When the coronavirus pandemic first struck, it took down restaurants in its wake. Dining establishments were largely forced to close to guests back in the late winter and spring of 2020, and those that couldn't pivot to takeout and delivery suffered major losses in revenue.
Even once restaurants got the green light to welcome back diners, capacity limits stalled their recovery. And once those restrictions were lifted, food shortages and rising costs took over.
But even with all of that, restaurants are now facing what could be their greatest challenge yet -- labor shortages. In May, the rate of quits per share of employment in the food services industry was 5.7%, according to seasonally adjusted data from the Bureau of Labor Statistics. That's substantially higher than the quit rate across all sectors, which sat at 2.5% in May.
Restaurant work is a hard sell
Working conditions in restaurants can be grueling, and the wages they pay are hardly known to be generous. Throw a pandemic into the mix, and it's easy to see why so many people are eager to leave the industry behind and pursue safer, better-paying jobs.
The fact that unemployment benefits are also generously boosted in half of states through early September may also be contributing to restaurants' lack of willing or available workers. Jobless benefits get a $300 enhancement per week until Labor Day. When we compare that to the minimum wages some restaurants pay, it's easy to see why workers aren't willing to apply for food service jobs.
The presence of the highly transmissible delta variant could also make the ongoing labor shortage even worse. If workers are spooked by the variant, the quit rate at restaurants could surge this fall.
Some restaurants are stepping up to address the labor shortage issue by offering sign-on bonuses to those who accept a job. Others are even paying job candidates to interview. But all told, restaurants may really need to reexamine their wage practices if they want to thrive and recover from the events of the past 17 months.
Furthermore, real estate investors had better hope that restaurants manage to solve their labor shortage issues sooner rather than later. If they don't and they're forced to shutter, landlords across the country could be left with vacancies to fill. And coming off a year when so many businesses closed permanently, that would be a terrible thing.
A vibrant restaurant scene can also help boost property values, both commercial and residential. As such, widespread restaurant closures could really impact the real estate market as a whole -- something investors clearly don't want to see happen.
The good news is that once boosted unemployment runs out in early September, restaurants could be in line for an influx of applicants. But we're still many weeks away from reaching that point, and restaurants that can't operate due to labor shortages may not be able to survive an extended closure, even if it's only temporary in nature.