Restaurants that survived the darkest days of COVID-19 and the restrictions they had to endure during the pandemic are now faced with a different problem: an extremely tight labor market that is making it difficult for many restaurants to operate at full capacity.
After recovering from what, for some, was a near-total loss during the pandemic – with experts initially forecasting the permanent closure of roughly one-third of all U.S. restaurants by the end of 2020 – restaurant operators have endured drastic shifts in diner expectations, yo-yoing demand, supply chain hiccups, surging food prices and overall economic uncertainty.
Underpinning those pandemic-driven hurdles is a labor shortage that has troubled the service industry for years – well before the days of capacity restrictions and mask mandates – and was exacerbated by mass layoffs at the onset of the pandemic and, later, the so-called “Great Reshuffle” of employees leaving their jobs en masse for different positions or industries.
But as the pandemic has gradually faded from the purview of diners and workers alike, restaurants across the U.S. have seen slow but steady job gains since 2021. With more than 192,000 jobs added already this year, according to the U.S. Bureau of Labor Statistics, the National Restaurant Association expects employment to surpass pre-pandemic levels by year’s end.
Still, compared to February 2020, restaurants across the country are down 75,000 employees, or 0.6%, as of March. And the gap is even wider in Wisconsin, with the latest employment numbers lagging by 9,600 jobs, or 4.7%, according to the NRA and BLS.
In the Milwaukee area, diners have seen post-pandemic labor shortages play out in numerous ways over the past two years. Scaled-back business hours from seven to five or even four days a week; limited sit-down lunch options for downtown workers; long wait times for tables when dining rooms are half empty; service fees on bills; help wanted signs in windows; permanent closures.
Meanwhile, local restaurant owners today are working harder than ever to find and hire the right people, onboard and train those new hires and then, most importantly, keep them on board – a task that has become increasingly difficult in the age of increased wage competition and shifting expectations around workplace flexibility. At the same time, inflationary pressure on food, energy and other goods is forcing restaurants to raise menu prices, but not so much as to turn diners away.
“You almost have to battle behind the scenes to really survive in the business right now,” said Eric Wagner, founder and chief executive officer of Milwaukee-based Lowlands Group, which operates European-inspired eateries Café Hollander and Café Benelux.
The challenges facing restaurants are present throughout the industry, from fast food and fast-casual spots to fine dining establishments, but the region’s restaurant groups offer a unique window into the issues. Their operations are much larger than the single-unit independent restaurant, but they don’t have quite the level of corporate infrastructure as the national multi-unit brands.
Now, with labor challenges ongoing, area restaurant executives and workers are gearing up for the busiest months of the year, and what some say will be the first normal summer of business since the pandemic.
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Long-term investments
On a warm, sunny day in mid-April, the rooftop deck at Café Benelux in Milwaukee’s Historic Third Ward hummed with the sound of chatter, utensils on plates, diners placing lunch orders. Carrying large trays of drinks and food, servers and staff carefully traversed up and down the central staircase and floated around tables of mid-day diners.
The annual arrival of “patio season” in Wisconsin means most of Lowlands Group’s restaurants are gearing up to double in size over the next few months.
“And with that, we need to double the number of employees as well,” said Ileana Rivera, the group’s chief operating officer.
Currently with more than 700 employees across eight properties, Lowlands Group recently announced plans to open two more restaurants – including a brand-new concept dubbed The Feisty Loon – and a bier garden at the 84South mixed-use development in Greenfield later this year, expanding its footprint to nearly 900 employees at 11 locations.
Staffing up for the summer season has become more challenging in the past couple of years, especially compared to pre-pandemic days when, at a spot like Benelux, college students on summer break would be “knocking at our doors” looking for a seasonal gig, said Rivera.
As expectations around work have shifted and students take advantage of remote work opportunities, Lowlands has had to do more outreach through job fairs and social media to reach necessary staffing levels.
As a long-term workforce solution, the group has invested “hundreds of thousands of dollars” to build out its suite of benefits and perks, including the addition last year of paid time off for all employees, health insurance for full-time employees, life insurance, short-term disability, dining discounts and an employee assistance program. The move was in response to feedback gathered from employee surveys during the pandemic.
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Kortney Cardoso (third from left) with Café Benelux wait staff (left to right) Matthew Tucker, Dillon Hunter, Clay Prather, Dani Rink and Cassandra Coffey.
Credit: Jake Hill[/caption]
At Benelux, PTO for hourly employees (after 30 hours of work), has been a boon for retention, said bar manager Kortney Cardoso, who’s been with Lowlands Group for five years, at Benelux for the past two.
When Cardoso first started out as a server in the industry, getting PTO from an employer was unheard of, she said. Since Lowlands Group started offering it, employees feel they have more skin in the game. Health insurance was another benefit Cardoso never expected to get earlier in her career. Today, it’s “something servers are looking for,” she said.
“It’s the small incentives that the company (is offering) and the benefits they’re putting behind it that truly I think is keeping a lot of our staff around,” she said.
Now, as Cardoso and her team of fellow managers work to increase hourly staff at Benelux from 50 to 80 for the summer, the new array of benefits provides some extra leverage with experienced candidates.
“We’re brutally honest during the interviews, where we will state how high volume we are. We let everybody know that it is not an easy serving job, but it’s worth it,” she said.
The investment, albeit steep, is worth it from the employers’ perspective, too. Hiring and retaining better people means – in the long run – less training, lower expenses and better run restaurants, which is why Lowlands’ employee benefit offerings are here to stay and will only continue to grow, said Wagner. The executive team has a long list of other requests it plans to implement going forward.
Ultimately, that means the company will need to continue driving sales, and leadership will need to keep a watchful eye on the balance sheet.
“On top of inflation, on top of all these costs, this is another one that isn’t really inflation driven, it’s just additive,” said Wager. “We’re looking at our business a lot more closely than we ever have.”
Rebuilding in phases
For Milwaukee-based PIE Inc. regaining full strength has been a slow and deliberate process.
Today, the company has about 85 employees across its four restaurants – Honeypie, Palomino Bar and SmallPie in Bay View and Comet Cafe on the East Side – with the goal of reaching its pre-pandemic employee count of 110 by year’s end, assuming sales stay on pace.
To fill the gap, PIE Inc. has devoted more resources than ever to its recruiting and hiring efforts, and leadership has taken a more active role in the process.
“Not that we were lackadaisical about it in the past, but we really got a lot of (job candidates) who targeted us, gave us their resumes, applied online,” said Valeri Lucks, founding partner and chief executive pie officer.
Last year, the group created a new role solely dedicated to reviewing applications, conducting interviews, staying in touch with potential candidates and onboarding new hires. In the past, those tasks made up a portion of an admin role or were shared among the leadership team.
“We really had to put some serious gas behind it,” said Lucks.
And it’s paid off.
“We’ve made so much progress in this area that I’m thinking it will continue to be in someone’s job, but I don’t think it’s going to need to be the only thing this person does going forward,” she said.
Lucks also attributed the company’s incremental hiring success to its new pay model, which launched in summer 2021 to create a non-discriminatory tip pool for all employees. Under the One Fair Wage model, front of house wages increased from $2.30 to $10-$12 an hour, leveling out with back of house pay, and all tips made by front of house workers are now split equally among the staff. Beyond increasing overall pay for kitchen staff, the shift has boosted morale and fostered teamwork.
“In the past, if we were getting our rear ends handed to us during Sunday brunch, the kitchen didn’t see more in wages. They would get frustrated and burned out by it, and now because they can see that it’s going to benefit them as well, it builds a stronger team,” said Lucks.
However, it hasn’t made up for all of the chefs, cooks and dishwashers that have seemingly exited the industry since the pandemic, leaving understaffed kitchens in their wake.
“Our goal is to have everybody make $20 per hour or more – dishwashers included – and that’s a drastic leap in pay to what it was in 2019,” said Derek Petersen, executive chef and managing partner at PIE Inc. “We were paying dishwashers $9 or $10 an hour with no tips, and now they’re making double that amount and we still can’t find anybody.”
When a kitchen is down people – which Petersen said still seems to be on a weekly basis – he or other executive team members and managers will step in to work the line, wash dishes and run food rather than expecting those on shift to pick up the slack or calling in employees who were not otherwise scheduled.
“We do whatever is needed to get through,” said Lucks. “We‘ve worked so hard to build these teams that I don’t want to burn them out and lose them.”
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Comet Cafe on North Farwell Avenue in Milwaukee.[/caption]
There were times, earlier in Pie Inc.’s rebuild, when the need to retain employees meant adjusting the business on a larger scale. Take for instance last summer, when Palomino Bar closed down for six weeks so staff could devote their full attention to getting Comet Cafe up and running by winter. As a main driver of business for the group, the concept took priority, but not at the expense of employees.
“Our last hurdle now is we’re trying to get Tuesdays back open again,” said Lucks. “We need two more chefs and until we get those two chefs, we just won’t open Tuesdays so as to not burn others out or lose out on them.”
Culture shift
Benson’s Restaurant Group initially saw a similar pattern as it worked to restaff the kitchens at its five downtown Milwaukee locations, Onesto, Blue Bat Kitchen, Smoke Shack, AJ Bombers and The Bridgewater Modern Grill.
When Steve Gustafson moved from Louisville to Milwaukee in 2021 to take a job as executive chef of the group’s then-soon-to-open Bridgewater, he found himself asking where all the chefs and cooks had gone.
“I think some people got worried about whether there was going to be jobs anymore,” said Gustafson, speculating on the back-of-house labor shortage. “I think a lot of people just assumed restaurants were going to go away and then got out of the business.”
Or another possibility – thanks to the widespread rise of remote work – culinary workers who’d grown weary of long shifts on their feet were drawn to other jobs that could be done fully from the comfort of home.
It’s been six months since the upscale-casual dining concept opened at the R1VER development in Milwaukee’s Harbor District and both the kitchen and dining room are fully staffed. Gustafson was recently promoted to regional executive chef, with Stephen Kovak taking over as head chef at The Bridgewater.
Benson’s is nearly back at full staffing levels with 350 to 400 employees as of mid-April, but that number will increase to about 600 this summer between seasonal hires and the opening of a sixth restaurant location, The Edison, in Milwaukee’s Historic Third Ward.
“The labor market is waking up,” said Mike Besson, director of restaurant development for Benson’s. “In the post-COVID environment, people are getting back to work.”
The group is receiving more applications these days than it has in the past three years and the overall quality of candidates is the strongest it’s been over that time. Any remaining gaps in staffing “have to do with normal attrition and not these huge shortages that require us to close half a dining room all the time,” said Besson. “We’re not having to do that.”
The key going forward is maintaining those levels; building a positive, inclusive culture plays a big role in that, Besson said.
“The most important thing is as we hire managers, we encourage them to always treat people with respect and dignity,” he said.
That workplace philosophy may seem obvious or even rudimentary, but it hasn’t always been prioritized within the restaurant industry. He pointed to popular TV shows like “Kitchen Nightmares,” where British celebrity chef Gordon Ramsey is often shown yelling expletives and barking orders at operators and their workers. That type of toxic environment often portrayed by Hollywood was once commonplace but is no longer acceptable in the eyes of employees, said Besson.
As executive chef, Gustafson sets the tone for the rest of the kitchen staff by cooking alongside them every day. Not only does that allow him to spend time doing what he loves most about the job, but it also builds mutual respect among the team.
“They get to know me personally, they get to know my style,” he said. “And then I can train them all personally the best I can. … They all get to cook and work with me, and I think that’s the best part about it, you get to know them at the end of the day.”
Gustafson said it’s up to companies like Benson’s to continue working to shift the idea of work-life balance for back-of-house employees.
“There’s this perception of chefs that all we do is work 70 hours a week, we don’t have families, stuff like that,” he said. “That’s where I think as companies, and as companies grow, we need to rebuild that, that that’s not what it’s like anymore. We all work hard, but we all have lives outside of work and families that we need to attend to, too.”
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How much is too much?
An unintended consequence of post-pandemic workplace culture shifts – particularly when it comes to more flexibility for employees – is perhaps less accountability.
It’s something Katie Hill has observed lately among her peers as a full-time server at Blue’s Egg in Milwaukee. She’s worked in the local restaurant industry for 22 years – the past 12 for Blue’s Egg operator Black Shoe Hospitality – and said the day-to-day work of taking care of diners has not changed much since the pandemic, and neither has her passion for the job. What has changed, however, are dynamics between management and staff, she said.
“It seems as though (management) can’t enforce attendance and punctuality policies that we used to … because of staffing issues,” she said.
Prior to the pandemic, if employees exceeded the limit of how many times they could be late or call in sick, they would lose their job. Now, with labor in short supply, there’s much more leeway, which can be aggravating to those who consistently show up – and show up on time, said Hill.
Beyond the annoyance, it creates logistical issues for those on shift.
“I might get an extra table, or the section is a little bit bigger, and it can be a harder day because your workload is a little heavier,” said Hill. “And then there’s all the extra side work to help with because you’re missing a body, so it definitely affects the day. Am I making more money? Yes. But it makes for a more difficult shift.”
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Blue’s Egg on North 76th Street in Milwaukee.[/caption]
These new workplace dynamics could stem from what Black Shoe Hospitality co-owner Dan Sidner considers a “very real change in the mindset” of the next generation of workers, who may not view work in the same way previous generations have.
“My generation and certainly the generations before me defined themselves by what they did professionally,” said Sidner. “I think an awful lot of younger people are like, ‘I do what I have to do to make a living so that I can be available for life and do what I want to do.’ I can’t prove that with any statistics, but that’s the impression that I get from talking with the younger staff members.”
In addition to Blue’s Egg, Black Shoe operates Maxie’s, Story Hill BKC and Buttermint Finer Dining & Cocktails, which opened in late 2021 in Shorewood. As of mid-April, the group’s total employee count was about 175. That’s only about 25 people below pre-COVID numbers, but there’s still a sizable labor gap given the drastic shift in the ratio of full-time to part-time employees.
“Pre-COVID, we were about 60:40 full time to part time and now that has flipped. … We’re still pretty short staffed just because people are working fewer shifts,” said Sidner, adding that many career professionals, from servers to managers, left the industry and have yet to return.
That trend has begun to reverse for Black Shoe, thanks in part to increased wages – by at least 20% for all employees – and the move last year to bulk up benefits for full-time employees, adding dental, vision, disability and life insurance as well as 401(k) matching to existing health insurance coverage.
“The standard of living or income for our teams is decidedly better,” said Sidner.
But in an industry with historically tight profit margins, there’s a ceiling – and it’s determined by the consumer.
“The only way we’ve been able to pay people that much is we keep raising our (menu) prices,” he said. “We’re definitely at the point now where we can’t raise prices anymore, we will lose business. Everybody is stretched and everything is more expensive.”
