant indoor dining rooms to stem the spread of COVID-19. Many were people who had worked for McNellie’s for years, and Nelson took pride in that. “It felt like somebody ripped out our soul a little bit,” he said. It was a scenario that played out in count- less different ways in restaurant companies, big and small, across the country. Over a matter of weeks, tens of thousands of people who worked in restaurants were effectively unemployed. For some, it was temporary. But many left the industry for good. That event—and the tumultuous four years of recovery that followed—fundamen - tally changed the labor landscape for both workers and employers. Now, five years later, restaurant operators say their ability to recruit and retain worker is mostly back to normal again. But that new normal now includes much higher labor costs, along with a recognition that employees have fundamentally different expectations about work. “Our average cost per labor hour is about 25% higher than it was before the pandem- ic, so it has gotten way more expensive,” said Nelson, whose group operates 25 restaurants across 17 concepts. “And it takes more people
to do the same jobs. We’re using more labor to achieve the same amount of revenue.” In addition, he added, “People’s relation- ship with work has changed. People just aren’t as apt to go in and really hustle to get a promotion. They don’t want to work more. They don’t want more hours.” COMING OUT THE OTHER SIDE What happened after dining rooms were closed down in 2020 varied by state. Restau - rant operators across the country pivoted to takeout and delivery where they could. As dine-in bans lifted, employers plunged into the chaotic world of economic disaster relief funding to get team members back on the job as consumers slowly began returning to res- taurants. There were the months of limited-capaci- ty dining with barriers between tables, social distancing and extra cleaning. There were debates about mask mandates, then, later, vaccine mandates. Every case of the sniffles required testing. “It was very scary for people to come back to work,” said Fatima Popal, chief fi - nancial officer of the Washington, D.C.-based Popal Group, a family-run operation with four concepts there, including Lutèce, Lapis, Pascual and Lapop. “You’re in a situation where no one knew what was happening. No one knew how bad it was.” Added to the pandemic fears was the death of George Floyd at the hands of police officers in Minneapolis, sparking a racial jus - tice movement. President Trump, in his first term, for
LISA JENNINGS
LISA.JENNINGS@INFORMA.COM
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RESTAURANT BUSINESS APRIL 2025
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