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Food and Beverage Businesses are Adapting to Labor Shortages

The food and beverage industry has experienced a rollercoaster ride over the past 15 months of the COVID-19 pandemic. Most in the industry believed their toughest struggles would be adapting to the new world of social distancing and online ordering. With the loosening of restrictions and a return to normalcy, the industry is experiencing adversity once again in the form of labor shortages.

According to new data released on June 8, 2021 by the Bureau of Labor Statistics, as of the end of April 2021, the overall job openings level rose to an all-time high of 9.3 million. The food and beverage industry accounted for the largest portion of this increase with the addition of approximately 350,000 jobs in one month, bringing the total number of job openings to 1.3 million. The shortages found in the labor pool to fill these roles was intensified by the COVID-19 pandemic.

As many businesses closed their doors during the pandemic, individuals needed a way to keep themselves employed and began shifting into industries that thrived during the pandemic. Some stores are unable to make a full return to normal under the current labor shortage conditions. This has a negative impact on those who are still contending with the additional hours and responsibilities they need to take on to make operations flow smoothly – which runs the risk of worsening the shortage by further driving people out of the industry. Many of the talent pool have shifted permanently, some are unwilling to return due to the enhanced unemployment benefits they are current receiving, and others are looking to receive more from their employers to return.

With the shrinking labor supply, business have begun getting creative to lure back their employees and potential new entrants to the industries labor market. The following are some examples of how businesses are adapting to the shrinking talent pool:

  1. Taco Bell held hiring parties including their own personal job fairs with on-the-spot interviews. They have also offered additional paid time off for vacation and “baby bonding” as well as additional short-term disability benefits.
  2. Whataburger has taken the route of offering additional wages by increasing their general manager’s salaries to six figures and significantly increasing the bonus pool available to their employees.
  3. Chipotle has offered to provide debt-free college degrees to all eligible employees in the agriculture, culinary or hospitality.

Several companies have begun offering signing bonuses or interview bonuses to increase the talent pool.

Even with implementation of some of these changes businesses are making, it remains to be seen if they will have a permanent or long-term impact on the labor shortage issue.

Author: Ryan Levin | rlevin@withum.com

Contact our Withum’s Consumer Products Team Member to help address your further questions.

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