Why workers are leaving hospitality, and why independent restaurants aren’t doing much about it.
The number of U.S. workers quitting their jobs in September was the highest on record. Nearly a million workers quit in hospitality alone. Because prices are also rising, inflation-adjusted hourly wage growth actually declined.
According to Indeed, just 10% of job seekers are urgently looking for openings. The number of workers in full-service restaurants has dropped more than 30 percent compared to 2019.
The “reservation wage,” which is the lowest amount of money workers would require to take a job, was 20% higher in March 2021 than in November 2019. Half of businesses found it harder to retain workers in 2021, up 20% from before the pandemic. According to Ben Casselman, the labor market is in a standoff: “Workers are holding out until their savings disappear. Businesses are holding out until their customers disappear.”
Over the past six months, wages of leisure and hospitality workers have risen 18 percent. So what are restaurants doing? When workers demand higher wages, businesses find ways to bring costs down. Historically, they invest in labor-saving technology. As more people quit, jobs get harder, which leads to even more people quitting, which means that technology becomes a necessity.
There are many restaurants doing this (Cracker Barrel, Dave & Busters, McDonalds, Checkers and Taco Bell to name a few). But these are all high-volume, multi-location, corporate restaurants. Chain restaurants investing in technology, and being the primary drivers of change, makes me think about Amanda Cohen’s prediction of the disappearance of independent restaurants.
Pre-pandemic, there were probably too many restaurants. Post-pandemic, that hasn’t changed (even though many closed, many others have opened). Eateries like Dig and Blank Street are leading the way in convenience, innovation and employee satisfaction. Shake Shake got a lot of attention for piloting a four day work week for managers, but that’s on pause.
If you think about it, going out to eat hasn’t changed much since 1916, when White Castle became the first quick service restaurant. Since then, the way we staff and operate restaurants has remained largely the same.
I worked in hospitality for over a decade. During the pandemic, I reconsidered my priorities and switched careers. I currently work for a company that sells payment processing to restaurants. The vehicle for the payment processing is QR codes. When talking to independent restaurateurs, especially in downtown Manhattan, it keeps getting reinforced in my mind that we’re seeing a split between restaurants that prioritize “experience” and those that prioritize operational efficiency. What I’ve learned is, trying to change this industry, even in the most minor of ways, is incredibly difficult.
50% of restaurants now use QR codes for menus. The ones that “prioritize experience” insist they’re not using QR codes because: (a) they remind people of the pandemic (that’s still happening) + (b) it takes away from the “human experience” of going to a restaurant.
The “experience” restaurants are referring to is the steps of service: servers greeting guests, rattling off specials, taking orders, putting orders in the computer, marking the table, coursing out appetizers + entrees, crumbing the table, asking if you want dessert or a coffee, and finally, presenting the bill. But the steps of service are just an assembly line that makes servers efficient. And restaurants who refuse to alter any step in the process are conflating the mechanics of service with hospitality.
According to Danny Meyer, service is a business principle; it’s a way to describe how well you technically delivered a product. Hospitality is different. Hospitality is genuine. It’s how you make people feel. It’s creating an experience in someone’s life. It’s being able to listen and build trust. It’s making people feel like you’re on their side. Danny Meyer says it doesn’t matter if the customer is right or wrong, what matters is if the customer feels heard. Restaurants confuse service and hospitality all the time, but it’s not just this confusion that keeps them from changing.
Restaurants buy into something that Greg Grandin + Sarah Jeffe call: American entitlement to service. “An American conception of freedom that’s wrapped up in the ability to, essentially, oppress others, and to specifically, sort of expect service and, essentially, to expect certain people to be there to serve you.”
Entitlement is not only leading people to quit jobs in hospitality, but the people that remain really believe this is the way it is (and it’s not their fault) — like the rest of us, their identity is wrapped up in their job — and it becomes a difficult thing for them to talk about.
Because work starts to become a source of identity and meaning, people who remain differentiate themselves in ways like being anti-tech and anti-change (even when technology can ease the emotional labor inherent in a job). In a paradoxical way, restaurants that prioritize efficiency over experience, actually become better places to work (plus they have HR departments and probably have less wage theft and things like that).
Big businesses aid and abet the bad practices of small businesses via reputation laundering. It’s a very unpopular to talk about, and not something I actually have much data on, but it’s something Scott Galloway brings up. Small business owners tend to be wealthy (some of the wealthiest people in the U.S.), and they go to great lengths to hide that fact. Independent restaurants (and big businesses) exist by exploiting undocumented workers and marginalized groups. A primary example is the NRA lobbying to keep the sub-minimum wage intact (The federal minimum wage has been $7.25 per hour since 2009. The sub-minimum wage for tipped workers has remained at $2.13 since 1991).
Powerful lobbying groups like the NRA lead to things like bailouts for restaurant owners, instead of policies and government programs that support people generally.
The field that saw the most people die of Covid was line cooks and food service workers. Sarah Jeffe says, “when you’re talking about a labor shortage in this industry, we’re literally talking about people who are dead, and we sort of talk about these two things as though they’re disconnected. It’s weird how that just sort of disappears from the conversation.” Because it’s morbid to talk about, workers actually forgo their own well being in favor of an “experience” that actually benefits them quite little, if at all.
Independent restaurateurs love to talk about hospitality, as if it’s a one way street (the customer is always right mentality). Meanwhile, 62 percent of restaurant workers say they’ve received abusive treatment from customers. This makes me think about what Danny Bowien wrote when he closed Mission Chinese Food.
When you don’t like a job you can exit, try to change it, or neglect it. But, when talking about imaginary people in imaginary situations, the “I” is at the center. Where is the locus of control in the real world? In many people’s lives, the reality is other things affect decision making, and this is especially true in the service industry. People work to support families, to support another career, or because it’s the only job they can get. In my experience, when you rock the boat in an independent, mom & pop, chef-driven restaurant you just get fired. It’s worse than a corporate restaurant because everything is subject to the whims of the chef or owner.
What I’ve found is, independent restaurants simply don’t have the bandwidth for change. Managers work 12 hours shifts, 5+ days a week. And that’s just putting out fires and dealing with whatever’s directly in front of them. A restaurant is something that sorta, kinda works. And because it’s not a total meltdown everyday, it keeps chugging along. Amanda Cohen says:
“Every day there is a disaster. Employees don’t show up, something breaks. But in the last 10, 15 years, we’ve seen our profit margin sort of keep shrinking and shrinking and shrinking because our expenses in the city have gone up. And so your problems are big on the macro level. Like I can’t afford to run a restaurant anymore to pretty micro, which is like, “Oh, my laundry company just called and said, all my laundry was on fire and I wasn’t going to have any linen tonight.”
What’s so frustrating is I see another generational rift here. One thing I’ve noticed is, young people don’t care if a server is there to wait on them. But older people do. And a large part of the attraction for older people going out to eat is being served. And who is served, who deserves to be served, and who does the serving is rooted in a racist and sexist system that most restaurateurs refuse to acknowledge or change.
Young people want things to change, but the old guard is stopping change in every sector. Independent restaurants are no different. And these businesses get handed down from generation to generation. Hopefully the new generation that inherits some of these businesses will see what’s not serving them and do away with it.