Restaurant operators are navigating historically low unemployment rates and rising wages and these labor pressures aren’t going away anytime soon.
According to the National Restaurant Association’s State of the Industry 2020 report released last week, three in 10 restaurant operators say they have job openings that are difficult to fill.
As if this wasn’t a big enough challenge, the pool of younger workers is expected to drop sharply in the next five to 10 years. The National Restaurant Association predicts 1.2 million fewer 16-to-24 year olds in the labor force by 2028. Considering the makeup of the restaurant workforce specifically, this trend could be disruptive.
As such, some restaurant brands are starting to get pretty creative with their recruitment and retention efforts. Hiring parties. The promise of six figures for general managers. Educational reimbursement. Progressive parental leave policies.
They’re also starting to tap into non-traditional employees.
McDonald’s, for example, recently partnered with the AARP to hire older workers, stating it wants to reach a “growing, yet underutilized workforce.”
This partnership makes plenty of sense for the company and the industry as a whole. While the percentage of younger workers drops, the growth of those 65 and older in the U.S. labor force is expected to jump more than 5% through 2026. In fact, workers over 65 amount to the fastest-growing workforce segment, according to the U.S. Bureau of Labor Statistics, and are expected to outnumber teenage workers by 11 million by 2028.
“This is such a major shift generationally and we’re seeing restaurants working harder to attract younger workers with more benefits. But we’re also seeing those who have retired from a career wanting to do part-time work. Older adults are healthier now and they like working part-time because it allows them to be social,” said Kristi Turner, chief marketing officer at restaurant software management company Compeat. “They’re such great employees because of their wisdom and maturity and that presents an amazing opportunity for restaurant operators.”
As part of its AARP partnership, McDonald’s is piloting a program that aligns employer and candidate needs and interests through existing programs at the AARP Foundation. Franchisees opt-in to the program, which rolled out nationwide in the summer of 2019.
“Considering the labor trends for both the 50-plus workforce and the growth of the QSR industry, McDonald’s leadership in this area is occurring an opportune time,” Ron Painter, president, National Association of Workforce Boards, said in a release.
Bob Evans and Honey Baked Ham Co. have also targeted job listings at older workers through AARP, senior centers and churches, according to Restaurant Dive.
Recruiting current and former prisoners
Just a few months after McDonald’s announced its AARP partnership, the National Restaurant Association Educational Foundation received a $4.5 million grant from the U.S. Department of Labor to develop model training and job placement programs for another group of non-traditional employees: young adults who are currently incarcerated or who were recently incarcerated.
The NRAEF worked with the U.S. Department of Corrections, community groups and state restaurant associations to create the job training program, called Hospitality Opportunities for People Entering Society (HOPES).
According to Rob Gifford, NRAEF president, this has not historically been a demographic the restaurant industry has proactively attracted, but the timing is right for that to change.
“Restaurants need more than 640,000 additional 16 to 24-year olds over the next 10 years to maintain the current level of teens and young adults in the industry,” he said. “With 600,000 individuals exiting the justice system each year, that presents the industry with the opportunity to get young people in the job market.”
Such a program should also help reduce recidivism. A study by the Manhattan Institute found that finding employment after getting out of prison reduces a return to criminal behavior. The study shows a 20% reduction in return to crime by nonviolent offenders, who make up the majority of incarcerated people.
“So, not only will restaurants expand their talent pipelines, they’re preparing these individuals with pathways to employment and independence,” Gifford said.
The NRAEF is unable to announce which specific brands are currently involved in the program, but Gifford said the overall response since launch has been positive. He does, however, single out Karim Webb, a Buffalo Wild Wings franchisee, who has been involved in inclusive hiring practices, and calls MOD Pizza and Hot Chicken Takeover “leaders in providing employment opportunities for justice-involved individuals.”
In this, its first year, the HOPES program looks to enroll at least 560 individuals in its four pilot cities–Chicago; Hampton Roads and Richmond, Virginia; and Boston.
“The ultimate potential of the program nationwide is tremendous,” Gifford said.
No doubt, the NRAEF and AARP programs are two meaningful solutions to the industry’s lingering labor challenge. Time will tell just how much impact they have. Hudson Riehle, SVP of research and knowledge at the National Restaurant Association, recently told CNBC that there are 1 million job vacancies in the hospitality space and that number could quickly grow with the looming demographic shift.
“Restaurant operators are going to have to get creative and they’re going to have to get smarter about their labor efficiencies,” Turner said. “It’s not all doom with the number of younger workers dropping off. There’s a huge pool of older, non-traditional workers who want to do this and that’s a good sign for an industry that has historically accepted everybody.”
Meeting younger generation’s employment needs
Still, the industry will continue to be a magnet for younger employees and operators are wise to continue attracting, empowering and advancing the next generation of restaurant leaders.
“While the younger workforce might be shrinking, what they’re looking for now is essential to keep top of mind as we compete to attract and retain them,” Gifford said. “If we succeed in meeting the younger generation’s expectations for today, we’ll have an even more compelling case to encourage the workforce of tomorrow to get their start in our industry.”
To do that, operators should focus on three key approaches:
Provide paid on-the-job training and development opportunities to immediately demonstrate a clear path toward advancement. Make it clear that the restaurant industry is “much more than just a first job because it is for so many people now than ever before,” Turner said.
Cast a wide net for talent. Gifford suggests looking to military veterans transitioning back to civilian life, older adults and ProStart students, for example.
Nurture future leaders through mentorship. “If we can keep this generation engaged through mentorship, they will ultimately become our biggest advocates and ambassadors for encouraging more young people into their restaurants to work and, ultimately, to stay,” Gifford said.