Are Restaurants on the Road to Recovery?

Things are complicated in the restaurant business these days. There isn’t a restaurant owner out there who would trade right now for last spring. Back then, wave after wave of lockdowns forced restaurants to close indoor dining and rely on carryout orders, the grace of their loyal customers, and government aid to stay alive. And many still went belly up.

According to Datassentials, 10.7% of U.S. restaurants permanently closed from March 2020, when the pandemic began in earnest, through March 2021. This includes full-service and limited-service restaurants, as well as food trucks. Of course, there is always some noise in these numbers. Restuarant churn is high in the best of times. And the pandemic may have been the coup de grace for a number of teetering establishments. That said, there is no question Covid ravaged the industry.

The numbers on the human costs were even more jarring. The National Restaurant Association estimated that the pandemic wiped out 2.5 million restaurant jobs, as of January this year. Since then employment has recovered somewhat. But the industry remains down 1 million jobs from pre-pandemic times. And job growth has slowed dramatically. According to the Washington Post, citing Labor Department stats, restaurant jobs grew by an average of 197,000 per month from January through July. Then they fell by 24,000 in August. And in September, the industry added back just 29,000 jobs.

While things were looking up over the summer, the combination of the delta variant and some ongoing structural problems have turned an expected red hot recovery into something decidedly lukewarm. Rising costs, for food and energy in particular, are giving restaurateurs headaches. Adding to the misery are supply chain disruptions.

They Just Aren’t That Into You

This may seem counter-intuitive for an industry that cast a few million workers into the economy to fend for themselves. But the number one challenge restaurant owners face is an acute labor shortage. It seems no one wants to work in a noisy, hot, and dangerous kitchen for minimum wage. Or to be at the mercy of the tipping etiquette of cheap, rude, and entitled diners.

And the problem has gotten so bad that many fast-food restaurants have shut down indoor dining and only staff the drive-thru. Other restaurants are taking measures ranging from limiting dining room capacity and cutting back hours to simplifying menus.

DoorDash, Responding to Pressure, Changes Pricing for Restaurants

A new survey from the National Restaurant Association asked 4,000 U.S. restaurant owners how things are doing in what most would have thought would be a post-pandemic era now. A number of stats stood out. The most jarring was that 40% of full-service restaurants and 49% of limited-service restaurants were not yet operating at full capacity. And the main reason wasn’t Covid-related restrictions. It was the inability to find staff.

So what’s the problem? Apparently, it wasn’t the extended unemployment benefits, which expired at the end of August. There was no discernable rush back to restaurant work once that well ran dry.

Most of the reporting we surveyed suggests workers just drifted off elsewhere. To retail, warehouse work, the gig economy. Higher wages may help, but those costs will somehow be passed along to diners. Which could suppress demand. It seems that once restaurant workers got away from the industry, most didn’t want to go back. And for now, at least, they have viable employment opportunities.

Yelp Rolls Out New and Improved Tools to Help Restaurants

The tech industry has stepped in to at least try to help.

This month, Indeed and Open Table joined forces on something called Interview Days: Restaurant Jobs. The initiative “aims to accelerate the recovery of the food and beverage industry by providing free hiring tools to help businesses and restaurateurs source, screen, and host interviews.”

Here is what Raj Mukherjee, SVP and GM of SMB at Indeed, had to say.

“It has been an extraordinarily hard time for local restaurant and food service businesses. When the pandemic hit last year, many had to shut down or significantly reduce operations. Now as they reopen and more people want to return to in-person dining, local restaurants and food service employers are struggling to hire enough qualified workers to meet the consumer demand that will help them rebuild.”

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