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SSRExample3-1.doc

Restaurant Labor Shortage and Solutions for Restaurant Owners

In September, the United States’ unemployment rate fell to the lowest that it has been since 1969 (Taylor, 2018). While this signifies a strong economy, it is unsettling news for restaurant owners. Fast-food and full-service restaurants alike are now struggling to find and retain employees. This has created an environment where restaurant owners are competing not only for customers, but for employees as well.

It is now more important than ever for restaurant owners to provide competitive wages and incentives for employees. As the restaurant labor pool continues to decrease, it will also become increasingly necessary to urge administration to take action on the underlying causes of this issue.

Methodology

The issue of a decreasing restaurant labor pool yields millions of results from journalists, bloggers, and restaurant owners online. I narrowed down these results to 6 articles written within the past year from sources such as the New York Times, Business Insider, and the National Restaurant Association. These articles provided me with information that was necessary to better understand this issue and uncover potential solutions for restaurant owners.

Background

The restaurant labor shortage is threatening the success of restaurants throughout the United States. Toast, Inc., a restaurant software company, surveyed a pool of 800 restaurant owners for their restaurant industry report. This survey indicated that 59% of successful restaurant owners and 63% of No-Growth restaurant owners find hiring employees to be their top challenge in 2018. This indicates that the labor shortage is affecting all restaurants despite their level of success. This data is reflected in the graph below.

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Issues and Conclusions

Unemployment Rate and Restaurant Growth

A strained labor market and the surge of new restaurants combined has had a significant role to play in the issue of restaurant labor shortage. The National Restaurant Association reports that within the next 10 years, the restaurant industry is projected to add nearly 2 million jobs to the market (Upson, 2018). With the restaurant labor pool already strained, restaurant owners are having to come up with different ways to compete for employees.

In the case of a tight labor market, most businesses automatically default to increasing their wages and offering incentives to draw in employees. Fast-food restaurant wages have been increasing faster than wages overall since 2014, and companies such as Taco Bell and McDonald’s are initiating programs to compensate their employees for college tuition (Abrams & Gebeloff, 2018).

Many independently owned restaurants are unable to provide increased wages and benefits due to low profit margins. These restaurants must open their workforce to individuals that they may not have had to consider in the past. The restaurant workforce is now expanding to include former prisoners, individuals with learning disabilities, and the elderly who are still seeking employment. Restaurant owners are actively seeking out formerly homeless individuals and recovering addicts to recruit for their businesses as well (Steinhauer, 2018).

Restaurants which are capable of increasing wages and providing benefits and incentives to their employees may find this to be a useful tactic to draw in employees from their surrounding competition. Other restaurants will have to reconsider the criteria that their employees are required to meet and cast out a wider net for potential employees.

It should be noted that while increasing wages seems like a natural solution, many restaurants have found that increasing their base pay has little correlation with their employee turnover (Navarra, 2018) . Increased wages may draw in members of the restaurant workforce, but other factors play a part in retaining an employee. While several of these factors are out of the restaurant owner’s control, it is more important than it has ever been for restaurant owners to avoid internal conflict within their business and to be attentive of the needs of their employees.

Immigration Enforcement

Recent immigration enforcement has further strained the restaurant workforce. Dishwashers and restaurant cooks have historically been drawn from the foreign-born workforce (Steinhauer, 2018). A crackdown on undocumented workers has eliminated these individuals as an option for restaurant owners.

While the restaurant workforce is projected to increase by 14% in the next 10 years, the U.S. born workforce in total is only projected to increase by 10% (Meade, 2018). The restaurant industry will be creating significantly more jobs than U.S. born individuals are capable of filling. In attempt to address this concern, the National Restaurant Association is urging current administration to consider implementing a temporary-worker visa program. This program would allow immigrants to work year-round in the service industry under a controlled process (Upson, 2018).

The National Restaurant Association is actively working to ease the concerns of restaurant owners by addressing their issues at Capitol Hill and reaching out to members of the current administration. Supporting organizations such as the National Restaurant Association as well as supporting the temporary-worker visa program could be a key to resolving the restaurant labor shortage issue in the long-term.

Future Work

Restaurant owners can expect that the labor shortage will not improve in the near future. Increasing wages and providing incentives for potential employees may ease this strain for many restaurant owners. Those who are unable to provide higher wages and incentives for their employees may find it necessary to minimize job qualifications and open their positions to a broader spectrum of individuals. Restaurants can do this by attending job fairs for ex-prisoners, the elderly seeking employment, recovering addicts, etc., and providing these individuals with the opportunity to fill their open positions.

The restaurant industry should also become more aware of the needs of their employees. This will help to retain the employees that they have and to potentially draw in others in search of a healthy work environment.

Urging current administration to address the underlying causes of the issue will be crucial as the restaurant industry continues to grow and the conditions of this issue worsen. Supporting the National Restaurant Association as well as the temporary-worker visa program could be the key to solving the restaurant labor shortage issue in the long-term.

References

Abrams, R., & Gebeloff, R. (2018, May 03). A Fast-Food Problem: Where Have All the Teenagers Gone? Retrieved December 2, 2018, from https://www.nytimes.com/2018/05/03/upshot/fast-food-jobs-teenagers-shortage.html

Meade, S. (2018, April 30). Immigration Reform. Retrieved December 2, 2018, from https://www.restaurant.org/advocacy/Immigration

Navarra, T. (2018, October 26). The 3 Most Common Reasons For Restaurant Employee Turnover. Retrieved December 2, 2018, from https://upserve.com/restaurant-insider/3-common-reasons-restaurant-employee-turnover/

Steinhauer, J. (2018, April 05). A Worker Shortage Is Forcing Restaurants to Get Creative. Retrieved December 2, 2018, from https://www.nytimes.com/2018/04/05/dining/labor-shortage-restaurants-employment.html

Taylor, K. (2018, October 05). The Unemployment Rate has Fallen to a 48-Year Low, and it's Terrifying News for Walmart, McDonald's, and JCPenney. Retrieved December 2, 2018, from https://www.businessinsider.com/unemployment-rate-sparks-hiring-concerns-2018-10

Toast, Inc. (2018). Restaurant Success in 2018 Industry Report. Retrieved December 2, 2018, from https://pos.toasttab.com/restaurant-management/restaurant-success-industry-report

Upson, M. (2018, January 31). Staffing Shortages in the Restaurant Industry. Retrieved December 2, 2018, from http://www.restaurantnuts.com/staffing-shortages-restaurant-industry

�This is the “so what?’ or why the issue is important, but I am unsure of whether or not it truly establishes the purpose or importance of research.

�Informative, trustworthy sources. As well as a firm statement of what the report attempts to uncover/better understand.

�It’s nice to see graphs and other figures. These are especially helpful when it comes to visualizing problems that require numbers and statistics.

�I find this form of parenthetical citation much less invasive, and it does not disturb the flow of reading nearly as much as some of the other reports I have read. Also, there are very few grammatical errors, or spelling issues.

�Includes a discussion of the next steps/action that should be taken.

_1605596650.xls

Chart1

0.59 0.41
0.63 0.37
Hiring is the top challenge
Hiring is not an issue
Succssful No-Growth
Hiring Concerns of Successful vs No-Growth Restaurants

Sheet1

Hiring is the top challenge 59% 63%
Hiring is not an issue 41% 37%

Sheet1

Hiring is the top challenge
Hiring is not an issue
Succssful No-Growth
Hiring Concerns of Successful vs No-Growth Restaurants