While a number of industries took a beating in the course of the pandemic, restaurants were notably hard hit. In fact, it's estimated that over 10% of U.S. restaurants closed due to the impact of the coronavirus outbreak.
But now, restaurants have a solid chance to recover. Not only is there a dedicated relief fund available to qualifying dining establishments, but thanks to widespread vaccination levels and decreasing COVID-19 cases, restaurant restrictions have largely been lifted, which means they can operate at full capacity both indoors and out.
Furthermore, after more than a year of being cooped up at home, dining enthusiasts are likely to flock to restaurants as a means of getting out and socializing. And with the economy being in much better shape than it was a year ago, more people may now have the means to go out and spend money on in-person dining.
But despite all of that, restaurants aren't anywhere close to being out of the woods. In fact, at this stage of the game, they're facing a whole new challenge: labor shortages.
Restaurants are desperate for workers
The restaurant industry shed an estimated 2.5 million jobs in the course of 2020, according to the National Restaurant Association. But even though restaurants have since attempted to rehire staff, the unemployment rate for restaurant workers is still sitting above the national average, and at this point, almost half of U.S. restaurants are operating with 20% less staff than usual.
A big part of the problem boils down to the fact that a lot of restaurant workers on unemployment are making more money collecting jobless benefits than they would by taking a job.
The American Rescue Plan -- the $1.9 trillion relief bill which put $1,400 stimulus checks into Americans' pockets -- allowed for a $300 weekly boost to unemployment benefits through the beginning of September. So far, 25 states have made the decision to pull the plug on those boosted benefits early, citing local labor shortages as the reason.
But in the remaining 25 states, jobless workers still have several months of boosted benefits to look forward to. And it's hard to make the case for them to go back to work when doing so means taking a financial hit. This especially holds true in the restaurant industry, where workers are often notoriously underpaid.
In fact, the pandemic may have driven some restaurant workers out of the industry altogether. Over 25% of kitchen workers claim they've exited the restaurant business for good, according to staffing firm Mis en Place, with long hours and poor pay cited as the predominant reasons.
Restaurant labor shortages have gotten so bad that dining establishments are now turning to on-demand workers to stay afloat. Apps like GigPro, for example, connect restaurant managers with workers looking for last-minute gigs. But there are clear drawbacks to going this route.
First, there's a lack of training. Restaurant work tends to be hectic and fast-paced, and bringing in workers without the right training or experience could make for a poor customer experience -- something restaurants always try to avoid. Plus, restaurants generally have to pay a higher hourly wage for on-demand workers, and after a year of sluggish revenue, that's an expense many can't afford.
The real estate takeaway
Thriving restaurants are a good thing for real estate investors because they can help local property values stay strong. And commercial landlords rely on restaurants to keep up with their lease terms and pay rent. If restaurants are forced to shutter due to a lack of staff, the impact on investors could be brutal.
Of course, things may improve on the staffing front once boosted unemployment expires on a national level and more workers are motivated to return to the labor force. But even so, some workers may opt to stay away from the restaurant industry due to the hours and minimal wages involved. If restaurants really want to thrive moving forward, they may need to reexamine their wage policies -- and remove one barrier to staging a full recovery.