Restaurants are facing a second wave crisis. This is not another lockdown; it’s the ongoing shortage of employees. Despite cases being significantly lower than a year ago and most states lifting lockdown measures, many restaurants didn’t reopen their doors because they are now permanently closed. The majority of eateries that reopened have faced labor shortages that make it impossible to recoup the losses of 2020. Payment Protection Program money has all but dried up and some loans were even recently revoked. Restaurants are experimenting with both traditional and unconventional hiring methods to solve the problem; however, it has not been enough. The road to recovery was always going to be difficult for restaurants and it only gets worse the longer the labor shortage continues. How can an industry with historically slim margins solve an issue with no employees?

It’s no secret that restaurants were the hardest hit industry during the pandemic. Dining rooms were shut almost universally and off premise options became the only option. Some restaurants, especially smaller ones, were not prepared for this change and they had to close their doors completely. Even larger chains that were able to adapt had to lay off employees. Off premise technology has come a long way in the past year; however, it can never replace the revenue of dining in for a full service restaurant. When lockdowns were lifted across the U.S. it was natural that restaurants would begin reopening dining rooms in order to recover their lost revenue. Every industry has had challenges with regards to upscaling operations, ranging from safety concerns to supply chain disruptions, yet restaurants have had a particularly difficult time just getting employees through the door.

The expectation that former foodservice employees would return quickly was short lived when restaurateurs found that those employees were unavailable or simply declined to resume their old jobs. The nature of the pandemic placed a focus on remote work and exposed that many industries could operate partially or completely on a work from home basis. Unfortunately, this option is not possible for restaurants and some of their previous workforce has moved on to pursue other industries. Restaurants have always faced a high level of churn for employees, although the pandemic only worsened this issue. Employees learned how volatile the industry could be and in some cases found out how dispensable they were to corporate. The recent event at a Burger King in Nebraska where all employees quit due to unfair working conditions including a 90 degree kitchen only highlights the often contentious relationship between employees and management. The drive to keep prices low and margins as high as possible has led to literal boiling points and the relationships could be hard to fix. Compounding this issue is the lack of benefits and sick leave offered to restaurant employees and the traditionally close quarter working conditions. These kinds of conditions are not viable in a post-COVID-19 world and some restaurants have taken action to change working conditions for the better. Restaurants have also turned to unconventional talent search tactics such as hiring through social media, like TikTok, and offering bonuses to new hires and candidates that show up to interviews. Other restaurants have even offered free fries and discounted food to potential new hires. These events have yielded mixed results with many locations still hanging “Help Needed” signs in their windows. A more disheartening development has been the numerous restaurants that have asked customers to be patient because they are shorthanded or the locations that closed due to no employees showing up. The restaurants that have scraped together enough employees are still facing challenges like reduced menus and long service times that drive customers away.

The issues of extended unemployment benefits and the increase of a minimum wage have been at the center of the discussion for restaurateurs. The extended unemployment benefits offered by the federal government often exceeded what entry level restaurant employees made per hour and were likely a contributing factor in convincing people to not return to work. However, many states have ended those benefits and by September the benefits will have expired completely, which could provide a larger employee pool for entry level jobs. The issue of minimum wage is a more difficult to sort out. Chipotle and McDonald’s have raised their average minimum wage along with others, though it can be more difficult for smaller locations. Restaurants have slim profit margins and revenue freefall from the pandemic make wage hikes difficult to manage. If competitors are offering wage increases, then even small restaurants will need to conceive of a benefits package to keep any employees.

Companies that are not interested in engaging with the complexities of increased employee benefits could turn to technology to solve the problem. Taco Bell, McDonald’s, and Shake Shack have all turned to ordering kiosks in order to replace some employee to customer interactions. McDonald’s and Chipotle are currently experimenting with A.I. ordering systems with a recent McDonald’s test boasting an 80% success rate. These technologies will likely replace some of the currently missing workforce and in some cases these jobs could be eliminated permanently which would allow for less entry level jobs at restaurants. Many of these technologies are still in testing phases and remain expensive and will be most utilized by fast food restaurants with large footprints. However, technology is always a day away from a major breakthrough and if prices decline we could see hybrid fast food restaurants everywhere in the next five to ten years. Many companies are already developing off premise only locations and it we could see locations that are run entirely by one or two employees. Fine dining restaurants adapt to new technology slowly, yet there could be locations that transition to completely contactless ordering and payment while still maintaining enough employees to provide a premium experience.

The labor shortage within restaurants is a perfect storm of factors and a solution will have to be multi-dimensional. Businesses will find a way to bounce back as most people are not keen on a world without their favorite eatery. The industry may look a little different in the end and we most certainly will be paying more for our favorite burgers, if we’re not already. Necessity is the greatest driver of change and there is nothing restaurants need more now than employees.