How to Hire Employees When Wages Aren’t Enough
October 3, 2022
How can restaurants hire and keep employees amid soaring labor costs? By differentiating themselves as better places to work.
The restaurants in Oak Brook, Illinois are usually a tight-knit community. Sitting twenty minutes outside Chicago in a tony enclave of office parks and shopping complexes, Oak Brook’s clientele of suburban professionals is usually abundant enough to maintain a sense of camaraderie among the town’s restaurants. Until the post-pandemic labor crunch, of course.
“It was late May. I got a call from my partner, who was fuming,” restaurant proprietor Steven Hartenstein told the Chicago Tribune in July. “He says, ‘You’re not going to believe this, but two of our bus boys just came up to me and said this guy told them they were guaranteed $1,000 a week to go bus tables at his restaurant, and they’re going to go.’
“So they walked out, and left us high and dry.”
It was an unprecedented and outrageous act of labor poaching, according to Hartenstein, and something no one a few years ago could have predicted: that in the post-COVID world, restaurants would compete over workers as much as — and sometimes more than — they compete for customers.
In the traditional competitive landscape, restaurants earned business by differentiating themselves by their product. As Hartenstein put it, “People can steal your employees, your recipes and your brand, but they can’t steal your hospitality and your integrity.”
But in many ways this is yesterday’s fight. Restaurant reservations are hitting all-time highs in 2022, but the post-pandemic dining boom has been stymied by worker shortages that have left restaurants cutting hours while spending astronomically on staff.
In a labor market that has sent wages soaring and made mercenaries out of long-tenured employees, restaurants are now competing to not only hire people, but differentiate themselves as employers — and it might change restaurant culture forever. Here are four things you can do to stay ahead of the labor crunch and build your brand as an employer.
Cultivate a healthy environment
For generations, restaurants placed far less emphasis on creating healthy environments for employees than on bending over backwards for guests. The post-COVID labor crisis is one result of that culture.
“Looking back, COVID got a lot of us off the hamster wheel,” Chef Sasha Grumman told BentoBox. In restaurants, “the culture is that everything rolls downhill. Because you’re supposed to be able to do anything, the higher-ups are relentlessly demanding of you. I can’t tell you how many times they pushed me to my breaking point.”
Grumman is one member of a generation of restaurant employees who decided to either leave the industry permanently or strike out on their own after the pandemic. Getting that cohort of workers to return is essential to solving the labor shortage. As of July 2022, the US Bureau of Labor Statistics reported that bars & restaurants were lagging further behind their pre-pandemic employment levels than any other sector of the economy, with more than 630,000 jobs still open across the industry.
The restaurants that bring those employees back in will be the ones that offer a different workplace environment than the brigade-style militarism that alienated so many workers.
“After a pandemic brought into sharp focus the thanklessness of working in restaurants, and the often fraught relationship between customer and staff, some new restaurants have started doing things differently,” wrote Kate Kassin in Bon Appétit. “Whether by reducing hours, paring down menus, or attempting to shift the transactional nature of customer-staff relationships, restaurants are reimagining their approach. They’re insisting that their staff comes first.”
Putting staff first is not necessarily a cost-incurring proposition. Sure, it can mean limiting the hours of dine-in service or being flexible with schedule changes. But fundamentally, a healthy restaurant environment is one that feels good to work in. It’s letting employees take time off if they have a family event; addressing substance abuse and mental health problems when you first see them; and creating a culture that places employee well-being just as high as customer experience. Often, one leads to the other. Happy hosts make happy guests.
Provide a benefits package
“Hospitality starts with your people,” says Caroline Schiff, pastry chef at Brooklyn’s Gage & Tollner and one of Food & Wine’s Best New Chefs of 2022. “If your back of house is miserable, you're not doing hospitality. And it’s going to show up in the dining room.”
Gage & Tollner is among the vanguard of restaurants finding success in taking a comprehensive approach to employee compensation. In addition to paying “a living wage,” the restaurant offers employee benefits more commonly found in corporate jobs. According to Schiff, the spending is a cost-saving measure in the long term.
“People don't take into account how expensive it is to hire and train someone. One of the best things you can do for your business is find a way to retain employees. If that means higher wages, health insurance, matching 401(k), offering more paid vacation — all of these things — that actually saves you so much in the long run.”
A 2006 study by Cornell’s Center for Hospitality Research found the cost of specialized hospitality worker turnover to be $5,864, or nearly $9,000 per new employee in 2022 dollars. More importantly, the study found that 52% of the cost of turnover comes in the form of productivity lost by the veteran employees who need to train the new employee. Translation: even after you manage to hire someone at a competitive wage, you’re less than halfway done paying for them to become fully productive. And that’s if you can find someone.
Compared to the cost and operational strain of turnover, Schiff’s hypothesis that benefits drive long-term savings is probably correct. Moreover, this calculation doesn’t account for the knock-on effects of creating a workplace where employees feel supported and healthy — where recruitment gets easier alongside retention. There’s even a marketing corollary to this benefit; customers want to support sustainable businesses.
Since the pandemic, countless restaurants and hospitality groups have started offering benefits that would have been unheard-of a few years ago. Nation’s Restaurant News has this story about restaurants offering to pay their teenage workers to do their homework and buying cars for employees. Bell’s bistro in Los Angeles “added on a bevy of new perks, including fully paid health care coverage and 80 hours of paid time off,” according to Matthew Sedacca in The Counter, and saw revenues and staff double since then. Benefits now seen across many parts of the industry include retirement plans, health insurance or stipends, tuition reimbursements, hiring and retention bonuses, and the all-important linchpin of the industry, child care.
There’s good reason to believe this trend heralds a permanent shift in hospitality, aligning our industry with other industries’ hiring practices. After all, we don’t wonder when white-collar firms are going to stop offering health insurance as an incentive. The restaurants that differentiate themselves as employers today will be ahead of the curve when benefits are table stakes for hiring labor tomorrow.
Develop employee careers
In an industry in which two-thirds of the employees stay at a job for less than 2 years, many employees have their eye on their next move the moment they are hired — especially the talented and ambitious ones. More than any benefit, those workers want to learn. To attract and keep them, put career pathing at the center of your culture.
“Ninety percent of restaurant managers and 80 percent of restaurant owners start out in entry-level positions,” says Restaurant365 co-founder John Moody. “It's crucial to think of all new hires and existing employees as potential managers and operators, making proper training a vital strategy for long-term growth and retention.”
Career pathing doesn’t require a monetary investment, though some restaurants do provide digital learning management systems or subsidize professional development classes. Like the mental health aspect of being a good employer, career pathing is more of a shared ethos of caring about employees’ goals and building growth into their roles.
“I have people who come through and say, ‘Listen, I don't think I'm a career kitchen person. But I really want to do this for a year,’” Caroline Schiff told BentoBox. “That’s no problem; I know I’ll have their undivided attention for a year and then they can go off and do something else. That's one kind of career trajectory. Then I have people come to me saying, ‘I want to be a pastry chef. In 10 years, I want my name on the menu.’ I'm like, Okay, great. That's the path we're gonna push you to.”
End the cycle of bullying
Finally, one of the most powerful ways to attract employees is by rejecting the bullying culture that too many generations of cooks and servers have had to endure.
“Harassment in restaurants is often hereditary. It gets passed down from chef-owner to chef de cuisine to sous chef like a mutated gene,” wrote former Carbone captain Adam Reiner in a 2019 essay in Food & Wine. “I was a veteran member of the front of the house staff. I was making money consistently and had a dream schedule. But like many of my former colleagues in this restaurant, the one reason I did have for leaving outweighed the rest. The executive chef was a serial abuser and I was tired of being his punching bag.”
Stories like this abound. In a 2021 report, research firm BlackBox Intelligence reported that 49% of restaurant employees dealt with emotional abuse from managers; 15% dealt with sexual harassment. And that’s not even counting what the customers dish out.
Today’s labor crunch has given employees a rare opportunity to demand better. In the new normal of healthy, supportive kitchens — the kind that employees want to not only work at, but stay at — strong leaders are not tolerating abuse.
If someone on staff feels unhappy coming into work, they’ll find a better situation quickly. And on the way out, they’ll be sure to spread the message to anyone thinking about coming in to replace them. Putting a stop to the culture of abusive behavior is a powerful and completely free way to end this cycle of harm, reduce turnover and spend less on labor all at once.
The evolution of the restaurant workplace
Two years after COVID threatened to end restaurants as we know them, it’s clear something fundamental did change about the industry — but maybe not in the way anyone saw coming.
In a 2021 survey, research firm BlackBox Intelligence found that 77% of former restaurant employees said they would return to the industry if provided “promotion opportunities, flexible schedules, health benefits, PTO and a supportive company culture.” For an industry dealing with the twin crises of rising costs and worker shortages, it’s nice to know that one of those problems is solvable. And, in fact, can be substantially addressed with cost-free cultural changes.
It’s a new day in restaurant culture: one in which the decency and security expected in every other sector of the economy makes its way to the front- and back-of-house. The standards demanded by today’s empowered workforce promise to be better for their employers, too. All the workers ask is that, instead of being seen as fungible inputs, they be treated as fully human resources.
The Restaurant Workforce Recovery Report
This report analyzes restaurant employment statistics and wages in the 50 largest U.S. metro areas. Use the data to help you make sense of the current hiring landscape and develop a workforce strategy.
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