How Small Restaurant Owners Are Navigating the Labor Shortage

Every few weeks, it seems, a new photo goes viral on social media showing a sign in a restaurant window declaring: “This restaurant is closed because no one wants to work.” Restaurant owners have, for months now, been quoted in articles and TV news hits decrying the ongoing labor shortage, blaming the enhanced unemployment benefits enacted during the pandemic for disincentivizing returning to work.

But those benefits have expired in some states already — and some jobs data suggests ending them didn’t exactly lead to a wave of rehires. The best way to attract long-term workers (back to) the restaurant industry, according to many who advocate for low-wage workers, is to pay people more. Through supply and demand, the thinking goes, higher wages will increase demand, and the restaurant industry can get back up and running again. That money has to come from somewhere.

The CEO of Chipotle was paid $38 million in 2020; the CEO of Yum! Brands, which owns KFC and Taco Bell, took in $14.6 million; and the CEO of McDonalds, $10.8 million. These companies could certainly afford to pay their line-level employees higher wages to entice them back to work. But the restaurant industry is hardly monolithic, and these outrageous examples belie the complexity of an industry that is not only made up of mostly small businesses but also relies on a broader supply chain that is facing its own pandemic-related calamities. Yes, executive compensation in this country is out of control, and workers are paid too little. But not every restaurant can raise wages as easily as Chipotle or KFC could.

For restaurateurs and owners working on a much smaller scale, hiring and retaining staff in the labor shortage has demanded flexibility. I spoke with owners of independent, non-chain restaurants to get a better sense of how they are meeting their staffing needs. Every restaurant is a unique ecosystem, but among the restaurateurs I talked to, a few key strategies emerged: paying themselves less (or last) in order to pay their employees more; creating greater employee participation in the restaurant’s operation; and being proactive about adapting to a permanently changed world.

Small restaurant owners are sacrificing their own pay

Eric Sze, Eater 2021 New Guard member and chef-owner of 886 restaurant in Manhattan, says that he considers himself a “very lucky owner” and hasn’t had too much trouble bringing staff back. Currently, 886 offers back-of-house employees an hourly wage between $18 to $20, and front of house usually sees a minimum of $25. Sze and his co-owner, Andy Chuang, usually end up working around 18 hours a day, paying themselves $60,000 per year, but frequently will forgo a salary some weeks to make ends meet.

Ed Szymanski and Patricia Howard, who own the new Manhattan restaurant Dame together and, like Sze, are members of the 2021 Eater New Guard, have “had it relatively good,’’ Szymanski says. “We’re a lucky outlier with a tiny total staff of nine, including ourselves, and they’re all friends.” Since their staff is so small and each member interacts with guests, they are able to include everyone in the tip pool, with a base wage of $15, plus tips, which usually brings the hourly rate up to about $40. They have yet to pay themselves.

Some restaurant owners keep labor costs in check by paying themselves a percentage of revenue, like Matt Glassman, owner of Greyhound Bar & Grill in Los Angeles, or profit, as does Sandy Levine, owner of the Oakland and Chartreuse in Detroit. Levine estimates that servers and bartenders in his establishments could easily be making more than he does in any given week.

Owners are finding more ways to get employee buy-in

Ji Hye Kim, chef and owner of Miss Kim in Ann Arbor, Michigan, who was able to bring back all but two staff members, implemented a weekly all-staff huddle where management and staff could talk transparently about the business and what safety measures the restaurant would be following. This meant that they could work with the staff on the timeline and strategy for reopening. “We opened slowly, in phases; it was not a unilateral decision,” says Kim. The restaurant did not allow guests inside, eliminated public restrooms, and, when its patio opened, Kim was the only one working it for the first two weeks, citing staff fears of violence in reaction to enforced mask-wearing.

Nelson German, owner of Sobre Mesa and Alamar in Oakland, said that his reputation has allowed him to keep most of his staff, although he’s still missing some: “It revolves around culture — they’re down for you if you’re down for them.” He said he’s always offered competitive wages and gave raises to those who’ve stayed through the pandemic’s shutdowns and reopenings.

Owners are looking ahead and looking beyond the current moment

Many small-scale restaurateurs seem to be reimagining staffing on a more philosophical level, thinking about more than simply how much to pay. Take hosting: usually considered to be one of the most entry-level positions in the front of house, German is treating it as a priority. “The host is a high-skilled position, you need to know how to de-escalate as well as strategize an entire dining room’s seating.” He pays well for the role (several dollars per hour above industry average), but still finds it difficult to keep staffed, and his wife often fills in. “Guests are mean and a lot of people don’t want to deal with that.”

Restaurants are also looking beyond what the law mandates they pay staff and instead toward equitable systems that not only treat people more fairly, but also allow for greater flexibility when scheduling shifts. Kim has implemented a One Fair Wage policy, meaning that tipped workers and non-tipped workers receive the same hourly base pay. This also allows them to share tips across front and back of house and lets staff fluidly transition between front and back of house as needed, allowing for greater scheduling flexibility.

Most of the owners I spoke with predicted that the current labor shortage and other staffing challenges will persist for the foreseeable future. Still, there’s reason to be optimistic — at least for restaurateurs like German who are actively adapting and experimenting with ways to attract and retain staff. “The industry is changing and we need to take care of our people. We can’t run without them,” he says. “The people who never treated people well are the ones who are in trouble right now.”

John deBary is the co-founder and board president of Restaurant Workers’ Community Foundation, author of Drink What You Want, and creator of Proteau. He can be found on Twitter and Instagram at @jnd3001.