Four years since the onset of the COVID-19 pandemic, bars and restaurants in Wisconsin have generally made a strong financial comeback, while worker retention remains a top concern, according to a recent report by the Wisconsin Policy Forum.
The report highlights the continued recovery of the state’s food and beverage service industry, which was among the hardest hit by the pandemic and subsequent government-mandated operating and capacity restrictions. It focuses on three main areas: employment, sales, and the number of restaurants and bars in the state.
Employment numbers are back, staffing challenges linger
Overall, employment in Wisconsin’s restaurants and bars has returned to pre-pandemic levels. As of February, 203,700 workers were employed by the sector, surpassing totals in February 2020 by roughly 900 or 0.4%, according to report, which cites data from the U.S. Bureau of Labor Statistics.
The industry’s seasonal peak employment this year will be more telling. Its most recent peak was in August 2023 with 218,100 workers employed, but that was still just shy of August 2019’s pre-pandemic high of 219,200.
“Despite this recovery, leaders of Wisconsin’s restaurant and bar associations say staffing remains a top concern for the businesses they represent. Many restaurants and bars have raised wages but still find it difficult to compete for and retain workers,” according to the report.
That’s despite better wages across the industry following rapid wage growth in the immediate aftermath of the pandemic — due to high demand for workers as well as high inflation. Between 2019 and 2022, median annual wages for food preparation and serving occupations in Wisconsin rose 29.8%, far outpacing both wage growth across all jobs (16.8%) and inflation during that period (14.5%).
As job openings at bars and restaurants have declined since 2022, wage growth has slowed. The report points to data released in April showing median annual wages for employees in food preparation and serving occupations rose just 4.2% in 2023, in line with the pace of growth for all occupations.
Sales on the rise
As they’ve sought ongoing recovery, bars and restaurants have found ways to make more from less.
As a result of inflation and higher menu prices, consumers have become more choosy with where and how often they spend their discretionary income, leading to fewer sales transactions and smaller orders at restaurants. Plus, thanks to staffing challenges, many restaurants have kept their operations limited to fewer days or shorter hours than before than pandemic.
Despite those limiting factors, the report suggests restaurants and bars are making around the same amount of money — or even more — as they were prior to the pandemic. Total state revenue generated by restaurants and bars in Wisconsin topped $578 million in 2023, which was 17.3% higher than in 2019, based on preliminary data on state sales tax collections.
“That modestly lagged the pace of inflation (19.2%), however, and growth was stronger in other industries subject to the sales tax, with overall tax revenues rising 26.6% during that period,” according to the report.
The report cited interviews with the state’s restaurant and bar associations that noted “many businesses discovered during the pandemic that they could have a similar bottom line with a reduced schedule and are now more judicious with which days and hours they open.”
By the numbers
Thanks to federal aid offered to businesses as relief from the financial devastation of the pandemic, most bars and restaurants in Wisconsin managed to remain in operation. In fact, as of the third quarter of 2023, the number of those establishments was 1.6% higher than the same quarter in 2019.
However, it appears the amount of bar establishments in Wisconsin is on the decline. The report notes a 6.6% decrease in the number of establishments classified as “Drinking places (alcoholic beverages)” from 2019 to 2022 (the most recent data available, while the broader set of all “Food Services and Drinking Places” was down 2.3%.
“Even if bars recovered in 2023 at a similar pace as restaurants, it is likely there are still fewer of them than there were before the pandemic,” according to the report.
