Exploring Solutions to the Labor Shortage in Wisconsin’s Hospitality Industry: Strategies and Opportunities

Exploring Solutions to the Labor Shortage in Wisconsin’s Hospitality Industry: Strategies and Opportunities

The hospitality industry is currently facing an acute labor shortage, especially in the restaurant sector. According to the National Restaurant Association, forty-five percent (45%) of restaurant operators report needing more employees due to increased customer demand, but 70 percent struggle to fill job openings.[1] The lack of staff is causing significant disruptions in their operations.

There is a total employment of 15.7 million in the restaurant and food service industry. It was estimated that the industry will add an average of 150,000 jobs annually until 2032, with overall staffing levels reaching 16.9 million by 2032.[2] Operators are turning to technology and the gig economy to cope with this situation. According to a recent survey, one in four operators stated that in their segment, using gig workers to fill in staffing gaps will become more common in 2024. Furthermore, almost half of the operators (47 percent) believe using technology and automation to address the current labor shortage will become more prevalent.

Several factors contribute to this situation, such as the changing demographics of the state resulting in a shortage of young workers who traditionally comprise the restaurant workforce, the demanding work, and low pay associated with the hospitality industry, which can discourage job seekers and the global health crisis that has caused many workers to reassess their careers, with a preference for sectors that offer more stability and better working conditions.

Effective Strategies to Address the Escalating Workforce Shortage

Gig Employment

Gig employment, also known as the gig economy, has gained popularity due to its flexibility for workers and employers.

By tapping into this pool of workers, companies can fill gaps in their workforce more efficiently. Another advantage is access to a broader talent pool.

Gig employment allows companies to access a larger talent pool beyond their immediate geographic area.

According to a survey by the National Restaurant Association, about a quarter of surveyed operators reported that they would consider using “gig workers,” or independent contractors supplied by a third-party service, to supplement existing staff.[3]

Hiring gig workers can be cost-effective for companies, as they often do not have to provide benefits such as health insurance, paid time off, or retirement plans.

This cost savings can be attractive to businesses facing financial constraints due to the labor shortage.

Gig workers often bring specialized skills and expertise to the table. Companies facing labor shortages in specific specialized roles can benefit from tapping into the gig economy to find individuals with the particular skills they need for short-term projects.

This type of employment allows companies to scale their workforce up or down quickly in response to fluctuating demand. This agility can be crucial for businesses operating in industries with seasonal variations or unpredictable workload patterns.

As the gig economy continues to evolve, policymakers, businesses, and workers will need to work together to ensure that gig employment is a sustainable and equitable solution to labor shortages while also protecting workers’ rights and well-being.

Collaborating with Development Agencies to Expand Opportunities for a Diverse Workforce

Partnering with local workforce development agencies presents a strategic opportunity to combat the labor shortage in Wisconsin’s restaurant sector.

These specialized agencies excel in bridging the gap between job seekers and employers. They can tap into various talent pools, including individuals seeking a career change, veterans, and previously incarcerated individuals seeking a fresh start. Twenty-one percent (21%) of restaurant and foodservice employees were born outside of the United States – compared to 19% of employees in the total U.S. employed labor force.

The top non-U.S. countries of birth for restaurant and foodservice employees are Mexico, China and El Salvador. Among the major restaurant occupation categories, chefs (44%) and cooks (31%) are the most likely to have been born outside of the U.S.

Twenty-three percent (23%) of managers and 16% of supervisors were born outside of the U.S. Eighteen percent (18%) of waitstaff and 17% of food preparation and counter workers were born outside of the U.S.[4]

Workforce development agencies are crucial in connecting job seekers from various backgrounds with potential employers in the restaurant industry. By partnering with agencies, restaurants can tap into a broader talent pool that includes individuals with diverse skill sets, experiences, and perspectives.

Having access to a diverse workforce brings several benefits to a restaurant. Firstly, it can lead to the introduction of fresh perspectives and innovative ideas within the establishment.

Employees from different backgrounds may approach tasks and challenges uniquely, fostering creativity and bringing new solutions. This diversity of thought can spark innovation and help the restaurant stay competitive in an ever-evolving industry. It can enhance the overall customer service quality provided by the restaurant.

Employees with varied backgrounds and experiences may better understand and cater to the diverse needs of customers, leading to a more inclusive and personalized service experience. Customers from different demographic groups may also feel more welcomed and valued when they see diversity reflected among the restaurant staff.

Establishing a connection with workforce development agencies can ensure a steady stream of workers for current needs and future growth. Agencies can collaborate with restaurants to anticipate staffing requirements and help ensure qualified candidates are always ready to fill open positions.

The EB-3 Visa as a Strategic Response

The EB-3 visa emerges as a constructive solution to the workforce deficit in Wisconsin’s restaurant industry.

This particular visa arrangement allows local employers to sponsor international workers for permanent residency when qualified American candidates are unavailable.

Specifically, the EB-3 visa program encompasses three subcategories, but the ‘other workers’ segment is particularly beneficial to the restaurant industry, as it caters to entry level positions.[5]

Customized Training Programs

Restaurants can assist in developing training programs catering to the specific skills required in their establishments.

These programs can encompass practical on-the-job training and classroom instruction, ensuring new hires are well-equipped and ready to contribute effectively. The U.S. Bureau of Labor Statistics predicts a 6% increase in demand for chefs and cooks over the next decade.[6]

Workforce development agencies may offer subsidies or incentives to employers who hire through their programs. These incentives can offset the costs of training new employees, making it a more economical solution for restaurants looking to bolster their staff numbers.

Positive Community Impact

Hiring through workforce development agencies can positively impact the local community by reducing unemployment and helping individuals acquire valuable skills. This can enhance the restaurant’s reputation as a community-focused business, potentially attracting more customers and job seekers.

According to 2024 State of Restaurants Report, 78% of restaurants spend over $2,000 on the training of each new employee.[7] Collaborating with educational institutions to create specialized training programs can ensure a continuous supply of trained workers for the restaurant industry. High schools, vocational schools, and community colleges can partner with local restaurants to offer culinary programs, internships, and apprenticeships.

These programs can assist students and job seekers in developing the skills necessary for roles in the restaurant sector and provide a clear pathway into the industry.

Embracing Technology and Automation

Implementing technology and automation can help restaurants cope with a shrinking workforce by streamlining operations. By integrating advanced technologies into their processes, restaurants can improve efficiency, reduce the need for a large staff, and enhance the customer experience.

According to a recent survey, nearly half of all restaurant operators (47%) have said that they are now turning to technology and automation to help alleviate the labor shortages they face. This trend is particularly prevalent amongst full-service (44%) and quick-service (49%) restaurants.[8]

Self-service kiosks enable customers to place orders without staff intervention, reducing wait times, allowing employees to focus on food preparation, and enhancing customer service. This technology can also extend to mobile ordering systems, where customers can place orders and make payments through a smartphone app, reducing the reliance on front-of-house staff.

Advanced POS systems can streamline the ordering and payment processes, making it easier for staff to manage multiple tasks efficiently. Modern POS systems often include inventory management tools that alert managers when supplies are low, reducing waste and ensuring popular items are always available.

Automation in the kitchen can come from intelligent appliances and food preparation robots. Automated grills, fryers, and robotic arms can handle repetitive tasks precisely and consistently, allowing kitchen staff to focus on more complex culinary duties or customer service responsibilities.

Digital tools can aid inventory tracking and staff scheduling, often consuming significant managerial time. Managers can optimize staffing levels and reduce time spent on administrative tasks by utilizing software that predicts inventory needs based on sales data and automates the scheduling process.

CRM systems allow restaurants to gather customer preferences and behavior data, enabling personalized marketing and improving customer loyalty. This technology can help restaurants target their marketing efforts more effectively, potentially increasing revenue without the need for additional staff.

Tabletop tablets for ordering and payment can streamline the dining experience for customers, suggesting additional items to increase the average order value. These systems can also entertain guests while they wait for their food, enhancing their overall experience.

Automated systems can efficiently manage delivery logistics for restaurants offering delivery services, ensuring orders are dispatched promptly and delivered hot. This may involve integrating third-party delivery services, route planning software, and real-time customer tracking.

The adoption of these technologies cannot only mitigate the impact of labor shortages but also lead to long-term cost savings. It is important to balance technology implementation with the need for human interaction, as the hospitality aspect of dining remains a critical part of the restaurant experience.

Staff may require training to adapt to new systems, and investments in technology should be carefully planned to meet the business’s needs and deliver a return on investment.

With thoughtful implementation, embracing technology and automation can revolutionize the restaurant industry in Wisconsin, addressing labor challenges and paving the way for future growth and success.

Community Engagement and Brand Building

Restaurants can establish a solid local brand presence by actively engaging with their communities. The 2024 State of Restaurant Report shows that Facebook is the most popular social media platform for restaurant marketing in the US. The report states that 81% of restaurant owners use Facebook to promote their business.[9]

This involvement can include participating in local events, supporting community initiatives, and creating a positive work environment that encourages current employees to refer friends and family—a restaurant viewed as an engaged and supportive community member can attract workers seeking meaningful employment.

The hospitality industry in Wisconsin, especially the restaurant sector, is facing a severe labor shortage, which calls for innovative solutions. One potential solution is to tap into the gig economy and hire gig workers to supplement the existing workforce.

Another effective strategy is to work with development agencies and international worker recruiters to expand opportunities for a diverse workforce. By partnering with these agencies, restaurants will have access to a broader talent pool that includes individuals from various backgrounds with diverse skill sets and experiences.

Ultimately, addressing the labor shortage will require a collaborative effort from policymakers, businesses, and workers to ensure a sustainable and equitable solution that benefits everyone involved.

[1] Wisconsin Restaurant Association. “Restaurant Industry Sales Forecast to Set $1.1 Trillion Record in 2024”. https://www.wirestaurant.org/news/restaurant-industry-sales-forecast-to-set-11-trillion-record-in-2024

2 Id.

3 Aneurin Canham-Clyne. “Restaurant operators see gig work as labor solution, NRA says”. https://www.restaurantdive.com/news/national-restaurant-association-state-of-industry-hints-at-gig-economy-growth/706652/

4 National Restaurant Association. “Restaurant Employee Demographics: Data Brief -April 2024”. https://restaurant.org/getmedia/6f8b55ed-5b3f-40f5-ad04-709ff7ff9f0f/nra-data-brief-restaurant-employee-demographics.pdf#:~:text=Based%20on%20data%20from%20the,restaurant%20employee%20demographics%20in%202022.&text=50%25%20of%20restaurant%20and%20foodservice,total%20U.S.%20employed%20labor%20force.

5 USCIS. “Employment-Based Immigration: Third Preference EB-3”. https://www.uscis.gov/working-in-the-united-states/permanent-workers/employment-based-immigration-third-preference-eb-3

6 Noelle Forseth. “Overcome The Labor Shortage In 2024 And Beyond”. https://wheniwork.com/blog/labor-shortage

7 Katherine Pendrill.“81 Restaurant Industry Statistics for 2024: Sales, Labor, & More”. https://www.touchbistro.com/blog/restaurant-industry-statistics/

8 Caitlin Engelhardt. “What’s the Future of Restaurant Technology in 2024?”. https://madmobile.com/blog/whats-the-future-of-restaurant-technology/

9 Katherine Pendrill.“81 Restaurant Industry Statistics for 2024: Sales, Labor, & More”. https://www.touchbistro.com/blog/restaurant-industry-statistics/