labour crisis

Despite labour crisis, 4 in 10 restaurants can’t afford to hire

As the labour crisis continues to plague restaurants, we are reminded yet again that there is no simple solution.

Many restaurants are still struggling desperately to maintain a viable level of staffing, and there is no easy answer. The labour pool has shrunk dramatically with many former gig workers leaving the industry, leaving operators to scramble to adjust their hiring processes and working cultures.

Meeting workers with competitive compensation can be a challenge in itself and, amid the current backdrop of record-high levels of inflation and potential workers’ expectations of more competitive salaries, more than four in 10 restaurants say they simply cannot afford to add more workers right now, despite their labour shortages.

That’s according to a new report from Alignable, which found that 44 per cent of Canadian restaurant operators say they can’t currently afford to add workers. That was higher than the proportion of U.S. restaurants, which was 38 per cent. In addition, four per cent say they feel they actually need to reduce their headcount just to stay in business.

Alignable also found that half (50 per cent) of the 44 per cent of Canadian restaurateurs who said they put a hold on hiring said they had been trying to hire earlier in the year before implementing a hiring freeze. Again, the main reason was that they just couldn’t afford the escalating labour costs, not to mention other inflationary trends eating away at their margins.

This is highly problematic. Talk of inflation finally leveling off after rising for so many months may bring some relief, but beign understaffed while not being able to afford to hire more workers is a vicious circle that can be hard to escape.

However, there does appear to be some light at the end of the tunnel.

Alignable’s report also found that in July, 36 per cent of Canadian independent restaurants said it has been “significantly more difficult” to hire workers. While that is evidently not a good position for the industry to be in, it does represent improvement. That figure was down four per cent from 40 per cent in June, and down 19 per cent from a high of 55 per cent in May.

“As in the U.S., we’re seeing that many restaurants still need to hire workers, but an increasing percentage have thrown in the proverbial towel on hiring for the time being, because of skyrocketing costs that they can’t make up for via increased pricing at their restaurants,” summarized Alignable’s Chuck Casto.