Restaurants fight the labor shortage with better pay, benefits and culture
Apr 12, 2022
As labor shortages continue for the city’s restaurants, the balance between workers and their employers has clearly shifted. To find and retain the talent they need to stay in business, employers have been increasing wages. When money falls short, they are building charismatic internal cultures, offering never-before-considered benefits like four-day workweeks, and creating structured paths for career growth. There are still 70,000 fewer people employed in the food services and drinking places category in New York City, according to the Department of Labor’s February employment numbers, compared to the average industry employment for the full year of 2019. Yet the number of restaurants fell by only about 1,000 by the third quarter of 2021, according to a survey of establishments published in the State Department of Labor’s Quarterly Census of Employment and Wages. Now, as the long-term shifts from the pandemic meet a pre-existing hiring crisis, things are finally shaking out in workers’ favor. Employers realize that the only way to attract the workers they need is to try to become better places to work. “It often feels like we are in the human resources business, not the food business,” said Chris Khalifa, founder and CEO of Zooba, a quick-service Egyptian restaurant that launched in Cairo a decade ago and opened its first location in Nolita in 2019. “We are in the culture-building and training business,” he said. Money has been the first thing on the table. The average quarterly pay in the industry for the third quarter of 2021 was $9,405, up 12% from $8,377 in the same quarter of 2019. Some of the lift is a result of the final stage of the minimum wage hike, to $15 per hour on Dec. 31, 2019—whose impact was somewhat swallowed by the events of March 2020. But the rest seems to be from competition among short-staffed employers. Leaders at Hot Bread Kitchen , which trains immigrant women and women of color in culinary skills, said graduates used to make around the minimum wage in their first positions. Now the average starting wage is $16, said Karen Bornarth, vice president of industry partnerships at Hot Bread, and several employers are offering $18 to start. One alumna with about five years of experience just interviewed as a pastry cook at a hotel for $30 an hour. “That’s kind of unheard of,” said Bornarth. At some point, though, food businesses and restaurant operators simply reach a limit of how much they can pay, especially amid increases in costs of everything from ingredients to insurance. “For us to have to do that, the businesses have to be healthier too,” said Sean Feeney, co-founder of Grovehouse which runs the restaurants Misi and Lilia in Brooklyn, and the co-founder of a group called Relief Opportunities for All Restaurants, which has supported the industry through the pandemic. “When you raise everyone’s wages, that comes from the business. Most of the businesses weren’t healthy.”
The question of how restaurant owners can pay more is central to the survival of the industry, said Steven Picker, executive director of Food Industry Partnerships at the NYC Department of Small Business Services, which is also running training programs for potential restaurant workers. "Business owners need to take time to develop a plan for this and implement what they feel is right for their business and employees,” he said. Benefits accrue
Employers often come to Hot Bread Kitchen with job orders for the program’s graduates. But Bornarth said those sometimes go unfilled, especially those from small businesses, because they are not the caliber of job that the leadership wants for its alumni. That has led the organization to create a training program for employers, taking them through the ways they can change their structure to become better places to work. “There is precedent to developing quality jobs in other industries,” said chief executive officer Leslie Abbey. “So why not apply this to the food industry now?” Employees at Starbucks’ Reserve Roastery, who voted to unionize in early April, seem to have the same question. At Boy Blue, a two-person firm founded as a delivery-only food business during the pandemic, the question of benefits is playing a central role in its planned growth. Partners Michael Davis and Camila Nevin are hoping to sign a lease to bring the firm to a brick-and-mortar space in a food hall soon. They hope to hire five employees, the largest number that seems sustainable to bring on while providing a livable wage and a benefits package. “That is important to us—it dictates how many we can hire,” said Davis. He imagines it would be impossible to offer health benefits, for example, at a restaurant with a large staff. “I grew up as the son of a single mom who was a waitress,” he added. “Our life was dependent on how good tips were that day.”
Some improved benefits have come down for hospitality workers from the government. New York City’s Fair Workweek for larger companies, as well as paid sick leave and an additional paid Covid sick leave, have extended some of the security of office jobs to this workforce. Yet it’s possible to over-regulate paid leave and schedules, said Carolyn Richmond, a restaurant attorney at Fox Rothschild. The various state, city and federal rules require professional attention; when proprietors make mistakes on certain wage forms, they open themselves up to lawsuits. This penalizes small business owners who can’t pay to retain a lawyer. “It’s really complicated,” she said. A career path
In the restaurant industry, employers often automatically infer that “better jobs” simply means higher wages, but Bornarth said that her members and graduates want other things too: to be in a well-organized environment, with the opportunity to learn new skills and get promoted, as well as simple recognition of their work. In an attempt to give this to employees, Ngo has put his 30-person staff on salary rather than hourly wages. He also changed the workweek. Staffers work four days a week, and on day five, they get the chance to learn from Ngo about the restaurant operations or ordering or culinary skills. This gives them a chance to expand what they know and begin to carve out a career path. Similarly, at Zooba, a fine-tuned growth ladder awaits new hires. They come on as entry level dishwashers, for example, making $16.25 an hour, plus tips of about $3 an hour. After getting a food handlers’ license, they can be prep cooks, at which point those interested can train to be team leaders. “We can train through each role so we promote and train from within,” said Khalifa. In Egypt, Zooba has a reputation for being a place to build a career, he said, which helps him recruit staffers. Here, he said he is still building up a reputation for being a solid employer. Last fall, the vegetable-centric Dig raised $65 million in investment, some of which went toward workforce initiatives similar in tone to Zooba’s and Di An Di’s. They include a four-day workweek and a six-week training program for would-be leaders. Yet there are limits. Some of the fundamental lifestyle complaints from restaurants, like working nights and holidays, or dealing with rude patrons, are hard to remove from the menu. New School labor economist James Parrott said that the time-to-think aspect of the Great Recession is important to the question of the lingering labor shortage: For some population of the restaurant workforce, the demands of the work just stopped being worth it at almost any price. Ngo said some of his pre-pandemic employees eventually tired of dealing with what he described as the 1% of unkind people who make work in service occasionally intolerable. On the bright side, the turnover may also mean a new generation is discovering that they do want to work in service, especially in the shined-up workplaces now being created. “I also see people entering the industry from diff backgrounds and careers,” said Feeney. Just like restaurant workers changed careers out of hospitality, other professionals recalibrated and decided that service was their future. “We are definitely getting emails and calls from people in other professions that they want to do this now,” said Feeney.