Worker shortage threatens the food industry

Randy Larson has owned Monica’s, an upscale, Italian American restaurant on the Coralville strip, for nearly 30 years. Viewed as a community staple, Monica’s never needed to advertise job openings or worry about workforce retention. But ever since the restaurant employee exodus following COVID-19, Mr. Larson has been forced to rip up the old playbook — along with countless other restaurants in the Corridor. “That’s just the times right now,” he said. Now Monica’s advertises on Indeed, an online job board, and utilizes their roadside sign to promote job opportunities. They’re also catering to employees however they can by offering flexible schedules and deciding against mandating the COVID-19 vaccine for skeptical workers, even though Mr. Larson’s belief that getting the shot is everyone’s “civic duty.” To retain employees in the aftermath of the pandemic, he gave the kitchen staff a raise and promised them they wouldn’t lose their jobs. That’s despite state law initially mandating they shut down all business and then limiting them to takeout- only orders. “I think that went a long way towards making everybody feel like we were the company they want to stay with,” Mr. Larson explained as one reason that Monica’s employee turnover has remained relatively stable. Yet he noted that some employees left and are not coming back. Other restaurants have had an even more difficult transition in supporting their staff. Parlor City Ice Cream announced that its Marion location would be closed until the winter due to staffing shortages. Likewise, Jimmy Jack’s Rib Shack shut down its North Liberty location permanently in June, referencing a challenging year for restaurants and making the decision “in order to take care of its staff.” “We used to, prior to COVID-19, run the restaurant on about a 12- to 14-person crew,” said Briana Smallwood, co-owner of Vivian’s Soul Food Restaurant Group based in Cedar Rapids. “Now, our average crew is about six people covering the front of the house and back of the house.” The situation has forced Ms. Smallwood to resort to extreme measures like turning off online orders and opening one hour less every day of the week. This vicious cycle, where restaurants are too understaffed to serve their customers, comes when there is pent-up demand for restaurant food again. “We’re actually busier now than we’ve ever been,” said Mr. Larson. “Of course, our costs are higher too.” He’s referencing all-encompassing supply chain woes plaguing the entire economy, where a scarcity of workers in many other industries are causing higher costs for everyday ingredients, says Jessica Dunker, president and CEO of the Iowa Restaurant Association. It puts restaurants in the uncomfortable position of deciding whether to absorb the higher ingredient prices in the short term or raise the prices on their menu. Vivian’s opted to raise the price of its chicken while eliminating crab cakes. Monica’s is keeping prices the same, hoping that ingredient costs will normalize soon. They aren’t alone. Ninety-four percent of restaurants saw significant price increases in food, and 72% saw significant increases in he cost of paper products, according to a survey from the Iowa Restaurant Association. Combine these supply chain troubles (as well as hefty service fees from third-party delivery services like DoorDash and UberEats that require paper products for transport purposes) with an inability to find and retain employees. As a result, restaurants are stuck with no easy solutions. In her experience, most employees applying for jobs at Vivian’s Soul Food restaurant or Vivian’s Express Grill are severely underqualified for the positions, says Ms. Smallwood. Others accept a job in the short-term until they can find a job in the industry they desire or even fill out fake applications with no intention of actually taking the job. “The amount of fake submissions that came in was pretty wild,” she said. “Retention is crazy too, because they’ll come on for two weeks, and they’re gone. A lot of times, the jobs they actually want are paying $18 an hour at Walmart or Hy-Vee to do online personal shopping.” So why are restaurant employees fleeing the industry? Low wages, a reevaluation of life priorities and safety concerns are significant factors, says Charlie Wilson, president of the Iowa Federation of Labor. “A global pandemic that has killed nearly 700,000 Americans is the kind of thing that makes you think differently,” he said. “You know, it’s not a big secret that a lot of folks that work in the restaurant industry aren’t always the best paid or have the best benefits. “I think that, like with most things in life, you kind of get what you pay for,” he added. “It may not be what this industry is used to, but workers right now have more power than they ever had, whether you’re in a union or not. Workers have more bargaining power, especially in a state like Iowa, where we have more job openings than people who are unemployed. If you want to call these employees ‘essential workers,’ you’re going to have to treat them like it.” Ms. Dunker rejects the notion that low pay is the crux of the labor crisis in the restaurant industry right now. “You can’t find somebody to work in the restaurant industry right now for less than $12/hour, and that’s what high school kids are getting across the state —not just in larger communities,” she said. “The wages, I don’t think are as big a factor as they may have been in the past.” Now that employees and job applicants expect higher wages, Ms. Dunker and Mr. Wilson agree that a rebalancing must happen so that restaurants find the sweet spot between profitability and worker’s wages in this new era of the restaurant industry. Despite the large-scale complexities the restaurant industry must sort through, optimism for the industry’s future lies with the same constituency — hungry, loyal Iowans. “I remember a banker telling me [at the beginning of the pandemic] that if our federal relief didn’t qualify to be forgivable, we wouldn’t make it that long,” said Mr. Larson. “He said, ‘Randy, a month ago your restaurant was worth $90. Now it’s worth 10 cents.’ That’s a sobering thing to hear from a professional that your million-dollar restaurant is worth 10 cents. “I told him I didn’t think that I could see a future where there were no restaurants, and I thought we’d be in a stronger position after this rather than weaker,” he added. “Now our gross revenue is higher than it’s ever been.” “We just hope that people will continue to stay patient with us now,” said Ms. Dunker.