Though the coronavirus pandemic had a brutal impact on the greater U.S. economy, the hospitality industry was notably hard-hit. That extends to restaurants, which were largely forced to close for in-person dining during the pandemic.
Now, things are looking up for the sector. With pandemic-related restrictions having largely been lifted, restaurants are free to welcome back diners at full capacity, which could, in time, help them recover from the events of the past 16 months.
There's just one problem -- nobody seems to want to work at restaurants anymore. In fact, as of last month, almost half of U.S. restaurants were operating with 20% less staff than they'd normally have on board.
Things have gotten so bad that some restaurants are resorting to sign-on bonuses just to convince workers to take a job. And recently, a Tampa area McDonald's had to go as far as to pay job candidates $50 apiece just to come in and sit through an interview.
Why are restaurants lacking workers?
Last year, millions of restaurant jobs were shed as the pandemic reared its ugly head. And now that restaurants are ready to hire again, workers aren't biting.
A big reason boils down to the fact that restaurant workers are notoriously underpaid, and many are forced to rely on the generosity of tippers just to stay afloat financially. In fact, working at a restaurant can be a pretty hard sell outside of a pandemic. But when the idea of having to do so poses a health risk, it's tough to make the case to come back to work.
Such is the position many restaurant workers are in now. The idea of earning minimum wage or less to work in an environment loaded with maskless people just isn't appealing. And so, those workers would rather find another job -- even a similarly low-paying one -- than put their health at risk.
There's also the matter of boosted unemployment benefits to consider. In March, the American Rescue Plan was signed into law, and in addition to another round of stimulus checks, it boosted unemployment benefits by $300 a week through early September.
At this point, 26 states have pulled the plug on boosted benefits ahead of schedule, citing local labor shortages as the reason. But in the 24 remaining states, that boost is looking like it'll stay put until its Labor Day expiration date.
And considering that boost alone could exceed what some restaurant employees might otherwise make working 40 hours a week, it's easy to see why so many prospective workers are opting to stay away.
Should restaurants focus on short- or long-term solutions?
In this situation, it's also easy to see why restaurant owners may have to increasingly throw money at the problem of insufficient staff, whether that means paying sign-on bonuses or offering cash for workers to come in and interview.
Of course, a better solution may be for restaurants as a whole to rethink their wage policies and come up with a structure that allows their employees to be more generously compensated. But that's a process that could take time, and restaurants don't have it -- not when they're desperately trying to recover from the miserable year they just had.
Of course, if restaurants can't solve their staffing problems soon, some may be forced to shutter, either on a temporary or permanent basis. And that, in turn, would be very bad news for real estate investors.
If restaurants close, commercial landlords will have vacancies to deal with and, potentially, past-due rent to chase down. And any time a string of local businesses closes, it can hurt property values in the area, thereby adding to the blow.
It's clear that restaurant owners will need to go above and beyond to attract workers, at least until early September when boosted unemployment runs out. The sooner they get on board, the greater their chances of surviving this latest chapter in an ongoing crisis.