Meanwhile, the amount of hires hardly moved at 6.1 million and the hires rate remained unchanged at 4.2 percent. The number of individuals quitting jobs and the quitting rate in April both rose to record highs of 4 million and 2.7 percent, respectively.
So to sum it up, the labor challenge, while nuanced and varied by segment, market, and more, isn’t dissipating. It may get a lift soon as half of the country’s states are set to end the $300 weekly expanded unemployment boost as early as June 12 and as late as July 19—both months ahead of the September 6 expiration date.
Yet still, parallel issues will continue to complicate the road back.
Shake Shack founder and USHG head Danny Meyer recently said it could “at least two or three months” for supply and demand to keep up with each other and hit an equilibrium, in terms of labor and customers dining out. Meyer, the chair of the NYC Economic Development Corporation, said, “Everybody is hiring at the exact same time,” according to Business Insider.
But he also credited the setback to the notion “many of our workers have left the city.” People who couldn’t afford urban real estate without usual wages during COVID. Or the fact many laid-off staff fled restaurants for other industries “that were actually doing quite well during COVID.”
Will they return to hospitality? Difficult to say. But it becomes easier to see why brands like Chipotle recently upped wages. The recruitment battle has changed, and broadened.
“In our company, what we know is, when we educate people on the purpose, the growth and then we show up with a compelling starting wage, that leads them to ultimately a), I would say, a great career wage, meaning you can get to $100,000 plus and really short order a couple of years. That resonates with people,” CEO Brian Niccol recently said at the Piper Sandler Consumer Marketplace Conference.
“… But you’ve got to be sharp, I mean, you’ve got to be on it,” he added. “You’ve got to be after it. And then you’ve got to also make sure that you put your arms around the people that you currently have, because you don’t want to be losing them either.”
Customers are paying attention. According to Datassential, 54 percent of people noticed restaurants struggling to serve customers due to a lack of employees—the highest figure among the sectors listed.
Grocery stores (45 percent), retail (36 percent), gas stations/C-stores (30 percent), department stores (25 percent), drug stores/pharmacies (24 percent), hotels (23 percent), and childcare centers (19 percent) followed.
“Consumers who have noticed ‘help wanted’ signs and rushed service from a skeleton crew are willing to give a restaurant or hotel the benefit of the doubt, but to a lesser degree than retail stores or supermarkets,” Datassential said. “People have higher expectations for true hospitality at foodservice and lodging venues.”
However, those two segments also received the most customer willingness to change how they order, like getting a restaurant meal delivered or opting for the drive-thru instead of waiting in a staff-light dining room.
“How have staffing interruptions changed your likelihood to visit those places?”
Grocery stores
- Willing to visit again: 74 percent
- Change how you order: 24 percent
- Not willing to visit that place again: 3 percent
Department stores
- Willing to visit again: 73 percent
- Change how you order: 23 percent
- Not willing to visit that place again: 3 percent
Gas stations/C-stores
- Willing to visit again: 73 percent
- Change how you order: 26 percent
- Not willing to visit that place again: 1 percent
Retail stores
- Willing to visit again: 69 percent
- Change how you order: 28 percent
- Not willing to visit that place again: 3 percent
Drug stores/pharmacies
- Willing to visit again: 68 percent
- Change how you order: 27 percent
- Not willing to visit that place again: 4 percent
Restaurants
- Willing to visit again: 64 percent
- Change how you order: 31 percent
- Not willing to visit that place again: 5 percent
Hotels
- Willing to visit again: 60 percent
- Change how you order: 30 percent
- Not willing to visit that place again: 10 percent
Speaking of Chipotle, the brand also recently announced it would hike prices 3.5–4 percent to cover the cost of raising wages for employees.
While there is some room to follow suit, Datassential said, operators should also consider automation. Half of consumers said they could accept ordering kiosks and other tech. Nearly as many would stomach slight price increases to help restaurants get to full strength.
“What level of menu price increase would you happily accept and regularly pay, if it ensured that a restaurant could retain the optimal number of employees?
- Less than 2.5 percent: 22 percent
- Less than 5 percent: 27 percent
- Less than 7.5 percent: 15 percent
- Less than 10 percent: 18 percent
- Less than 12.5 percent: 2 percent
- Less than 15 percent: 4 percent
- Less than 17.5 percent: 3 percent
- Less than or equal to 20 percent: 6 percent
- Greater than 20 percent: 2 percent
On one particular labor topic, consumers and operators seem aligned. Half believe enhanced unemployment is contributing to the labor shortage. About two in five also argued restaurants don’t pay enough.
“Why do you think some restaurants are having trouble finding and hiring enough employees at this stage of the pandemic?”
- Enhanced unemployment benefits create a disincentive to work: 52 percent
- Wages in foodservice are not high enough to attract employees: 39 percent
- People don't want service jobs that risk exposure to COVID-19: 38 percent
- The pandemic is still causing health problems for workers: 36 percent
- Parents won't let their children work while during the pandemic: 28 percent
- People are dropping out of the workforce to care for family: 28 percent
- People are starting to find jobs in other industries: 27 percent
- Potential employees can make more money in the gig economy: 24 percent
When asked if guests are seeing signs of inflation and rising prices in general in the economy, 82 percent said they did. And this could signal trouble for restaurants, with 35 percent of consumers saying they’d cut back on restaurant meals if inflation accelerated.