OPERATORS WHO SAID THEY DIDN’T HAVE ENOUGH WORKERS TO MEET CUSTOMER DEMAND:
example, staged a campaign event in Tulsa in June 2020 on the anniversary of a racial massacre there, prompting businesses to board up their windows in fear of clashes on the streets, Nelson said. “That was almost harder on our employ- ees than the shutdown,” he added. “It was emotionally charged and very difficult. The emotional toll … was another punch in the gut, and I saw more people say, man, I just can’t do this.” THE GREAT RESIGNATION Even as restaurants were able to open more fully in 2021 and 2022, the period dubbed The Great Resignation swept the country and an estimated 50 million workers made moves to perceived greener pastures, post - ing their “Quit Toks” on TikTok. Restaurant chains were forced to close restaurants or limit hours because they could not adequate- ly staff their units. 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. One of the highest “quit rates” of over 5.5% was seen in leisure and hospitality in 2021, according to the U.S. Chamber of Com- merce. That quit rate dropped to 3.6% by the end of 2024, though it’s still higher than other industries. In 2021 and 2022, the number of job openings in restaurants and accommodations soared to record high of 1.5 million, accord- ing to the Bureau of Labor Statistics’ (BLS) Job Openings and Labor Turnover Survey, or JOLTS. But by late 2024, it was around the 2019 average of 87,000. Data from the National Restaurant Asso - ciation’s recent State of the Industry report indicates the labor landscape has vastly im - proved. In 2021, 78% of operators said they didn’t have enough workers to meet customer de - mand. By the end of 2024, 32% of operators said that. Labor is still top of mind. The report said 77% of operators say recruiting and retaining employees are still significant challenges. But unfilled job openings are down to pre-pan - demic levels and turnover is at its lowest point in a decade. The association has projected restaurant sales will top $1.5 trillion this year, and the industry workforce is projected to grow by 200,000 jobs to 15.9 million. By 2035, staffing is projected to reach 17.4 million.
AT MCNELLIE’S GROUP, LABOR COSTS HAVE INCREASED 25%. | PHOTO COURTESY OF MCNELLIE’S GROUP
HIGHER WAGES Getting those workers back has, of course, required wage increases. And that has been perhaps the pandemic’s most lasting impact on the labor landscape. The past five years have brought battles to increase the minimum wage, primarily at the state level, and ongoing attempts to elim - inate the tip credit where it is allowed. This year, minimum wage rates will jump up in 23 states, with increases ranging from 25 cents to $2.15. In California, for example, state lawmak- ers created a fast-food wage of $20 per hour, which went into effect in April. The legisla- tion also created a Fast Food Council with the authority to raise that wage rate each year up to 3.5% to keep up with inflation. Washington, D.C. is in the process of phasing out its subminimum wage. In Michi- gan, meanwhile, attempts to kill the tip credit were thwarted, though the state’s minimum wage will increase to $15 per hour by 2027, with the subminimum wage increasing to make up 50% of the non-tipped rate. But even where there are no mandated
wage increases, restaurant operators have been forced to raise wages to compete. By 2024, a number of large restaurant chains had filed bankruptcy, citing higher labor costs, including Red Lobster, Buca di Beppo, BurgerFi, Rubio’s, World of Beer, Tijuana Flats and more. Struggling both with the need to increase wages and address a perceived inequity be - tween the front and back of the house, many restaurant operators turned to service charg - es—to either replace or supplement tips. The tactic has shown mixed results. In D.C., where they are more common, Popal said her restaurants use a 20% service charge, shared between front- and back-of- the-house. As a result, she said, “They all work better as a team.” In Philadelphia, however, Ellen Yin, founder of the multi-concept High Street Hospitality Group there, said there’s a mis - trust about service charges by consumers, so they are not popular there. Long an advocate for equitable pay in the industry, Yin said she had hoped the pan-
APRIL 2025 RESTAURANT BUSINESS
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