Higher pay and better benefits out of the pandemic might just attract a new generation of restaurant employees.

Between February and April 2020, the American labor force shed north of 8 million jobs. The country didn’t return to pre-pandemic levels until the summer of 2022. For restaurants, it took even longer—September 2023. Hospitality needed three years and 33 consecutive months of employment growth to lift its pool to February 2019 marks. To put that in perspective, restaurants had to staff more than six million jobs from March 2020 lockdowns onward.

And unlike some industries, which suffered a gradual burn as habits adjusted, those six million jobs were erased in weeks. Restaurants accounted for one in four of the 10 million jobs lost in the overall economy at one juncture. There were simply few, often zero, alternatives as operators were forced to shift the entirely of their sales outside the four walls. Then arrived the saga of federal aid and the recalibration of what it meant to staff a restaurant in COVID’s aftermath. Did operators need as many people to serve guests? Then, as dine-in flooded back, did they have enough to satisfy pent-up demand while also still operating off-premises growth? And now, can restaurants afford higher wages and other realities of a rebalancing workforce?

In understated terms, labor did not become less complicated following the journey back to 15.5 million jobs, or 10 percent of the total U.S. workforce. Hospitality reclaimed its place as the nation’s second-largest private sector employer with September’s news, but that doesn’t mean it snapped back to how it was operating from a wider sense.

According to the National Restaurant Association’s State of the Industry Report, the COVID-triggered plunge opened record-high positions across the economy. Unsurprisingly, a battle for talent in the rebound led to higher wages (as well as some legislative changes forcing operators’ hands). And it’s resulted in an interesting shift.

In 2023, 36.9 percent of 16- to 19-year-olds were in the general labor force—the highest level since 2009 (37.5 percent), yet well below 1979’s record of 57.9 percent

The participation for 20- to 24-year-olds stood at 71.3 percent last year, also up significantly from pandemic lows. While the population of the 16–24 cohort is projected to remain relatively steady over the next decade, the U.S. Bureau of Labor Statistics expects its labor force participation to decline steadily. If so, the number of teenagers and young adults in the labor force would sink.

However, the dynamic of shedding the field in 2020 and refilling it forced the industry to pay higher wages and create more desirable roles. Benefits today are more tailored to what younger workers want and technology flowed through positions to create restaurants that tend to staff fewer employees than before, especially in quick service, but with less monotonous positions. The Association believes the last few years provided clear proof younger employees shouldn’t be written off despite population trends—“in the right circumstances, they’ll come off the sidelines,” it wrote.

In a more optimistic scenario, the labor force participation rates of 16- to 24-year-olds could remain flat during the next decade (this assumes it holds at 2023’s 71.3 percent result).

What would that entail? About a million teens and 700,000 young adults in the labor force versus the BLS’ declining projections. “If the current participation rate of younger workers holds in the years ahead, it would go a long way to easing some of the restaurant industry’s staffing challenges,” the Association said.

A LOOK BACK: What Do Frontline Employees Want from Restaurants?

This past year, restaurant operators, in a survey by the Association, reported 18 percent of their jobs being filled by people entering the workforce for the first time (21 percent in quick service and 14 percent in full service). Fifteen percent of restaurant openings were also staffed by employees promoted from within.

To frame this further, it’s worth going back to 2019, before anybody had a clue a global health crisis was about to force operators to explore Plexiglas strategies. Late that year, the unemployment rate stood at 3.5 percent, which was the lowest jobless figure since 1969. The industry added about 308,700 jobs over the previous 12 months.

A job-seeker’s market disrupted the cyclical turnover restaurants historically face. In 2018, the turnover rate in the restaurants-and-accommodations sector climbed to a post-recession high of 74.9 percent. It was the fourth straight year above 70 percent. From 2015–2017, the rate for just restaurants averaged 81.9 percent. In comparison, it was 48.9 percent for all private sector workers.

Truthfully, the number was a difficult one to bank since restaurants see such massive swings by ladder tier (crew versus management). Panera, for instance, noted that July it was 130 percent. Darden pegged turnover at 120 percent. Chipotle was seeing hourly rates of 144.9 percent a year after it was 158 percent.

So getting back to the makeup of this workforce, teens once outnumbered adults aged 55 years or older in the industry 3 to 1. That had dropped to 2 to 1. The nation’s older demographic (55 and older) and their participation in restaurants rose by 70 percent between 2007–2018. Ten years prior, only 13 percent of the population fit into that window. By 2020, it was 17 percent.

The BLS in 2019 named the 65-plus population as the fastest growing segment of the workforce. By 2024, it figured it would represent nearly 25 percent of the civilian labor pool.

It also predicated, over the next 12 years, employees in this bracket would be at a record high with 16.1 million of them clocking in. Teenage employees would be the lowest since 1963 (5.1 million).

It is probably too early to say with any real certainty that COVID reversed this trend. But to the Association’s 2023 observation, it does appear to have veered somewhat off track. Again, being forced to fill six million jobs in a hyper-charged timeframe forced a workplace reset in terms of what employees want—and can actually get—from restaurants. Flexible schedules, higher pay, engagement initiatives, education benefits, and so forth, were glancing the radar in 2019. They’re often table-stakes now.

Chipotle’s turnover reached up near 200 percent at times during COVID. CEO Brian Niccol told investors last week it was down to the low 100 percent range for crew and 20 percent for GMs—the best figures since he came on as CEO in March 2018.

A couple of weeks ago, Chipotle shared more than 73 percent of its current workforce—a swath of some 110,000 people—were Gen Z. And so, the brand revamped benefits with programs like student debt pay help, retirement assistance, and mental and emotional well-being options where employees could access free sessions with a licensed counselor or coach.

Not to be glossed over, either, Chipotle in recent years refined a “Restaurateur” title that allows employees to reach six-figure salaries in as little as three and a half years. Nearly 90 percent of current leadership at Chipotle started as crew members. Last year, it promoted north of 26,000 people. There’s also an all-crew bonus program where workers can earn an extra month’s worth of pay each year.

In sum, the Chipotle hiring workers today appears a lot more desirable and curated to younger employees than the one in 2019. The Association feels that’s a sentiment that rings true across the restaurant map.

Many restaurants, despite all the job growth, claim to still be understaffed.
Many restaurants, despite all the job growth, claim to still be understaffed.

Some other trends

Over the next several years, the Association expects job growth to continue but moderate for restaurants. It’s a sensible notion barring any serious unit growth (something that’s likely a couple of years away for most brands thanks to a high-cost market and the challenges to secure capital/interest rates). Between 2024 and 2032, the Associated projects the industry will add 150,000 jobs per year on average, with total staffing levels reaching 16.9 million by 2032.

What that looks like in 2024 is 12.5 million total eating and drinking place jobs and 3.2 million non-restaurant foodservice jobs. Bring that forth to 2023 and the figures bump to 13.5 million and 3.4 million, respectively.

The Association predicts every state will see restaurant and foodservice workforce growth. Setting the pace with 20 percent employment rates will be Nevada, Utah, North Carolina, and Georgia. Texas (255,000), California (241,500), and Florida (186,700) are expected to add the most restaurant jobs in the coming decade.

Many restaurants are still, anecdotally, looking for help, however. From the Association’s operator survey, 45 percent said their restaurant didn’t have enough employees to support existing consumer demand. Operators of limited-service restaurants (48 percent) were more likely to feel this way than full-service counterparts (41 percent).

Of those currently understaffed, nearly six in 10 said their staffing levels were more than 10 percent below what they need.

All restaurants (how understaffed they are)

  • 1–5 percent: 9 percent
  • 6–10 percent: 33 percent
  • 11–15 percent: 22 percent
  • 16–20 percent: 23 percent
  • More than 20 percent: 12 percent

Full-service restaurants

  • 1–5 percent: 8 percent
  • 6–10 percent: 35 percent
  • 11–15 percent: 22 percent
  • 16–20 percent: 23 percent
  • More than 20 percent: 13 percent

Quick-service restaurants

  • 1–5 percent: 11 percent
  • 6–10 percent: 32 percent
  • 11–15 percent: 23 percent
  • 16–20 percent: 23 percent
  • More than 20 percent: 11 percent

How are operators reacting? Sixty-five percent said they’ve had to reduce hours of operation; 52 percent said they aren’t operating at full capacity; and 43 percent (including 51 percent of full-service operators) noted they closed on days they’d normally otherwise have opened.

Broken down:

Full-service restaurants

  • Reduce hours of operation on days that they’re open: 65 percent
  • Not operating at full capacity: 56 percent
  • Close on days normally open: 51 percent
  • Reduce number of items on the menu: 50 percent
  • Postpone plans for expansion: 34 percent
  • Incorporate more tech or automation: 27 percent

Quick-service restaurants

  • Reduce hours of operation on days that they’re open: 64 percent
  • Not operating at full capacity: 49 percent
  • Close on days normally open: 34 percent
  • Reduce number of items on the menu: 32 percent
  • Postpone plans for expansion: 34 percent
  • Incorporate more tech or automation: 36 percent

The impact of understaffing on ability to grow/be successful

Full-service restaurants

  • Significant: 60 percent
  • Moderate: 30 percent
  • Just a little: 9 percent
  • Not at all: 1 percent

Quick-service restaurants

  • Significant: 51 percent
  • Moderate: 38 percent
  • Just a little: 11 percent
  • Not at all: Zero percent

There’s no denying the market is tight. The nation’s unemployment rate in January was 3.7 percent with a total of 6.1 million unemployed. The U.S. added 353,000 jobs in 2024’s opening month and payroll growth beat more modest expectations. Restaurants and bars shed 2,400 jobs in January to sit at 12.3 million overall.

Seventy percent of operators in the Association’s study indicated they have job openings that are hard to fill (73 percent in full service and 66 percent in quick). Sixty-seven percent of restaurants with difficult-to-fill job openings reported having trouble finding applicants for kitchen positions. A majority added they have unfilled job openings for service positions, too.

Percentage of operators who reported having difficulties filling open positions

Full-service restaurants

  • Service roles: 50 percent
  • Kitchen roles: 80 percent
  • Manager positions: 43 percent
  • Quick-service restaurants
  • Service roles: 61 percent
  • Kitchen roles: 53 percent
  • Manager positions: 45 percent

A quarter of operators noted using gig workers to fill in staffing would become more commonplace in 2024. That number was a bit higher in quick service (29 versus 21 percent).

Nearly nine in 10 said recruiting and retaining employees was a “significant” or “moderate” challenge for their restaurants. Most don’t see it getting any easier near-term.

In fact, 31 percent said they think recruiting and retaining employees will actually be tougher this year than 2023, while 58 percent expect it to be about the same. Only one in 10 felt recruiting and retaining was about to get easier.

But, to close the loop, 88 percent said they’ll likely hire additional employees in the next six to 12 months if they can find qualified applicants. The percentage varied slightly between 87 percent of full-service and 89 percent of limited-service operators reporting they intended to hire. Either way, the survey found, operators will do so with an eye on the economy.

Speaking of external forces, 54 percent said they were likely to lay off employees during the next six to 12 months if business conditions deteriorated and the U.S. economy slid into a recession. That was a shade higher (58 compared to 51 percent) for full versus quick-service restaurants.

The survey also noted tech solutions could help—but to a point. Forty-seven percent of restaurants said in 2024 the use of tech and automation would become more common within their segment to ease labor woes (44 percent in full service, 49 percent in quick service). Sixty-nine percent of operators suggested tech integrations in restaurants would augment rather than replace human labor.

Just 14 percent of operators said their restaurant made investments last year in equipment or tech that replaced an employee.

The larger view, the Association added, is comparatively high numbers of job openings indicate restaurant workforce expansion has greenspace. September 2023 was the 30th consecutive month in which job openings in the combined restaurants and accommodations sector topped 1 million, above 2019’s average of 875,000 each month. In the second half of last year, turnover of restaurant employees slowed. Less than 5 percent (4.9 percent) of hospitality sector workers quit during Q3, per the BLS. That was nearly a full percentage point below the average monthly quit rate of 5.8 percent in 2021 and 2021.

The roll off of expanded unemployment benefits could factor into that. So can the higher wages and better benefits mentioned earlier. Or, simply, the point the country-wide market is tight right now and people are holding jobs while they face higher costs in their daily lives. It’s two-sided—restaurants are giving workers more reasons to stay, and employees are sticking around to weather the rocky economic backdrop.

Consumer Trends, Feature, Labor & Employees