Higher Wages, Signing Bonuses Help Fuel Restaurant Job Rebound
(Bloomberg) -- U.S. restaurant owners have been dangling unprecedented perks in an effort to attract back workers, and it’s starting to pay off.
After months of understaffing that’s hobbled the recovering food-service sector, bars and restaurants reported the largest payrolls increase of any industry last month, with a gain of 186,000 jobs, the Labor Department’s report showed Friday.
That jump in employment was likely buoyed by recent wage hikes at deep-pocketed chains like McDonald’s Corp., Chipotle Mexican Grill Inc. and Olive Garden. Average hourly wages in the leisure and hospitality sector were $18.09 in May, preliminary data show, an increase from $17.86 in April. Owners are also getting creative when it comes to attracting talent, including offering retention bonuses and loosening previous restrictions on appearance or experience.
Sandwich chain Jimmy John’s recently hosted its first national hiring event, including paid ads on Instagram and Snapchat. The 98%-franchised chain, owned by Inspire Brands Inc., says store owners are dangling $300 sign-on bonuses in some locations and up to $200 in retention bonuses for hourly workers already on the payroll. The company is also playing up its fryer-free kitchens when trying to recruit.
“We don’t have fryers or grills so you’re not sweating over the grill, and you don’t smell like fried food when you leave work,” said Chief Operating Officer Sarah Mueth when asked about the company’s recruitment efforts. “If you drive down the street, almost everybody is hiring. There are a lot of jobs out there to be had.”
East Coast restaurant chain Cuba Libre is dangling $1,000 welcome bonuses to new staff in Orlando, payable in cryptocurrency if desired, in addition to a boosted minimum hourly wage of $14 for non-tipped workers. It hosted a three-day hiring festival complete with face painting, balloon artists, live music and free Cuban sandwiches, setting it back almost $10,000.
Co-founder Barry Gutin had hoped to hire as many as 60 workers at the event, but only 15 showed up. He hired 13. “I was surprised but not shocked,” he said. “If we had not had the festival we wouldn’t have those 13 people, so in that sense it’s a win.”
Cuba Libre is trying other things, too. It’s loosening appearance standards. Neon hair is now OK; so are ear gauges. The restaurant and rum bar is taking less experienced workers than it used to and holding on to the not-so-good ones longer.
“You end up keeping for longer than you like,” Gutin said. “Today you have to hire quickly and fire slow.”
Despite the big bounce in restaurant payrolls, there still aren’t enough workers to go around. Even with loosening Covid-19 restrictions across the U.S. and increased vaccinations, some workers are reluctant to return to public-facing work.
“Kids are still home from school, other people are still home from work,” said Credit Suisse analyst Lauren Silberman. “People are still nervous about Covid; it’s a very front-lines job.”
Salsarita’s, for example, hasn’t been able to reopen two of its roughly 90 Mexican-themed eateries due to staff shortages, said Chief Executive Officer Phil Friedman.
“I can’t get enough help to cover all shifts,” said Friedman, who says raising wages would mean higher menu prices -- and a resulting defection to Panera Bread or other competitors. “I can’t pay $100,000 for a $50,000 person because the economics just don’t work.”
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