Restaurants are finally staffing up.
The industry, which experienced among the biggest reductions in jobs and workers after the Covid-19 pandemic struck the U.S., has erased most of those losses. This past month, restaurants and bars had nearly doubled the number of employees working at the pandemic low in April 2020, according to the Labor Department. The past month alone, restaurants and bars added 62,000 jobs.
Restaurant owners and workers attribute the return to a combination of factors including pay increases, improving working conditions and fewer opportunities elsewhere as the economy weakens.
All but 2.1% of the 12.2 million food-service and drinking-establishment positions that existed in the U.S. in November 2019 had returned as of the past month, Labor Department data show. Restaurants, hotels and other leisure and hospitality employers have lagged behind the broader labor market, which in July added back the total number of jobs lost during the pandemic.
Many recent hires are returning to the restaurant industry after forsaking it earlier in the pandemic, when lockdowns and local mandates reduced shifts and incomes, and many workers were laid off, furloughed or quit amid increased uncertainty.
After lockdowns eased, demand roared back while employment was still down, leading to declining service ratings and incidents involving angry customers. As the experience of working in restaurants deteriorated, many people left the industry to find better, safer, higher-paying work.
Since then, pay has risen and some employers have taken steps to make the jobs more appealing, including by expanding benefits and in some cases offering more flexible schedules than traditionally provided by restaurants. "There's a lot more focus in the hospitality industry on the importance of workers," said Bob Szuter, co-owner of Wolf's Ridge Brewing, a Columbus, Ohio, brewery with two full-service restaurants. "You'd be hard-pressed to find a lot of businesses now who say that the customer is always right."
Restaurant owners say applications have increased and more prospects are showing up for their interviews rather than ghosting operators, as many did earlier in the pandemic.
The share of job seekers interested in food-service and restaurant jobs is rising close to prepandemic levels, according to Jobcase, a job board specializing in hourly work. In October, 6.2% of individuals on the platform clicked on ads for food-service and restaurant jobs, compared with 6.4% in October 2019 and 5% in October 2021.
Beau Duncan was bartending at an Outback Steakhouse in Colorado when the pandemic hit. He lost his job and largely fell out of the workforce for more than a year. He did some construction work and picked up occasional shifts at the Outback once it reopened at limited capacity. But he wasn't earning enough to cover his bills, the 40-year-old Highlands Ranch, Colo., resident said.
Around three months ago, Mr. Duncan found a job as a waiter at Los Dos Potrillos, a Mexican restaurant in the Denver area. He is now earning good money, particularly in tips, he said, and is trying to teach himself Spanish to communicate with more of his co-workers and customers.
"It's been the most difficult industry job I've had, but the most rewarding," he said.
Fast-food workers earned an average hourly wage of $15.17 in October, up 26% from before the pandemic, Labor Department data show. Wages for workers at sit-down restaurants rose 21% to $18.70 an hour. Both categories increased faster than the average worker's wages; across private-sector employers, average hourly earnings for rank-and-file workers were up 16%.
Some restaurants have managed to staff up faster than others. Fast-food restaurants employed 4.6 million workers as of October, around 1% more positions than before the pandemic. Full-service jobs remain down 7.3% compared with February 2019.
"We're in a much better place" with staffing, said Adam Noyes, chief operating officer of sandwich chain Potbelly Corp. "Over the last 90 days we've made a lot of progress."
The 430-unit chain is down to 16 locations where a lack of staff is curtailing restaurant hours, most of which are located in suburban areas where teens in particular haven't returned to hourly restaurant jobs, Mr. Noyes said. Potbelly and other chains, including Starbucks Corp., also have invested in technology to improve collection and distribution of tips to workers, standing to improve overall pay.
Owners and operators say a softening labor market has brought workers back to the sector and kept them in roles for longer. The nation's job openings, while still elevated, have declined from their pandemic highs. "We're seeing people sticking around, which tells me they're not seeing as much opportunity or they're a little scared about jumping from job to job," said Mr. Szuter of Wolf's Ridge.
Retention has improved sharply since earlier this year, he said, with turnover dropping from 35% in the first six months of 2022 to 20% over the past three months.
Vanessa Chadwick worked at restaurants before the pandemic, but found she had to juggle around 60 hours of work at two locations to earn enough money, so she switched to the retail sector. But the 27-year-old Sycamore, Ill., resident found she missed restaurant work. When she began applying for jobs about a month ago, the opportunities were better than before the pandemic, she said.
"The hospitality industry has caught up and the pay and benefits are much better than they were," said Ms. Chadwick, now an assistant manager at Noodles & Co. in Geneva, Ill. "I haven't felt this happy in a very long time."
While higher pay is helping to solve companies' hiring shortages, it is also eating into profit. Broomfield, Colo.-based Noodles, which now offers benefits such as paid paternity leave, adoption assistance and tuition assistance for hourly workers and their immediate family, in November told investors that its wage costs were up 12% for the three months ended Sept. 27 compared with a year earlier. Chief Financial Officer Carl Lukach expects the chain's labor costs to continue to grow next year.
"You're still seeing double-digit wage inflation because of the competition in the market," he said.
Restaurants' margins, which have also been hit by rising costs for food, ingredients and materials, have declined to an average of 13% from 21% before the pandemic, according to a survey of 800 operators by market-research firm Datassential. Some restaurant operators said their margins are far lower than that.
Timothy Tharp, owner of the Checker Bar and Grand Trunk Pub in downtown Detroit, said his staffing has improved and the quality of his applicants has shot up from last year, but he is barely breaking even and fears that raising his prices will unnerve customers.
"I'm trying not to scare people away with $30 hamburgers," he said.
