What’s Up with Today’s Labor Market?

  • Covid panic caused operators to sharply reduce 2020 headcount in anticipation of a sharp sales drop-off.
  • To be fair, operators had no idea what to expect with the government lockdowns and prudently trimmed their expenses in anticipation of a sharp sales decline.

  • Fortunately, 2020 sales were not nearly as bad as expected – especially for QSR.
  • More so, the LTM 8/21 period sales rebound was astounding, far exceeding 2019 levels.

  • Despite the tremendous sales rebound, headcount levels never recovered.
  • The reluctance to return for those laid off was fueled by the comfort of government stimmy and possible health concerns.
  • Also, operators learned that closed dining rooms and simplified menus could be serviced by lower headcounts.
  • In any case, this all translated into a sharp increase in revenue per QSR employee.

  • While revenue per FSR employee did not increase, operators ran their stores with a reduced headcount.

  • The net result for remaining QSR & FSR employees was much more work and greater stress. Maybe good for short-term profits, but bad for long-term morale.
  • This translates into substantially more quits…

  • …and many more unfilled job openings.

Conclusion

  • Restaurant employees are likely burned-out and perhaps a little distrustful of their employers after working so long to compensate for sharply lower store headcounts. Unfortunately, word gets out…
  • Now operators must work hard to re-establish trust with employees and new applicants by assuring them that they will be treated with respect & equity in properly staffed restaurants. Higher pay does not compensate for high stress conditions – especially not in today’s upside-down world!
  • The industry must not blame unfilled jobs on changing work ethics and an indulged work force. Rather, operators must recognize their role in providing a work environment that is challenging and rewarding but not stressful.
  • This is key as the industry needs to fill their job openings in order to restore staffing levels back to pre-covid levels – sales growth will likely stall until this is accomplished.