How the Hospitality Sector is Adapting to a Talent Shortage

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Restaurant employment rose for the sixth consecutive month in June, yet staffing levels remain well below pre-crisis levels. The industry added a net 186,000 jobs in May on a seasonally adjusted basis, according to the Bureau of Labor Statistics. As job opportunities and sales rebound for restaurants, many workers have already moved on, or are in the process of doing so. 

And while food services are driving the majority of hires in the hospitality sector, other areas like accommodation and  arts, entertainment, and recreation, are also attempting to restaff to pre-pandemic levels. Unfortunately, employment in leisure & hospitality is still down 2.2 million, or 13%, from February of 2020.

Higher Wages Won’t Solve Hospitality’s Talent Shortage

Hospitality workers are migrating towards larger businesses, like supermarkets, e-retailers and fulfillment warehouses, in part because of attractive wage hikes these businesses can afford to offer. Aside from simple wage hikes, some restaurants and businesses in general are even offering bonus incentives

However, seven out of 10 restaurants are single-unit operators and nine out of 10 have a staff size under 50. Many restaurants, both large and small, cannot afford to pay $15 an hour or provide bonuses to all workers as those increased payroll expenses will severely impact their margins, especially as many are re-opening or returning to indoor capacity.

Related: How to Use KPIs to Improve Your Hospitality Recruiting Process

What this creates for businesses in the hospitality sector is a cycle in which occupancy is expanding, demand is increasing, but staffing is so short that owners have to pay more overtime, risk staff burnout and turnover, which causes even more stress for the remaining staff and limits their ability to provide customer service. In some cases, staffing shortages are creating an intolerable work environment, like the recent example of a Burger King in Nebraska in which 13 workers (the franchise’s entire staff) quit in protest of long hours, low pay, and kitchen temperatures that reached 97 degrees.

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A Burger King sign saying "we all quit" went viral after a group of disgruntled workers resigned. Photo credit: Rachel Flores, Business Insider

How Hospitality Companies are Adapting to Staffing Shortages

In a survey from the National Restaurant Association, which represents the spectrum of restaurants from white-tablecloths to fast food, 72% of operators rated recruitment and retention of workforce as their top challenge, up from 8% in January. While they work to recruit and retain workers, restaurants, hotels and other hospitality businesses have had to make some changes – and most come with a cost.

Many restaurants are raising prices in order to afford to pay higher wages. According to the National Restaurant Association, menu prices in May of 2021 were up more than 4% from a year ago at full-service restaurants, and up more than 6% at limited-service restaurants.

Others have had to reduce hours and some have even decided to close on certain days, which will only reduce revenue, but it allows them to maintain a level of customer service that can keep their doors open. 

Hotels across the U.S. shifted away from automatic daily housekeeping services during COVID-19, driven by federal COVID-19 safety guidelines. Now they’re doing it because of labor shortages. Hilton’s newest policy at its non luxury U.S. properties, which went into effect July 7, offers free housekeeping upon request. Guests will have the ability to customize the level of service they receive, Hilton Senior Vice President of brand development Phil Cordell told USA TODAY.

Will Suspending Benefits Help?

Most in the industry are hoping these are short-term changes and that an end to extended unemployment insurance will see candidates returning to the hospitality sector. However, early data isn’t promising.

Half of all U.S. states are cutting extended unemployment benefits early, citing a labor shortage, but data from Indeed found job searches are still down in the states cutting off the benefits early. The data, measured by clicks on job postings through June 18, showed increased searches in some of the states ending benefits early and decreased searches in others, but overall, total search activity was down. 

How Hospitality Recruiters Can Make Hires, Even in a Shortage

As companies continue to struggle with hiring in hospitality, recruiters can focus on a few things in order to make the hires they need. Some of the most important are:

  • Giving candidates what they want. Pay and flexibility rank highest in terms of importance for job seekers right now, and employers will have to provide strong, relevant benefits if they don't want candidates being swayed by higher-paying competitors or industries.
  • Optimizing their job postings. Starting with your job title, and continuing throughout your whole job posting, make sure you are speaking to potential candidates in the way that would best reach them.
  • Getting creative with their methods. From sign-on bonuses, to tuition payments, to interview incentives and more, recruiters are finding that they'll have to use creative strategies to get talent in the door.

Related: How to Localize Your Recruiting Outreach for Hourly Roles

The hospitality talent shortage can't last forever, but with a rise in burnt-out workers, as well as high-paying competitors (who give workers the wage they want) and even on-demand talent platforms (who can give them the flexibility they want), things aren't looking great for recruiters in the space. Talent acquisition professionals will have to stay focused, strategic, and creative in their hospitality hiring while the world continues to "wait out" full and true recovery.

To learn more about how Talroo can help you find qualified hospitality candidates, see how you stack up against competitors, or improve your overall recruiting strategy, email us at solutions@talroo.com.

Topics: Recruiting Industry

Updated July 22, 2021