Workforce Challenges

A grandfather’s prized silver dime collection, lovingly set aside in the hopes of passing it on to future generations. A family home in Nevada. A string of struggling restaurant locations put on the market by an operator at the end of his rope, only to be snapped up by larger, more monied franchises.

These are just a few examples of what one year without the Restaurant Revitalization Fund has cost restaurants fighting to survive, Erika Polmar, executive director of the Independent Restaurant Coalition, said. 

The $28.6 billion federal grant fund ran dry in just three weeks, closing on May 24, 2021. A bill that would refill RRF with $40 billion — legislation the IRC and countless operators were “belligerently optimistic” about — failed to pass the Senate in May. Now, it seems that nearly 200,000 RRF applicants who were approved for grants but didn’t receive them may never see that money.

“When Congress offered these restaurants the RRF lifeline, restaurant owners and operators made business decisions based on those commitments. Restaurants that are still trying to make up for what was lost in the pandemic today are struggling with workforce shortages, record-high inflation, and supply chain constraint,” Michelle Korsmo, president and CEO of the National Restaurant Association, said in a statement last week. “[The Senate’s] vote will further exacerbate those challenges and result in more economic hardships for the families and communities across the country that rely on the restaurant and foodservice industry.”

The disappearance of RRF’s safety net plunged many struggling restaurants deeper into financial danger over the past 12 months, but it has also wreaked havoc on operators emotionally, Polmar said.

Polmar continued, “It's been two years of not knowing how you're going to survive and how you're going to keep your people employed. … It's been awful.”

That fear has been compounded by the uneven playing field left in RRF’s wake. Restaurants that received grants have a leg up over operators still struggling to crawl out from under debt accrued during the peak of the pandemic, which has amassed like layers of “compounding grief,” Polmar said. This grant money has helped the lucky few raise wages to attract and retain better talent, or invest in remodels or expansion.

“There’s [been] aggregation of assets through the entire pandemic. The rich got richer, the poor didn’t. And I think you see that in this industry as well,” Polmar said. 

Without a refill, she doesn’t see how the industry can reach true recovery. 

“We heard Senator Schumer say [the first round of RRF] would be a down payment. And none of us thought that a year later, we would be still talking about that damn down payment and needing the rest of it,” Polmar said. 

Beyond current monetary strain, RRF’s absence is also sapping the industry of future potential, she said. 

“You can't think creatively. You can't pivot your business. … These folks are beyond exhausted. They're weary,”she said. “Right now all they're doing is thinking about the present and how they're going to make it through the next day.”

We took a look at several market performance indicators over the past year to get a sense of how the absence of RRF impacted U.S. restaurants. And while it’s impossible to know both how far the ripple effects of RRF’s closure reaches — or to what degree the closure exacerbated pain points like inflation and labor shortages — it’s clear the past year was challenging. And some restaurants fear there are more dire consequences ahead. 

Labor

Openings and closures

Sales

Debt and bankruptcies

Oil hissed as the White Castle fry cook lowered a basket full of chicken rings into the vat. Next, the cook pulled a basket of fries out of the fryer, letting hot oil drain off for a moment before dumping them at the station where fries are packed and served.

From there, the cook continued to load, drop and pull fryer baskets. It’s a tough job — repetitive, hot, and greasy. But this cook doesn’t pause or flinch at a splash of grease because, instead of skin and muscle, this cook is made of cast aluminum. Called Flippy 2, the robot worked with a mechanical whirl, unceasing, unbothered by the heat and the noise.

Flippy 2 is the second iteration of Miso Robotics’ fry station robot, and a refinement of early attempts to build a labor-saving machine for QSRs. The technology looks to build a cook that never gets sick, never undercooks an item and is never a “no-call, no-show.” Miso’s robot could serve as a two-in-one solution for the restaurant industry, which is the only major business sector to have wage growth outpace inflation, and is struggling to reach pre-pandemic staffing levels. The product is resonating with major chains: White Castle will deploy Flippy 2 in nearly one-third of its stores by the end of 2023. White Castle is the earliest adopter of Miso’s technology, but Wing Zone has committed to deploying Flippy 2 in all future restaurants, and Chipotle is testing Miso’s chip-making robot as well. 

Automation is easing White Castle’s labor pressure and improving efficiency

The Mokena, Illinois, White Castle is the third of the chain’s stores to install Flippy 2. It’s also short-staffed. Diana Williams, the district supervisor responsible for 14 White Castles straddling the border between Illinois and Indiana, said the location has faced fluctuating employment levels since the start of the pandemic. In May, the store had 32 employees, about 8% below Williams’ desired staffing level of 35 workers. 

Traditionally, the fry station required two employees to oversee it. One of the workers’ main tasks was just to handle the baskets in the boiling oil.

“The one that's always managing baskets and dropping frozen product is really just always in front of that fryer. That's the work environment. A very, very challenging work environment,” Mike Guinan, White Castle’s vice president of operations and services, said. 

Flippy 2 frees up workers who would normally be responsible for the fryer to work at what Guinan refers to as the “hospitality door,” a door next to the drive-thru window where workers can carry food and drinks out to cars and greet customers. This, in turn, alleviates pressure on the drive-thru employees, who must take and collect orders, make drinks, hand off food and attend to customers at the window and over their headsets. By reallocating labor from the fryer to the drive-thru, White Castle has improved drive-thru speed of service.

“We're seeing somewhere between 15% and 25%, faster [order] times,” said Jacob Brewer, chief strategy officer at Flippy 2’s parent company Miso Robotics. “And traditionally, a hang up is the fry station. You're often waiting on fries, even if it's one, two or three seconds. Three seconds out of a 90-second order is still meaningful.” 

Miso refined the robot to mitigate training needs

An earlier version of Flippy was less efficient from a labor-saving perspective, Brewer said, because workers had to fill the fryer basket before the robot picked it up. Operational testing, as well as testing at Miso’s Pasadena, California, laboratory, allows the robotics company to continually refine the design and software that powers Flippy 2. 

“Masters and PhD roboticists and software engineers will interact with something far different than [restaurant workers],” Brewer said. “If you want to see if something really is tough, put it in a restaurant.”

Brewer said high turnover in restaurants also drives Miso to improve and simplify its user interface.

“What we didn't plan for is once we trained everyone, turnover is still 100% [at many restaurants], which means everybody is leaving every year,” Brewer said. This turnover figure wasn’t specific to White Castle, which he said had some of the lowest turnover among QSRs. In light of the industry’s turnover rates, Miso designed Flippy 2 so it is intuitive to use and easy to train workers to interact with. Employees need to feel like the robot is a productive team member, he said.

The Flippy 2 arm moves faster than the original Flippy, Brewer said, not because it’s necessary to speed up throughput, but because slower movements led workers to feel the robot was sluggish and inefficient.

Williams said Flippy 2 works well in the kitchen, and has integrated into the operations at White Castle smoothly. In Mokena, one worker feeds product into the machine, while a second, who previously would have been assigned to handle baskets, expedites drive-thru orders and interacts with guests. 

Robotics costs can be competitive with wage costs

White Castle’s configuration of Flippy 2 frees up one worker for redeployment from the fryer, making the robot something of a replacement for an individual worker. But how does the cost of a worker compare to the cost of a robotic arm across a full year’s operations?

Miso charges restaurants a $5,000 installation fee for Flippy 2, and a $3,000 monthly service charge, Brewer said. That cost structure is intended to make it easier for franchisees to adopt Flippy 2. Brewer said this cost — $41,000 per unit in the first year and $36,000 each subsequent year — is lower than the equivalent labor costs of a staff member manning the fryer.

A restaurant with three dayparts, operating the fryer during two hours on peak and one hour before and after peak, has someone dropping and pulling baskets at the fryer station for 12 hours every day. Stretched across 365 days and multiplied by the $15 hourly wage that is increasingly prevalent in major markets, that adds up to $65,700 in raw wages. For a restaurant with two dayparts, the same assumptions yield about $44,000 in wage costs. It is, in Brewer’s telling, a math argument.

“You're cleaning up,” Brewer said. “You're getting a killer ROI from day one.” Brewer added that the choice to reallocate labor, as White Castle says it is doing, or to cut jobs is up to the brands themselves.

But a closer look at labor market data reveals a more complicated equation. Fast food cooks in the U.S. earned on average $11.63 an hour, the lowest wage of any job class in food preparation and serving-related occupations, according to the U.S. Bureau of Labor Statistics. This would yield a wage cost of $50,939 for a restaurant open for three dayparts, closer to Flippy’s first-year costs. A restaurant open through just two dayparts would see average wage costs for a fry cook around $33,959, just below Flippy 2’s cost in its second year of operations.

The hourly wage at which it becomes cheaper to install Flippy 2 than to employ a fry cook for three dayparts is $9.36 in the first year, and $8.21 in subsequent years. For two dayparts, the break even point for wages compared to Flippy 2 fees is $14.04 in the first year and $12.32 in following years.

But this comparison of hourly wages and costs doesn't account for expenses that vary on a store-by-store basis. For example, installing Flippy may cause a restaurant to pause operations for a day or two, or require kitchen renovations to make space for the robot. Restaurants would also need to train staff on how to interact with Flippy. But Flippy 2, as Brewer said, does not come with some of the more costly aspects of labor, like training workers to operate the fryers, which can add up for brands like White Castle that cross-train their employees so they can fulfill any back-of-house role. 

Robotics could shape the restaurant labor market

Major publications have argued since at least 2015 that wage increases would spur automation in fast food. Miso’s deals to bring robots to hundreds of units in the next few years, and the number of robots working the floor at the National Restaurant Association Show, suggest a growing swath of the industry is embracing automation. Recent surveys have indicated restaurant operators are hungry for technology that can reduce inefficiencies across management, back-of-house and front-of-house roles.

Brewer also touted Miso’s crowdfunding, totaling more than $50 million raised from 18,000 shareholders, as indicative of a larger acceptance of automation in restaurants.

“People get the product, people get the problem,” Brewer said.

Before the COVID-19 pandemic, wages were growing steadily in foodservice, according to the BLS. Employment in foodservice grew steadily too, peaking at 12,360,000 workers in February 2020. Both fell in the months that followed, according to BLS data. Since then, foodservice wages have outpaced broader inflation, and the growth in compensation has exceeded the recovery in employment. The number of foodservice workers, about 11,566,000 in April 2022, lags behind pre-pandemic peaks by more than three quarters of a million workers.

Rising wages haven’t drawn workers back into foodservice fast enough for many operators, who have cut hours, simplified menus and leaned into operational efficiencies. Now, a number of chains are betting on back-of-house automation to solve operational problems — including White Castle. 

“At the end of the day, we want to have Flippy in every Castle,” Guinan said

For retailers, rising costs and inflationary constraints on consumer spending are not the only obstacles affecting the bottom line—labor uncertainty is also a factor. Understanding and responding effectively to evolving workforce dynamics continues to be key to success in the retail sector.

Retail business owners looking toward the future need to understand and respond creatively to shifting customer behavior and preferences, on both a digital and an experiential level—and having the right talent in place is essential in this effort. By investing in employee resources and programs, as well as process improvements and time- and labor-saving technology, retailers can continue to deliver on their brand promises to consumers.

Strategic investments to maximize efficiency

In a tight labor market and uncertain inflationary environment, retailers must combine creative recruiting and retention strategies with the most up-to-date sales forecasts to ensure their head count supports evolving sales expectations. Recent changes in the labor force—from scarcity of talent and significant wage increases to last-minute absences and resignations—have left many retailers struggling to retain their existing employees, let alone find new ones. To compete for talent, business leaders must continue to evaluate their workplace environment, rethink their flexibility and financial benefits, and reconsider their approach to recruitment.

Efficient staffing of stores and fulfillment centers will continue to be a challenge, as will retraining staff to meet consumers’ evolving expectations. Since the start of the pandemic, businesses that have invested in productivity optimization and digital strategies have seen those key efforts start to pay off. For retailers that have yet to invest, a range of process improvement techniques and new technology can help measure, model and improve workforce productivity to address capacity issues.

Leveraging technology and data—including information on consumer traffic patterns and buying behaviors—will help employers deploy resources more effectively and may provide talented employees with opportunities to take on more diverse and potentially rewarding work tasks. In turn, greater opportunity in the workplace can lead to improved hiring and retention.

Providing a seamless customer experience across all channels

In today’s inflationary environment, it has become increasingly important for companies to interact with, understand, and meet the needs of their customers across channels, delivering a seamless shopping experience through well-trained employees and the power of technology, including data analytics. Harnessing the power of data, process automation and productivity-enhancing technologies will provide the biggest bang for every invested buck.

During the pandemic, businesses that have either implemented or enhanced their digital platforms have succeeded in driving customer engagement—and profits. As retailers continue to adapt operating models to meet today’s challenges, they should assess their current technology infrastructure and introduce new technologies where appropriate. Customer-facing technologies like self-checkout and mobile checkout—winners during pandemic-era shopping—can help, in addition to automation technologies in warehousing and distribution centers.

Determining the right time- and cost-saving technology for your business is only one piece of the puzzle. As technology is added—including for the collection and utilization of client data—cybersecurity and privacy programs must be assessed and enhanced for operating units, warehouses, corporate offices and remote employees.

Flexibility to pivot as consumer preferences shift

Companies have learned a great deal from the challenges brought on by the pandemic, including the importance of transitioning quickly to other channels and implementing new systems to improve effectiveness and efficiency.

Leveraging a tailored digital strategy to optimize operations and offset the impact of rising costs and labor shortages is a must for growing organizations. The future of retail will continue to be determined by changes in customer behavior, and by businesses’ ability to provide both the ease of online transactions and the benefits of an in-person experience—all amid a rapidly accelerating pace of change.

Shortages of delivery drivers, which have been worsening since 2021, are taking a toll on top pizza chains. Pizza Hut and Domino’s both posted negative same-store sales during the first quarter of 2022, attributing these financial dips to prolonged labor pressure. 

But despite these challenges, one pizza restaurant continues to grow: Papa Johns reported a 1.9% increase in North American same-store sales during Q1. How? In part, because the chain has been working with third-party delivery aggregators for the past three years to support stores during peak hours. This move initially aimed to mitigate sky-high driver turnover, which reached 220% in 2019, but now it appears to be a farther-reaching strategy. 

“Staffing is always a challenge in our industry and continues to be so. In addition to our integrations with the aggregator marketplaces, our nationwide integrations with deliver[y] service providers have been a key tool allowing us to continue to serve our customers during peak times,” Papa Johns CEO Rob Lynch said during the company’s Q1 2022 earnings call.  “Though these delivery-as-a-service transactions are a slightly lower margin versus using our own drivers, they are incremental, profitable orders that otherwise may have gone unfulfilled.”

Papa Johns' premium pricing has also helped alleviate some staffing issues since the company needs fewer transactions compared to more value-centric competitors, Lynch said. 

The chain has also been using a third-party call center since 2020 to take orders instead of requiring individual stores to field phone calls, freeing up employees to complete other tasks. A little over half of Papa Johns' domestic stores, or roughly 1,600 in North America, are using the Papa Call phone service, and more are expected to sign up, Lynch said. Domino’s also plans to deploy its call center to up to 3,000 stores by mid-May. 

“We continue to invest in tools to increase productivity in our restaurants,” Lynch said. “And as labor becomes more expensive, those tools become more valuable.”

The benefits of aggregator partnerships

Some Papa Johns operators say third-party delivery partnerships account for 6% to 7% of sales while others say it represents about 15% to 16% of sales, BTIG said in a May 2 report emailed to Restaurant Dive. 

Franchisees' relationships with delivery firms have improved over time, Lynch said.

“We've learned a lot about how to work most effectively and productively with these aggregators. It's not a perfect relationship. There were some bumps along the way that we had to work collaboratively with them to iron out, to get to an operating model in the customer service level that allows us to continue to leverage it at the scale that we do,” Lynch said.

Despite apprehension among some operators, increased partnerships could help improve Papa Johns' supply of drivers. 

“We continue to be bullish on these growing partnerships as we execute on additional opportunities to reach new customer segments,” Lynch said.

Papa Johns began its foray into delivery partnerships with a relationship with DoorDash in 2019, and added Uber Eats and Postmates later that year. Moving away from exclusivity with DoorDash to partner with additional providers may also allow for increased competition that could alleviate jumps in commission rates, which franchisees have expressed concerns about, BTIG said in a May 5 Papa Johns report emailed to Restaurant Dive. Multiple delivery deals ensure Papa Johns isn't beholden to the pricing of just one company, and it could use relationships with different delivery providers to negotiate costs down.

“We expect Papa John's to continue to focus on ways to increase driver pay, to lower turnover, driving sales through its own higher-margin channel,” BTIG said.

Forty-four percent of drivers prefer the scheduling flexibility offered by ride-sharing providers like Uber and Lyft versus more structured pizza delivery jobs, according to a BTIG survey of nearly 300 active ride-share drivers emailed to Restaurant Dive. That number went up to 56% among drivers 18- to 24-years-old. All-in pay was a determining factor for 40% of all drivers. 

Rising gas prices have also prevented 40% of survey respondents from taking on food delivery jobs, and a third of drivers said they used to deliver food but now only do ride-sharing. 

Chains dependent on self-delivery, like Domino's and Papa Johns, may need to increase flexibility, raise pay and offer fuel reimbursements to stay competitive as they look to boost driver counts, BTIG said.

The current delivery driver shortage was evident during the latest round of quarterly earnings reports, as the major pizza chains — Domino’s, Papa Johns and Pizza Hut — all alluded to the challenge. Same-store sales in the delivery channel at Domino's, for example, fell 10.7% during the first quarter with executives citing driver shortages as the main culprit.

Yum Brands executives said during the company's Q1 2022 call that it is working to raise staffing levels at Pizza Hut to combat the driver shortage. The company is also adding third-party delivery companies into its model for the first time, enabling aggregators like DoorDash and Uber Eats to fulfill orders during peak hours, and adding its presence on their marketplaces to expand its customer reach. 

Domino’s is also facing driver staffing challenges. Incoming CEO Russell Weiner said his company is continuing a “deep dive on driver labor," which could even include partnerships with third-parties as "nothing is off the table."

Weiner added that he doesn’t think the driver shortage is the result of pay, as Domino’s has increased wages by over $30 million during the past three years. He said marketing will play a recruitment role moving forward, as the company showcases stories about franchisees who started out as delivery drivers.

Papa Johns added third-party partnerships in 2019, but CEO Rob Lynch noted during the company’s Q1 2022 call that driver staffing has been a challenge for over a year, exacerbated by a Omicron surge in January. Still, the company’s third-party relationships, as well as investments and “productivity tools,” have “afforded us what we need to meet the needs of our customers,” Lynch said. These strategies helped Papa Johns boost same-store sales by 1.9% in North America during the first quarter.

Lynch said Papa Johns is still investing in technology to help its drivers be more productive and earn more money in hopes of raising retention.

Fuel reimbursement programs are likely drawing workers towards third-party delivery companies. The average cost of fuel has been above $4 per gallon since March and DoorDash, Grubhub and Uber have added programs to help drivers. BTIG believes such incentives are pulling drivers away from pizza delivery, and in some cases away from delivery and towards ride-share services altogether. Some pizza chains have begun implementing their own incentives, however, as high fuel prices linger. Papa Johns recently began offering prepaid gas cards, according to BTIG.

“Restaurant concepts with their own delivery network will either have to supplement with an aggregator or change their driver business model to resemble the flexibility of ride-share options," BTIG Restaurant Analyst Peter Saleh said in the report.

Domino’s, at least, is considering such flexibility as part of its deep dive. During its Q1 call, outgoing CEO Ritch Allison said, “there are a lot of folks out there looking for more flexibility, perhaps shorter shifts, maybe fewer hours over the course of the week. So we’re taking a look at that scheduling component to make sure the way we ask our team members to show up aligns with their expectations of what they want to do.”

TGI Fridays is reimbursing its general managers up to $2,500 for vacation expenses. The perk was rolled out in 2022 to help mitigate labor shortages affecting the restaurant industry. The casual dining chain is also offering general managers bonuses to help cover health insurance costs.

Fridays' vacation reimbursement is a creative approach to paid time off, which many restaurant chains have expanded throughout the pandemic to attract talent and keep existing employees. The full-service category is more challenged by the labor crisis than its quick-service peer, according to Moody's. But the overall industry continues to see slow job gains.

About 650,000 fewer workers are employed in foodservice than in January 2020, and the sector has seen only gradual employment increases since July 2021, according to the U.S. Bureau of Labor Statistics. The quit rate is also at an all-time high — about 6.9% (920,000) of foodservice workers quit in November.

In April 2021, Taco Bell began offering general managers up to four weeks of accrued vacation per year. Some restaurant owners have taken their employees on vacations to show appreciation for their staff's work throughout the COVID-19 crisis. Danielle Jones, owner of Abenaki Trail Restaurant and Pub in New Hampshire, pays for flights and accommodation for her employees every year. Jones told Business Insider that she hasn't had issues finding staff to keep her restaurant running.

Fridays CEO Ray Blanchette told Bloomberg the chain's two new benefits should bolster retention for both managers and hourly employees striving for promotions. 

Employees are leaving the restaurant industry in droves for several reasons, which may be too complex to be solved by vacation stipends or small raises. The current labor market problems exist despite average pay for restaurant workers surpassing $15 an hour for the first time ever last year. 

BlackBox/Snagajob data found that 23% of workers are leaving restaurants to find more consistent scheduling and income, and 17% are leaving because they lack access to professional development opportunities. As many as 33% of hourly workers would like to change industries, according to BlackBox/Snagajob data. Further, a majority of surveyed restaurant workers reported experiencing emotional abuse or disrespect on the job during the pandemic.

Operators have deployed a variety of tactics to solve the labor shortage — from free iPhones to enhanced educational benefits and hiring bonuses. The needle hasn't moved much so far though, according to the National Restaurant Association's State of the Industry Mid-Year Update for 2021. Three out of every four restaurant owners reported employee hiring and retention as their greatest difficulty.

While eating and drinking places gained 1.3 million jobs during the first seven months of 2021, the industry is still 1 million jobs short from reaching its pre-pandemic level of 12.3 million, according to the National Restaurant Association.

In August, however, the industry lost over 40,000 jobs for the first time this year due to an uptick in coronavirus cases, keeping the labor shortage top of mind. Without enough workers, many restaurants have reduced operating hours and rely on overburdened staff who face stronger diner demand. 

Many operators continue to pin the labor crisis on higher unemployment benefits offered during the pandemic, but a closer look at several labor reports released in the past few weeks show the situation is much more complicated. 

Over a quarter of restaurants can't find enough cooks

Twenty-six percent of restaurants say they are looking for cooks and line cooks, while 17% are in need of servers and 7% are seeking bartenders, according to 7shifts data emailed to Restaurant Dive. Restaurant jobs data was sourced from over 2,400 job postings from over 1,800 restaurants across North America from June 1 to Aug. 22, 2021, while 7shifts used internal data from over 18,000 restaurant locations and 500,000 employees with over 90% sourced in North America.

The hardest positions to fill are for cooks and line cooks, managers and bartenders, the company said. Twenty-three percent of postings for cooks/line cooks receive applications while 37% of manager positions receive applications, according to 7shifts. Fifty-six percent of bartending postings attract applicants.

Sit-down restaurants across the industry are already feeling the pinch of reduced staffing. Full-service concepts are operating with 6.2 fewer employees in the back of house and 2.8 fewer staff members in the front of house compared to 2019, according to a report by Black Box Intelligence and Snagajob. The report includes survey results from over 4,700 former, current and future hourly restaurant workers, as well as data from Black Box Workforce Intelligence. 

Limited-service restaurants are also under labor pressure, and a handful of Chick-fil-A and McDonald's units have had to close their dining rooms due to insufficient staffing. Some of the Chick-fil-A restaurants said they disabled curbside ordering to reduce strain on their workers, according to CBS News. 

Many restaurant employees just aren't coming back

Numerous workers have left the restaurant industry to seek careers elsewhere, especially after many restaurants closed early in the pandemic. Fifteen percent of hourly workers surveyed by Black Box/Snagajob said they have changed industries in the past year, while 33% would like to do so. 

Thirty percent of former restaurant employees found office positions and 17% went into teaching or education, according to Technomic's Crisis on the Front Lines study. Many have also turned to industries that are experiencing tremendous growth. Warehouse/logistics jobs, following a boom in online sales, are up 278% and on-demand jobs, which can provide more flexibility for both workers and employers, are up 183% compared to before the pandemic, according to Snagajob data. 

Most workers are leaving the restaurant industry for these three reasons: to receive higher pay (28%); for access to a more consistent schedule/income (23%); and because they lack access to professional development and promotional opportunities (17%), according to Black Box/Snagajob. 

Hourly wages are going up

Many restaurants are offering hiring incentives and hourly wages above minimum wage to attract fresh labor. Limited-service hourly wages rose 10% year over year in Q2 2021, according to Black Box Workforce Intelligence data, marking the highest increase the industry has reported in several years. Full-service line cooks saw wages increase 6% during the period, compared to 3% in Q1 2021. 

But better pay hasn't been enough to keep employees on the job. Turnover rates for both limited-service and full-service restaurants are higher than they were pre-pandemic, reaching 144% and 106%, respectively, in June. In 2019, limited-service restaurants recorded 135% turnover and full-service operators experienced 102% turnover, according to the Black Box/Snagajob report. 

Incidents of abuse have increased

Though restaurant pay is improving, rates of abuse inflicted by both customers and managers have risen during the pandemic. According to the Black Box/Snagajob report, 62% of workers have experienced emotional abuse/disrespect from customers while 49% said they experienced emotional abuse from managers. Fifteen percent of employees said they experienced sexual harassment from customers or managers/co-workers. 

A One Fair Wage report from December reiterates these findings, especially with customers acting out in response to the enforcement of COVID-19 protocols. Some workers said customers have threatened to not give a good tip unless the servers took off their masks.

Such harassment could continue, especially with a majority (83%) of workers saying they plan to keep wearing a mask while working regardless of the business or state requirements, according to Black Box/Snagajob. 

This dynamic is likely to become more complicated as states and municipalities increasingly require proof of vaccines for diners and employees to enter restaurants. One-third of diners have already said they would leave a restaurant if asked to provide proof of vaccination. And some employees are also pushing back against these mandates. A New York City restaurant owner reported that 20% of his staff said they would rather resign than get vaccines, according to Business Insider. 

What restaurants can do

Hiring and retention have been long-standing challenges in the restaurant industry, but the combination of surging diner demand and a shrinking labor market push the stakes even higher. Still, there are strategy pivots restaurants can make to attract and retain workers.

Use technology: Operators that used restaurant technology reduced staff turnover by 13%, which saved over $6,000 in costs to hire new staff for a 10-person team, according to 7shifts. On-demand pay apps have shown to improve retention rates as well, especially since they offer more flexibility on pay schedules versus the typical every-other-week pay date. App-based applications that streamline the process and cut down completion time have also helped boost applicant numbers. 

Ensure health and safety on the job: For operators enforcing mask and vaccine mandates, Black Box/Snagajob suggests operators should provide support to workers and make sure staff are comfortable with enforcing these rules — adding that dialogue is key between staff and managers to mitigate potential issues that could impact retention. Employee health check tools can also help ensure staff remain coronavirus-free. Such tools helped prevent the spread of over 500 cases and were used 1.5 million times by employees during the pandemic, according to 7shifts. 

Offer flexibility: Over one-third of hourly workers and job seekers are parents, so operators should highlight any flexibility they can offer, Black Box/Snagajob suggests. Employers should talk to their staff to see what they need if they are struggling with childcare and offer to adjust hours, the companies said. 

Make job postings clear: The top five things workers look for in a new job is a starting hourly wage, opportunities for advancement, flexible schedules, health benefits, paid-time off and information about company culture, according to Black Box/Snagajob. These offerings, as well as any hiring incentives, should be clear and apparent in job postings, the companies said. Making pay rates transparent from the beginning has also helped boost job applications.  

Appeal to younger job seekers: A majority of workers in both limited- and full-service restaurants are 16- to 24-years-old, according to Black Box/Snagajob, so job descriptions and work environments should be attractive to them, the companies said. Setting up an employee referral program can also boost applicant rates, as they have a hire rate five times higher than other applicants, the companies said. 

The National Labor Relations Board’s Buffalo Regional Office issued a complaint against Starbucks in May 2022, alleging the coffee giant violated workers’ rights hundreds of times in western New York. The regional office found merit in many of the union’s claims about union busting, alleging at least six workers were fired for organizing in upstate New York.

The complaint also alleges Starbucks surveilled and punished workers for organizing by selectively enforcing sections of its employee handbook, according to a copy of the complaint sent to Restaurant Dive. In one instance included in the complaint, Brian Murray, a worker and union supporter in Buffalo, pictured above, received a written warning for wearing a union shirt to work, though Murray said the company did not previously enforce a prohibition against T-shirts with large logos. The union drive has reached more than 250 stores.

Starbucks representative Reggie Borges said in an email to Restaurant Dive that the union’s charges and the NLRB’s complaint have no merit. Starbucks maintains that union supporters who faced disciplinary action did so because they knowingly violated the company’s code of conduct. The company will not settle with the union before trial.

Starbucks has attempted to dissuade employees across the country from voting yes in union elections. But the company has also promised to bargain in good faith, as required by law, with unionized cafes. The NLRB regional office, however, claims Starbucks neglected to bargain over changes to working conditions at unionized stores. For example, the complaint alleges Starbucks changed the minimum number of hours workers at the Elmwood Avenue location in Buffalo were required to be available for work on a weekly basis.

In April, Starbucks also announced new employee benefits will not extend to workers at unionized stores, or stores that have filed for elections. Though Starbucks maintains these perks are unrelated to the union drive, Starbucks Workers United filed charges against the company over the benefits rollout. But these charges came too late to be part of the NLRB’s consolidated complaint. If those benefits changes were in fact intended to dissuade employees from organizing, it would be illegal, retired union-side labor lawyer Gay Semel, who worked as a field attorney for the NLRB for two years, said. 

The question now is how this NLRB complaint, and others like it, could impact Starbucks’ anti-union strategy going forward. According to labor experts, the complaint’s teeth may be undermined by the NLRB’s lengthy Process for Unfair Labor Practices. 

The NLRB’s complaint will pass next to an administrative law judge, and Starbucks and the union will have time to file briefs in response. From there, the judge will try the case, but it could be years before consequences are handed down if the chain is found to have committed union busting.

That process, including objections, can generate hundreds of pages of briefs and last for years without a settlement or a conclusion, Semel said. 

“It is the beginning of a litigation process that permits both sides to be heard and to present evidence. We believe the allegations contained in the complaint are false, and we look forward to presenting our evidence when the allegations are adjudicated,” Borges wrote. 

A possible consequence outlined in the NLRB’s complaint is that Starbucks should produce a video statement on workers’ rights, explained by interim CEO Howard Schultz or President of Starbucks North America Rossann Williams, that could be shown to all stores. 

John Logan, professor and director of labor and employment studies at San Francisco State University, wrote in an email to Restaurant Dive that such a video recording was a more effective remedy for unfair labor practices than posting notices, as such notices often go unread. The complaint also calls for increased training for Starbucks managers on workers’ rights and the right to equal time and ability to respond during compulsory anti-union meetings. 

The NLRB cannot impose remedial action unless an administrative law judge finds the company violated labor law, Sid Lewis, an employment-side labor lawyer with Jones Walker, wrote in an email to Restaurant Dive. Even if the company is found to have broken the law, Starbucks would have room to maneuver by appealing to federal court. The board’s ability to impose penalties is also restricted by law, NLRB Press Secretary Kayla Blado said. 

“The NLRB is prohibited from assessing monetary penalties,” Blado said. “The agency may seek make-whole remedies, such as reinstatement and backpay for discharged workers, and informational remedies, such as notice posting, notice reading and electronic distribution of a notice.”

The complaint’s request for video explainers on workers’ rights, for example, could take years to enforce — too late to have an impact on the dozens of elections the NLRB has scheduled at Starbucks stores over the next few months.

It’s common, according to Semel, for companies with limited resources to settle before such a trial. But a company the size of Starbucks could absorb the cost of an administrative law case, and appeal to an appeals court if dissatisfied with the initial trial’s outcome.

“This is the great weakness of labor law,” Semel said. “If you have an employer with deep pockets, they can just keep doing this for a really long time.”

In extreme cases where large numbers of serious labor law violations are alleged, Semel noted, the NLRB can seek an injunction against company actions in federal court. The NLRB’s New Orleans region has already sought an injunction against the firing of seven Starbucks union supporters in Memphis, Tennessee.

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“This is the great weakness of labor law. If you have an employer with deep pockets, they can just keep doing this for a really long time.”

Gay Semel 

Retired union-side labor lawyer

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But Semel said such injunctions are rare, and the process by which the board decides to seek one is also lengthy.

“Of course, employers can appeal any adverse decision through the federal court system,” Lewis said.

Extended litigation over labor law gives an edge to employers in high-turnover industries, Nelson Lichtenstein, a professor specializing in labor history at University of California Santa Barbara, told Restaurant Dive in a past interview.

“From the point of view of employers, delay is absolutely vital, and a winning strategy,” Lichtenstein said. “Just delay, delay, whatever you're doing, whether it's the vote or the union contract or anything, just delay it, and in a year, half a year, half the workforce will be gone.”

NLRB complaints rarely have an impact on new organizing drives, Lewis said, especially in shops where the union already lacks support. But Murray said he felt vindicated by the NLRB’s complaint — arguing it’s a symbolic win for the union. 

“I think it'll have an impact on morale and probably reverse the cooling effects of Starbucks’ retaliation against workers seeking to organize,” Murray said.