Even with more teenage workers, restaurants struggling to fill positions
- The number of restaurant employees between 16 and 19 years old is back up to 2007 numbers, according to the National Restaurant Association's State of the Industry report. The Department of Labor's Bureau of Labor Statistics shows that 1.7 million teens worked in restaurants in 2018, similar to 2007, according to CNBC.
- Despite this trajectory, the overall labor force participation rate of teenagers has remained stagnant since 2016, which means the restaurant industry has pulled those employees from other industries such as retail.
- With a continued low employment rate and total restaurant and foodservice employment projected to top 15 million in 2019, recruiting and retaining employees is cited as one of the top challenges faced by many operators, according to the National Restaurant Association report.
Although the teenage demographic numbers reflect pre-recession employment levels, they aren't expected to stay there. Teenage employment is expected to shrink by 600,000 from 2016 to 2026. This will add even more pressure for operators. Hudson Riehle, senior vice president of research and knowledge at the National Restaurant Association, told CNBC that there are currently 1 million job vacancies in hospitality. According to the report, more than one-third of operators have job openings that have been difficult to fill, in particular, back-of-house employees.
Although U.S. employers across all industries are struggling to find and keep employees amid the tightest labor market in nearly 50 years, the stakes may be higher in the restaurant space, which has long struggled with high turnover. In 2017, the turnover rate for hourly employees at limited-service chains was 146.2%. An inconsistent labor force can compromise operations and service, which can ultimately compromise business. In an intensely competitive environment, this can make or break a restaurant.
A number of restaurants across the industry have been plagued with employee shortages, even forcing some to close. Although more retail locations are shutting down and the industry has reduced costs and spending, retail is generally able to attract labor a bit more aggressively because its margins aren't as thin. This could explain why Target, for example, will increase its minimum wage to $13 an hour in June, with plans to reach $15 next year.
Last year, Dunkin's then-CEO Nigel Travis told Business Insider that the labor shortage is the biggest problem facing the industry. According to the association's report, operators see little sign of these challenges abating this year. As a result, a strong majority (75% to 85% depending on segment) say they plan to devote more resources to recruiting and retaining employees in 2019 than they did in 2018.
Despite these extra pressures, it's not all bad news. The number of older workers joining the restaurant workforce is projected to continue growing. The number of adults 55 and older working increased by 400,000, or 70%, from 2007 to 2018. Though positive, that still represents a 200,000-person gap compared to the projected loss of teenage employees. With 1.6 million new restaurant jobs expected to be added by 2029, restaurants are going to have to get creative to stay in operation — perhaps with automation or other technology, or even more enticing benefits.
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