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How Food and Beverage Companies are Adapting to Current Labor Shortage Issues

How Food and Beverage Companies are Adapting to Current Labor Shortage Issues

Labor Shortages: How Food and Beverage Companies Can Adapt

Since early 2020, the COVID-19 pandemic has wrought havoc on the food and beverage industry.

In addition to shutdowns of restaurants and bars as well as significant changes in how operations take place, the extensive unemployment insurance that has been offered by state and federal governments has kept workers away from lower-paying jobs in food service.

This was an unexpected challenge for many in the industry as it tries to recover as restrictions are loosened and our world starts to get back to normal.

By the end of April 2021, job openings levels rose to 9.3 million, with the food and beverage industry making up the biggest part of that increase, adding 350,000 jobs in a single month to bring the total worker shortage in the industry to 1.3 million positions.

These shortages have been difficult to fill, with teenagers being offered high wages to come in and work these positions, but with school resuming, the shortages will almost certainly return. How will the industry meet these changes? Through clever adaptations discussed below.

A Closer Look at Labor Shortages in the Food and Beverage Industry

Let's start by taking a look at where the labor shortage came from.

Though there were a few stimulus checks that came through, the shutdowns caused by the pandemic caused a lot of people to lose their jobs.

Between filing for some of the generous pandemic unemployment packages that have been made available, taking on new educational opportunities to get into a new career path, or shifting into other fields such as grocery delivery, personal shopping, and similar service industry positions that have drastically increased in popularity, people coming back to the industry has decreased significantly.

These shortages are making it very difficult for some stores, restaurants, and similar establishments to fully return to normal operations. It also creates a strong negative impact on those who are being saddled with extra hours and responsibilities to make the operation run smoothly.

This stress can impact the number of people who were able to remain in the industry through the worst parts of the pandemic, driving them out of the industry and worsening the labor shortage problem.

Examples of How Businesses Are Adapting to Labor Shortages

Combined with increasing inflation, many workers are looking for more money to return to work. The shrinking labor supply has caused a lot of businesses to get creative to bring their employees back while enticing new entrants to the industry into the labor market.

Below are a few examples of how some businesses are adapting to the limited labor pool currently available to the industry:

  • Taco Bell began holding hiring parties which included job fairs and on-the-spot interview opportunities. Additional paid time off has been offered for employees to be able to take vacations and for those bonding with new babies while providing new short-term disability benefits to its employees.
  • Whataburger has decided to improve employee retention by raising general manager salaries to a six-figure level, making them much more likely to remain in service while retaining a pool of knowledge about the business's operations. An increased bonus pool is also available to other employees.
  • Chipotle has chosen to maximize its college student employee workforce by providing a range of debt-free college degree benefits, specifically for student employees who are pursuing degrees in agriculture, the culinary arts, or hospitality.
  • Numerous other companies have offered a wide range of other benefits. These include bonuses for interviewing or signing on to help increase the talent pool. Other companies have increased wages, while yet others have offered instant daily pay rather than waiting for a paycheck.

Though these changes are being implemented across a wide range of businesses in the industry, time will tell whether these changes will have a long-term or even permanent effect on not only the current labor shortage problems but also the industry as a whole, one that has been fraught with labor issues for many years.

However, when implementing these types of changes, make sure that the business's overall finances are set up in a way that helps ensure continued financial success.

If you're considering ways to retain and attract employees for your food service business, our team of professionals can help.

With industry-specific knowledge and expertise, we can help you navigate the maze of government requirements, new programs, and a range of similar opportunities to set your business up for success.

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© CPA ContentPlus 2021

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Biz Tip Topic Expert: Nicole Gralapp, CPA, CExP™

Nicole Gralapp, CPA, CExP™

Nicole is a Principal at SVA Certified Public Accountants working primarily with closely-held businesses and individual clients. Nicole performs a variety of tax, assurance and business consulting functions. She provides clients with technical expertise in areas such as tax planning, financial reporting, financial projections, budgeting, financial and estate planning and review of internal controls. Her experience in the hospitality, restaurant, construction and professional services industries gives her the ability to consult with clients in a variety of areas.

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