3 Critical Issues Food Service Operators Face in 2016
As 2015 has just passed, we take a look at some of the most critical issues that food service operators and restaurant owners may face throughout 2016.
Minimum wage hike
According to the National Employment Law Project, around the start of 2016, 14 states including Alaska, Arkansas, California, Colorado, Connecticut, Hawaii, Massachusetts, Michigan, Nebraska, New York, Rhode Island, South Dakota, and Vermont saw minimum wage increases from previous legislation and initiatives.
Later in 2016, The District of Columbia, Maryland, Minnesota, and Nevada will also raise their minimum wages. These changes will affect millions of workers and thousands of businesses. Many of these states are set to keep increasing minimum wages through 2018 or 2020. This means that food service operators and owners, as well as many other business owners, will face rising costs over the next 4 years.
The federal minimum wage has not been raised since 2009 when it rose from $6.55 to $7.25, however a variety of proposals have been put forth in recent congressional sessions including a $12 proposal. None of these measures have passed so far but if a federal wage hike did pass, increasing minimum wages could affect even more businesses.
Fewer people applying to food service jobs and a shrinking workforce
According to data from the Bureau of Labor Statistics on the food service and accommodation industries, Food service and Accommodation job openings are at one of their highest levels in 10 years. The troubling part of this is that there is that starting in 2013, there has been an increasingly smaller gap between job openings and total hires during the month. This trend indicates that there may soon be a serious shortage in workers in the Food service and accommodation industries. This is a sign of an improving economy where more people are employed but with this improvement, restaurant owners and operators will continue to struggle with more customers, high industry turnover, and not being able to fill job openings.
It can be seen pretty clearly from the chart below that if the current upward trend in job openings continues that restaurants and those in the food service and accommodation industry are going to have a hard time filling job openings in the coming years.
*Data from The Bureau of Labor Statistics Job Openings and Labor Turnover Survey
In line with this data news stories about the food industry worker shortage have started to appear. In Minnesota, the Star Tribune reported that restaurants across the state are having to compete more for qualified workers. They stated that there are simply not enough driven individuals willing to work the historically long hours and lower pay that is consistent with most jobs in the food industry. In fact, in the Minneapolis-Saint Paul area alone, over 100 new restaurants opened in 2014 and this increase in restaurants continued in 2015. Many businesses in that area have decided to close on certain days due to staff shortages.
At first this may seem like an isolated trend, but there are news stories from around the country that corroborate a shortage in restaurant workers. The Washington Post wrote a story in August of 2015 about a crippling problem that chefs are freaking out about. This problem they are talking about is a shortage of workers in the kitchen. The article explains that where there once were 12 workers applying to 1 positions, there are now 12 positions and 1 worker. Job openings are increasing much faster than hiring and there are not enough workers to keep up.
Besides the Washington post and the star tribune, the National Restaurant Association, The Franchise Times, Nation’s Restaurant News, Inc., The New York Times, and many other news and professional organizations have reported on this trend.
Increasing protests and the move towards a $15 minimum wage
Not only are workers now harder to find and more expensive, but many workers are also going on strike. According to Reuters, in 2015 the fight for 15 saw fast food workers plan strikes in 270 cities across the United States and protests in 500 cities. This movement started in 2012 and has recently gained a lot of traction. New York City, Seattle, San Francisco, and Los Angeles County all have plans to increase their minimum wages to $15 an hour. Further, Greensboro, NC, Missoula, MN, Pittsburg, PA, Buffalo, NY, and Rochester, NY all plan to raise minimum wage to $15 for city workers. If this trend continues and more cities, counties , or states plan to raise their minimum wages to $15 an hour, the food service industry could not only have trouble finding workers and paying them, but keeping them at work in the face of strikes.
Of course there are many other factors that face the food service industry that were not discussed here. Rising food costs, turnover, training and development, technology, and changing consumer preferences are all important factors that the food service industry faces.