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VinePair Podcast: Can the Restaurant Industry Overcome the Post-Covid Labor Crunch?VinePair

As vaccination rates across the U.S. continue to rise, Americans are returning to restaurants and bars — even in parts of the country that had previously been locked down. In response, understaffed establishments are looking to rehire furloughed workers or bring in new employees, yet many are facing a new challenge: a labor shortage that is greatly complicating those efforts.

On this week’s episode of the “VinePair Podcast,” Adam Teeter and Zach Geballe contemplate whether this labor crunch is purely an effect of the pandemic — discussing the issue’s roots in long-standing trends in the industry, as well as ways that operators might hope to get around this challenge. Tune in to learn how this labor shortage might force a restructuring of the service industry entirely.

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Adam Teeter: From Brooklyn, New York, I’m Adam Teeter.

Zach Geballe: And in Seattle, Wash., I’m Zach Geballe.

A: And this is the “VinePair Podcast.” Oh man, Zach, it’s feeling a little normal. I don’t know about it in Seattle, but it definitely is here.

Z: We possibly could be looking at a 2021 as if 2020 never happened. Obviously, that’s not going to be the case. Here in Washington state or in King County, where Seattle is located, a full 25 percent of all people 16 and over are fully vaccinated. I am also counting myself as part of that cohort. Obviously, a great number more are in the process. We’re very close to everyone being eligible. I assume it’s similar status in New York, but we’re definitely heading there, which is cool.

A: It’s awesome. What have you been drinking recently? Anything tasty? Anything delicious?

Z: Yeah, it was a big weekend in my life last weekend. On Friday, my sister got married.

A: Oh wow, congrats!

Z: Thank you! On Saturday, we had a very small family gathering to celebrate, and my dad made lamb, and I brought some Languedoc, so a south of France Syrah-Grenache blend, and it was great. It was imported by Kermit Lynch, who usually handles good stuff. I really was going to talk about, and it’s been mentioned before, but it reinforced how much more fun and celebratory magnums feel. I think there’s a little bit of fetishization in the wine world surrounding magnums. You could read into that whatever you want, but there is something fun about a larger-format bottle that makes those types of occasions feel special. It’s also nice because I don’t have to worry. If there are 10 people and I open a bottle and everyone wants to have some, am I going to get less than half a glass? That’s a bummer. The magnum allows you to have a full glass or close to if everyone’s drinking in that setting. Again, it’s just something about it. It’s two bottles of wine. It doesn’t seem that remarkable, but it makes a big difference in a way. How about you, what you’ve been drinking?

A: I have an admission to make, which as I’ve stated publicly before, that a Paloma is not a Paloma if it doesn’t have grapefruit soda in it. However, on Saturday, we were hanging out with a friend in the park, and we were like, “Oh, let’s make Palomas.” I ran to the bodega, and they didn’t have grapefruit soda so I used sparkling-flavored grapefruit water. I used Spindrift, and it was pretty good. I said to myself, “Wow, I actually like this a lot better than how sweet the Paloma can be when it has the soda in it.” I was wrong, I was wrong. I had that on Saturday and that was pretty tasty. Then, last night I met up with a friend and had some delicious wines, a bunch of random stuff from one of these wine bars. I can’t even remember the names of the things that we drank.

Z: Sounds like a good night out.

A: Yeah, but that’s always the problem and why I’ve always had this issue with people saying discovery happens in the restaurants. I was out with a friend, and we’re at a restaurant. We know the people at the restaurant, but we ordered wines, but I don’t remember the names of them because I was just enjoying the conversation and the wine that was in my glass. I was not going to pull my phone and take pictures of the labels. I think between us we had three or four glasses of wine each, and I don’t remember them. I remember they were delicious. One was an orange wine, one was a light red, Xinomavro, and the other was the Nebbiolo. But I don’t remember who the producer was or what the wine was. That has been the case when I go out to dinner for the most part, whereas when I have wine at home, I’m looking at the bottle all night sitting on my table. If I forget, I could look up my receipt.

Z: Or go digging in the recycling bin.

A: Yeah, exactly. I’ve always thought that was so weird, at least prior to Covid. There was such an emphasis on the part of producers being like, “We need to be in restaurants because that’s where wine discovery happens.” I would say maybe you discovered a region in the restaurant where maybe I have a Xinomavro, for example, for the first time and say, “Wow, this is so cool, never had this grape before. I should look for more Xinomavros.” I don’t know if you truly discover producers in the restaurant.

Z: Well, if you’re the kind of person who does pull out the phone and take a picture of the bottle, and I’ve both served and been that person from time to time, but I think another thing you could do, and it would be acceptable, is you could reach out to the wine bar or restaurant and say, “Hey, I had a really nice time there last night. I know I drank these kinds of wines. Can you just tell me the info behind the bottle?” You’re right that discovery in that context, and especially the case with imports, is more about varieties and regions than it is about individual producers. I think domestically, the names of the producers are going to stick in your head more than a Greek name or something that might be hard for a lot of consumers to internalize after just having read it off a menu. They might remember more the variety or the place. I’m envious, I have yet to have a glass of wine out because of Covid. I think it’s coming soon. My wife and I, our anniversary is in May. We are going to try and do a celebratory dinner because obviously our anniversary celebration last year was dinner at home, which was the same as the night before and the night after. That might be the first time that we actually have wine that isn’t from our collection in over a year, which is wild.

A: Yeah, it is pretty amazing to sit outside because the structures that people have built in New York are just amazing. Last night I was at Kindred, who you know, we’ve had the owners on the podcast before. The structures that these places have built, like Kindred, are just so incredible. It feels crazy normal. It’s just weird.

Z: I have to ask you a question, Adam, about this because I think it transitioned us into our topic, anyhow. Is your sense, both from the restaurant side and from the New York City residents side, that all that stuff is going to stick? Are they going to be a permanent part of the city’s landscape? To me, it is a fascinating conversation that’s going on all over the country wherein so many places, people have taken up sidewalk space. Even streets have intentionally been closed or greatly reduced in terms of traffic to accommodate outdoor seating. I’m curious, what is your read? Do you think that’s going to stick?

A: Yes, 100 percent. At least for the next year, if not longer. I think it’s going to stick because a lot of people, even those who are vaccinated, like myself, don’t really want to have meals indoors. Who knows how long people will want to do that? I think there will be an expectation that if you are going to dine indoors, there needs to be much more separation there. I’m not sure if we’re ever going to go back to the time when you have restaurants where the tables are so close together that when you get up, you potentially could knock over a person’s wine glass. I just don’t know if we’ll ever go back to that again. I mean, think about when you were sitting at a table indoors and you were basically a part of the conversation with the people next to you. if you want to.

Z: Absolutely.

A: I don’t think that is going to happen anymore. People are very aware of space. The only way, then, for these restaurants to still be at numbers is to allow them to have these outdoor seating areas. A lot of these outdoor seating areas allow them to have even more seating than they had prior to the pandemic. Yeah. At least from what I’m seeing in New York, most of the restaurants are investing as if it’s going to be permanent or at least permanent enough that it’s worth the investment. Some of these structures are getting very elaborate. They are running much more like permanent electricity to them. They’re taking them from their restaurant, they’re going in the air with steel piping and then going into the structures. It’s clearly above everyone’s head. It almost looks like telephone poles coming out of these restaurants into these structures. A lot of people are investing in beautiful lighting and nice tables and now the structure is closed and locked in a very different way. I remember when people were first doing this, as our friends at Alphabet City Beer Company, Zack Mack posted something where they had their stuff stolen out of their sidewalk structure because they didn’t really build the things that you could build at the time to really protect the structure. It was basically a platform with some sides, and they would bring in the tables from inside to outside. Now, people are investing in, specifically, chairs and tables that are for outdoors. A lot of them are now bolted to the bottom of the structure. It’s pretty wild. The majority of people think it’s going to be permanent because I know people are already negotiating with their next-door neighbors. For example, the way the city of New York is treating this is, you have access to the front of your restaurant. You can take that space equivalent in the street where there would be a parking space. If your next-door neighbor is a barbershop or a nail salon, and they don’t need that frontage, you can actually rent it from them. People are negotiating and paying for that space and building larger spaces. I’ve seen a few people who’ve done that. When I’ve talked to the owners, they say, “Yeah, we pay into that landlord.” It is interesting. I see people who are making investments because they’re assuming it’s permanent. Who knows? I’m hoping it is, because it’s a nice way to dine. It really is.

Z: It combines two things that are really delightful in lots of other places, including some parts of the U.S., which is dining outside, for the most part, is quite nice. It’s true too that if you’re dining in around your neighborhood you feel more part of the community in a way. You see people walking by or cars going by, maybe not. People bicycling. It’s something that you and I have both experienced where you go to a lot of places in Europe and you go to the centers of cities and like restaurants, their dining areas sprawl into piazzas and squares. They’re all over the place, and that’s how it is. These are public spaces that are used by the public. They’re not parking spots. This isn’t a transportation podcast. I don’t want to get too deep into it. I think Covid has given us this opportunity to rethink how much space we dedicate in our cities. I would like to see less space for cars and more space for fun stuff like restaurant seating capacity.

A: I think what’s so interesting about it all is that New York has always been trying to say that: “We want fewer cars.” I think that’s a very good thing. It is an opportunity to have these spaces that are really nice. Prior to these structures in New York, it was tables on the sidewalk. That wasn’t great for anyone. You had to get approved by the community board. The community board had decided how much of the sidewalk they wanted to be taken up. If you were the last restaurant on the block that applied to the community board, you may not ever get outdoor seating because the community had already decided that there are two other restaurants already that have sidewalk cafes, you don’t get one. Also, with the sidewalk cafe, they weren’t protected. It’s just an open table on an open sidewalk. It allows people to walk right up to you. In a city that does have a homeless population, it wasn’t always enjoyable for people to have someone come up and ask for money or try to sell them something. Now with these structures, you walk into it, and sure, it is still open, but you are very much still in the restaurant, if that makes sense. No sidewalk space is being taken up. It’s all in the street. That’s so great for so many reasons. It’s really cool to walk through neighborhoods that have really invested in these and see how cool they are. It’s really phenomenal, but that brings us to the main topic of the day, where there is this boom, right? Along with this boom is something that’s happening that I think is being reported as a new phenomenon. I think what you’re going to add is that this isn’t actually new. But there are a lot of articles being published right now, The Times published one today actually about how there’s a massive labor shortage. All these restaurants that are reopening are having a really hard time hiring people. I’ve heard that from everyone that I know in the business in New York, that they cannot find anyone. The reasons for that vary. I had a friend who was a somm is not going to go back to work because she told me that the expectations of the places she’s working at is that you’re not just a somm anymore. You also are running food and taking orders. That’s not what she wants to do. She wants to just be a wine professional. You already predicted in an earlier episode that that was going to happen. It is definitely happening. A lot of wine professionals are choosing not to go back because they don’t want to be waiters or waitresses. They just want to be wine professionals. There are people who have found other well-paying jobs that they were into in the pandemic, or had a year’s worth of reevaluation if the restaurant life was for them. They found other things to do. Zach, you told me this on Slack before recording, is that there was also a labor shortage before.

Z: Yes. My very first published article about food and drink was a piece about a labor shortage in Seattle restaurants. Restaurants had been coming out of the Great Recession and essentially every year since then, it’s just gotten worse. I think there are a lot of reasons that this is true. Some of it has been exacerbated by Covid and some of it are things that this pandemic in the aftereffects might mitigate a little bit. I’m going to provide background for listeners who are not in the restaurant industry and might not be as familiar. One of the things that were happening in Seattle, New York, and San Francisco is you had a fundamental transformation of the restaurant industry. As a server, a cook, a front-of-house worker, server, bartender, etc., you could live in New York. You could live in San Francisco. Now, did you have a glamorous life? Maybe not, although those jobs do come with their own perks. You could have a steady job. You could potentially even have a family if that was the thing you were interested in. We just saw as the tech industry grew, rents got crazier in those cities. People who worked in those cities, in restaurants, could no longer afford to live in them. Unless you had a partner who made a lot more money than you or had an incredible deal on your rent or you were young and willing to eat Top Ramen every day. The idea of a service industry professional, frankly, even for sous chefs, chefs, etc., pay has not kept up with the cost of living in those categories unless you’re very successful. As we’ve talked about in other episodes, people would move to smaller towns and cities or out of the industry entirely because they looked at their bank accounts and said, “I can’t do this.” I can’t tell you the number of people here in Seattle that I worked with who now work for Amazon and say, “I don’t really want to do this, but they will pay me enough to live in Seattle. I don’t want to live an hour and a half away from the restaurant I work in, that’s not fun.” It takes away the whole appeal of being young-ish, or at least in an industry that has that dynamic element. They would say, “If I want to stay in Seattle, I got to work for Amazon or I got to get an office job of some sort.”

A: The places that I know who is being able to hire are the ones who have dramatically increased the pay.

Z: Yeah, I think there’s a way in which we may be coming to a different equilibrium in the restaurant and bar industry than we had pre-Covid. I don’t inherently think this is a bad thing. There’s a part of me that bemoans this very real fact that we are probably going to deal with fewer full-service establishments than we had pre-Covid because of the labor issue and the cost of labor is remaining very high. If the industry has more places that are counter-service, I don’t see that as inherently a terrible thing, but I do think that it does mean that restaurant-goers will have to think about if you’re going to go to a full-service restaurant, you’re going to pay for the experience. That has always been true but in a lot of ways, it’s just becoming more true. It’s becoming harder and harder to not charge what you have to charge in order to have a viable business. We’re going to see in this next year, how does America as a whole put its money where its mouth has been about restaurants and how much they matter? You might have to pay a lot more. I have another suggestion, but I definitely want to hear your thoughts first, Adam. I always thought that New York was a bit of an exception because of the incredible density of restaurants, that there was always going to be a labor pool there. But it sounds as if that’s not the case there.

A: No, even in New York, people are having a really hard time hiring. There’s a lot of factors. One is that people realize they can make the same amount of money or better in other jobs. There are fewer people who are willing to deal with the bullshit. It’s been a really hard year. I think, going back to being in a service profession where you’re going to have a lot of people coming in with a lot of entitlement and wanting to blow off a lot of steam, I don’t think that is appealing to a lot of people. At a lot of these restaurants, it’s going to be like New Year’s Eve every night for a while. The other thing is that people who are going back are doing well. I was talking to a restaurant owner recently who told me there’s a restaurant in Brooklyn that is making massive amounts of revenue every weekend because people want to go out. They have a massive outdoor space and they’re just making money hand over fist. They’re selling really nice bottles of wine. They’re selling multi-course meals. It’s because the population that would go to this restaurant didn’t suffer in Covid. We’ve talked about this a bunch, they had white-collar jobs that they were able to do from their basement, second bedroom, dining room table, etc., and so they continued to earn. They also didn’t spend on travel and things like that in the last year, so they had a lot of disposable income. One restaurant I talked to said that they are selling more $100-plus bottles of wine than they ever have before. People are thinking, “Why not splurge?” They made it through and now I’m eating out. It feels like a special occasion, even though it’s no one’s birthday, graduation, anniversary, promotion, etc., but we’re here. But that is also taxing on a staff. You have people that are becoming harder to deal with in a lot of ways. Other people have found new careers. In this Times anecdote about this sous chef who worked at Marlow & Sons in Brooklyn and said, “What am I going to do for the next year? I’m going to sit here and wait to be a sous chef again? No, I’m going to learn computer programing.” He taught himself computer programming and moved to San Francisco. I think a lot of people did that. A lot of people found new careers because it was too up and down for too long. Are we going to come back or are we not going to come back? I think a lot of it is just, f*ck it. I’m going to figure something else out. I always have wanted to do X, Y, or Z, and they did it.

Z: I think you make a really good point about how there was an element of volatility earlier on in the pandemic. At the beginning of 2021, it became a little bit clearer that vaccination programs are going to be ramping up. There was a ton of uncertainty. When are our restaurants going to reopen? Are people going to want to go out and eat? I think for a lot of people, including myself, it was also a rude awakening of just how fragile the industry was. No person who worked in the restaurant industry had any idea that the entire industry could completely grind to a halt in a matter of days. For a lot of people, and especially in some of these big cities that we’re talking about, it was completely outside of anyone’s field of vision until it happened. As a result, I think it just showed a lot of people just how fragile their situation really was. Obviously, part of that is there were real issues with unemployment insurance throughout the country and getting enhanced unemployment insurance for people. The political dynamic of that is its own thing. I think it showcased to so many people that this industry is extremely fragile. Even if we knew about this fragility on an individual level — I’ve worked with many, many people who were paycheck to paycheck; one bad shift, one bad week, one untimely illness or injury put them in a really bad financial situation — I don’t think we all understood just how fragile the industry as a whole was. It caused a lot of people to say, “I don’t want to f*cking do this again. Sure, I like restaurants, cooking, serving, bartending, or being a somm, but frankly, I don’t want a job where the next time a pandemic happens, I can be the person who’s sitting at home working on their computer, saving money, not the person who’s scrambling to file unemployment insurance and hoping that it comes through. It was a stark reminder for a lot of people.

A: You know what else was a big awakening for a lot of people, I think? There was no safety, even maybe less safety in the big restaurant groups. I’m seeing a lot of people, if they are choosing to go back to work, prior to Covid, it was a very cool thing to work for a large restaurant group. I’m not trying to call any of them out, but I think we all know it’s the ones that have a hospitality group at the end of their name. They own 12, 15 restaurants. They abandoned their staff just as fast. I think a lot of these smaller establishments really took care of their employees and really fought to take care of their employees. When there is so much competition, these employees can choose and are saying, “Huh, it actually seems like it’d be more fun to work at a place like this. It’s smaller, scrappier. I’m going to make about as much money because it’s so competitive right now.” Basically, if you want someone, you’ve got to be willing to pay. I know great wine bars across the city that are hiring somms that were at two- and three-star Michelin restaurants in the city because they just want to work at a great place to work. These wine bars really took care of their staff and fought for their staff. People heard about that, and word spread. They want to work there because it’s going to be a better environment. It’s going to be more fun. It’s almost what happened after the Great Recession, where you had a lot of young workers saying, “I’m going to work at a startup. It’s just as volatile, but at least it’s more fun. I feel like I’m part of something because I got screwed at a big company, too. I lost my job. There was no safety net there. They didn’t fight for me.” At least the smaller companies in the Great Recession fought to keep their employees, so you had this huge migration of people to startups. I wonder if that’s going to be the same thing where we’re going to see this huge migration of the workers that choose to stay in the industry going from the large restaurant groups to the smaller restaurant groups. Possibly, to the mom-and-pop restaurant.

Z: How about starting their own? Certainly talked to a number of people on “Next Round” who, pre-Covid, were working for someone else, and decided they were going to strike out on their own. Some of them may have those plans in the works before Covid hit for sure, but I think we’re going to hear a lot of those stories of someone who says, “If I’m going to deal with all this volatility, I might as well be doing what I really want to be doing, not working for someone else.” I have one other point to make, which I think is connected to this, and I’m curious about your thoughts on this, Adam. I have been thinking about this for the past year. I’ve been thinking about one thing that might make a difference in some of this whole conversation. I think it would be good to think about, as a society, whether it makes more sense to treat restaurants and bars more like we societally treat the performing arts. We don’t necessarily consider that industry’s sole purpose and focus to be profit-driven. We see, as in most places, that there is a broader societal benefit to having a symphony or an opera. The idea that there is a societal benefit to having these things, whether it’s through subsidies at various levels, or through lower costs in various ways. I think it would be good to think about as a society, looking at restaurants and bars a little bit more that way. I’m not saying that a restaurant or bar should have no responsibility to be financially efficient or successful, but we’ve seen that we want to treat restaurants and bars as essential businesses. Even in the throes of a pandemic, we want to have options for food and drink, whether it’s takeout, delivery, or outdoor dining. Yet, what we saw so much over 2020 in particular was “maybe we try to help you guys, I guess.” Again, some of that has to do with the specific politics of 2020, and we don’t have to rehash that. I also think it goes to show you that these industries are treated as essential, as it makes the cities like New York, and Seattle, places many people want to live in. Therefore, I think it’s incumbent upon us to say more than just support businesses with your dollars, because that’s a really inefficient way to do it. At a deeper, societal, structural level to provide some backstop in the way that you see in a lot of European nations, where dining and food are so central to the existence that not supporting restaurants of all different types is just unthinkable. I think America doesn’t have a long history of deep culinary appreciation. It’s a new thing. I’m not good at writing laws, so I don’t have any idea what to do here. But I think it would be good to talk about, as an industry, what are the ways to put in structural supports for this industry moving forward so that when the next crisis comes along, it is more stable than it has been? Also, it could then bring labor back in. Again, this lack of stability explains a lot of why people left the industry. You need to be able to provide stability and not just at the individual employer level because it’s really hard on employers to do that. You create really difficult financial issues for employers when they have to be the ones backstopping unemployment. Instead, doing it at the broadest possible level, I think makes more sense.

A: I don’t know if it’ll happen nationally, but I think smart cities will do it. It goes back to before we started this conversation when we were bantering about the outdoor shelters in New York City. For restaurants, I think one of the reasons everyone’s assuming that they will stay permanent is because New York understands that the arts and restaurants are what attract people here. I think the smart cities are now saying, “Sh*t, we had this crazy migration of people leaving our cities. We have offices that say they’re not coming back.” The way they are going to get people to come back, ultimately, is by creating places that people want to live. It’s having exciting restaurants, having a great theater, amazing museums. I think New York will realize this. Other places will, too. I may be the minority here, but I think that in two to three years there’s going to be a lot of articles written, so I want to go on the record now. There’s going to be a lot of articles written that say that phase we went through where everyone was working from home after Covid was a nice one, but we’re also happy back in offices. I think that we are going to have a return to offices for the most part. I think some jobs will be majority remote. I really do think that, in a year or two when we really are through all of this and no one’s wondering if they need to wear their mask at their desk etc., there will be a massive return to offices. There’s a sense of community that you get there that you don’t get elsewhere. We’re sitting here arguing that we need to do education in person. I think you’re going to start hearing the same argument from certain companies. I know VinePair, for example, we do better work when we’re all together. We can brainstorm. We can come up with greater story ideas. We can help fix pieces. We come up with huge package ideas. All that stuff happens because we’re in the same office together, and everyone wants to come back. When that happens, there are going to be cities competing for those locations and workers. The way that you get them is you have a place people want to live. If you don’t, people will go somewhere else. You look at the places, prior to Covid, that really did that with the breweries. I know we wrote a big piece a few years ago about how Roanoke, Va., revitalized its city by becoming this location for breweries to locate. I think now they have nine or 10 breweries in the city. It created a scene for people who like beer. All of a sudden people want to live in Roanoke. Now, startups are saying, “Let’s have an office in Roanoke. It’s a cool place to live. There’s a good quality of life.” It’s going to be the same. It’s always about money, right? That realization that more people means more tax revenue means better services will cause certain places, potentially New York, maybe Seattle, to try to figure out how they can better support restaurants. They recognize that restaurants and bars are one of the best recruitment tools for getting someone to move to your city. A good sports team, maybe. But the Jets have been terrible forever, and people are still living in New York. It’s culture, food, and drinks. That’s going to be a big realization. The problem is that so many people just screwed up so badly early on in Covid, but I want to think that some places will move to correct it.

Z: I think so, too. I think they will.

A: Zach, always great conversation. If you have thoughts, listeners out there, shoot us an email at podcast@vinepair.com. Let us know what you think. Let us know if there’s anything else you’re interested in. We always love hearing from readers. Zach, I’ll talk to you next week.

Z: Sounds great.

Thanks so much for listening to the “VinePair Podcast.” If you love this show as much as we love making it, then please leave a rating or review on iTunes, Spotify, Stitcher, or wherever it is you get your podcasts. It really helps everyone else discover the show.

Now for the credits. VinePair is produced and recorded in New York City and in Seattle, Wash., by myself and Zach Geballe, who does all the editing and loves to get the credit. Also, I would love to give a special shout-out to my VinePair co-founder, Josh Malin, for helping make all this possible and also to Keith Beaver’s VinePair’s tasting director, who is additionally a producer on the show. I also want to, of course, thank every other member of the VinePair team who is instrumental in all of the ideas that go into making the show every week. Thanks so much for listening, and we’ll see you again.

The article VinePair Podcast: Can the Restaurant Industry Overcome the Post-Covid Labor Crunch? appeared first on VinePair.

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