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Restaurant Labor Shortages Supply-Chain Wide Continue to Impact U.S. Businesses

Restaurant Labor Shortages Supply-Chain Wide Continue to Impact U.S. Businesses



UNITED STATES - To say that today's labor shortages are fueling economic challenges in the U.S. is an understatement. But, I do believe that its redundancy is necessary as we address the repercussions on both sides of the coin—the trade and the consumer. Speaking of the foodservice sector, 2020 experienced one heck of a year, and the segment is still battling a labor shortage with staffing their restaurants and hospitality businesses, as we previously reported. While May employment numbers were on the rise and some pandemic-era benefits are being rolled back, there are still many pain points plaguing the industry.

The foodservice sector is currently still battling a labor shortage with staffing their restaurants and hospitality businesses

As the foodservice industry rallies to reemerge, one national restaurant chain executive tells me that the challenges to bouncing back are multilayered and complicated for the entire supply chain. Even as post-pandemic sales begin to gain ground for some businesses and they begin to fully open back up post-pandemic and shutdowns, the ripple effect is both far and wide.

“Labor is still very short in supply throughout the supply chain. Not only is labor an issue in our restaurants, but growers, processors, protein suppliers are feeling the lack as well. Trucking and transportation companies, distribution center warehouses—all of these pieces of the puzzle that allow us to feed the country are feeling the strain of the labor shortage,” the source tells me. “I even know of produce distributors that are offering signing bonuses in excess of $2,500 just to get drivers!”

The source went on to express the impact of pandemic-area assistance, well aware that there is a positive and negative impact.

“The stimulus money that was necessary for 2020 and maybe even in the first quarter of 2021, may now be crippling our country and causing inflation,” they said. “The extensions of unemployment and increased amounts need to be canceled for those that can work. People that are able to work should be working,” they added.

The National Restaurant Association (NRA) reported that 62 percent of fine-dining operators and 54 percent of both family dining and casual dining operators revealed that staffing levels were more than 20 percent below normal as of the January 2020 NRA statement on the state of the industry, when the report emerged. We realize those numbers are improving but many still struggle.

There are many reasons for labor shortages in the U.S. as restaurants struggle to staff their businesses. These include pandemic-era benefits keeping the workers they need out of the workforce, government subsidies, unemployment advantages, and changes in child care costs at the familial and community levels. While some states have halted supplemental unemployment benefits (approximately half of all U.S. states are slated to end the $300-a-week federal benefit before its September expiration), there is still much work to be done, according to publications like CNET and others.

According to Business Insider, which distilled the recent job report from the Bureau of Labor Statistics (BLS) and recent reports from NRA, while May had some employment gains, the hospitality industry is still hurting in some sectors.

The National Restaurant Association (NRA) reported that 62 percent of fine-dining operators and 54 percent of both family dining and casual dining operators revealed that staffing levels were more than 20 percent below normal as of the January 2020 NRA statement on the state of the industry

The article notes, “...venues reliant on dine-in have far from recovered. Cafeterias and buffets are worst hit, with 58 percent fewer employees than pre-pandemic. The foodservice contractor segment is still 37 percent down; catering and mobile foodservice 32 percent; bars and taverns 25 percent; and full-service restaurants 14 percent, or 750,000 fewer jobs.”

Additionally, the publication noted that the old normal returning is still very much in question.

“Across all operators, 84 percent told the Association [NRA] their staffing levels were lower than normal – and 10 percent said that they thought staffing levels would never return to normal at their restaurant,” the article read.

According to a separate NRA report today, Congress will unveil the Restaurant Revitalization Fund Replenishment Act of 2021 tomorrow to provide $60 billion in additional funding for the Restaurant Revitalization Fund. The statement added that the restaurant industry has lost $290 billion in sales, 90,000 restaurants have closed permanently or long-term, and more than 1.5 million jobs have not been recovered since the onset of the pandemic shutdowns in March 2020.

As our industry rises to the challenges of the post-pandemic economy, please stay tuned to AndNowUKnow for the issues that matter most to each of you, our friends and colleagues.