Restaurant worker crunch: Surge of eateries, strong economy creates headaches for operators

Restaurant worker crunch: Surge of eateries, strong economy creates headaches for operators

September 2nd, 2018 by Mike Pare in Local Regional News

Mojo Burrito employee's Davey Oshodi, left, and Emilie Woodford work the front line Friday at the St. Elmo location.

Photo by Tim Barber /Times Free Press.

Gallery: Restaurant worker crunch: Surge of eateries, strong economy creates headaches for operators

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In her 16 years as a restaurateur in Chattanooga, Mojo Burrito owner Eve Williams says she has never seen an employee shortage like the one that exists today.

"I've never experienced this," Williams said. "There's a severe employee crisis in the restaurant business right now."

TOP TENNESSEE JOBS

Employment, percent of all occupations and annual wage estimates:

› Office, administrative support: 16.3 percent; $32,060

› Sales, related: 9.81 percent; $24,630

› Food prep, serving related: 9.31 percent; $19,200

› Transportation, material moving: 9.26 percent; $30,340

› Production: 9.13 percent; $32,400

Source: Tennessee Department of Labor and Workforce Development

Williams isn't alone in her opinion, and Chattanooga isn't unique in feeling the crunch. But the city's growth and a surge in restaurant openings, coupled with a strong economy generally, are causing headaches for eatery owners and operators.

Paul Macaluso, the Krystal Co.'s chief executive officer, said hiring workers for restaurants today is as difficult as any time in modern history.

"It is extremely tough — the toughest market I have ever seen in my 26 years in this industry," said Macaluso, whose Atlanta-based company was founded and headquartered in Chattanooga for many years and still has about two dozen restaurants here.

Fletcher Thompson, general manager of the new State of Confusion restaurant and bar on downtown Chattanooga's Southside, said "it's certainly a challenge to find good people and keep them."

"It's something you handle day to day," said Thompson, who's a partner in SquareOne Holding, which also runs Stir in the Southside.

The restaurant sector is a huge part of Tennessee's economy. Nearly one in 10 workers, 9.3 percent or 271,390 workers, were employed in food preparation and serving jobs, primarily related to restaurants. The average pay was under $20,000, according to state figures.

The median wage earned for all Tennessee occupations in 2017 was $33,870, state figures show.

East Brainerd Mojo

For Williams, the employee crisis played a big role in last week's decision to turn Mojo's East Brainerd eatery into catering and event space and to exit the dine-in business there.

She still has three staffed-up, full-service locations, most recently having opened a new restaurant in Ooltewah in Cambridge Square, and the eateries are busy. But all year long, Williams said, there has been a problem finding and keeping employees.

"Everyone thinks the grass is greener somewhere else," she said.

Williams said Mojo has "a huge percentage" of employees who've been with the local chain for up to 13 years.

"We're good at training," she said. "We offer health insurance, vacation pay an IRA and company matches." Employee wages were already increased this year, Williams said.

She said a strong economy is a double-edged sword.

"We're all busy. More restaurants are open," Williams said. "The downside is there's not the restaurant workforce to meet demand."

She said she'd rather have three restaurants operate well, and not have a fourth run inefficiently due to employee shortages.

At Krystal and other fast-food chains, Macaluso said, the typical eatery has a 200 percent turnover rate. To fill the 6,000 jobs across Krystal's 240 company-owned restaurants, it has to hire twice that number of workers in a year, he said.

"We're doing what we can first to retain our workers and then to identify new ways through social media, job fairs and other means to recruit more workers," Macaluso said.

Worker incentives

To entice workers to stay, the Krystal chain launched the Square Up Scholarship program this year with a $500,000 contribution from Michael Klump, the CEO of Atlanta-based Argonne Capital Group, which acquired the business in 2012. The program is initially offering 20 of the $2,500 individual awards to full- and part-time Krystal workers for four-year or two-year college degrees, trade degrees or technical certifications.

Macaluso also said Krystal has begun providing free meals to most of its workers. In addition, the company is hosting general manager feedback sessions with employees.

Brittany Alcala, who with her husband owns the Embargo 62 eatery in Chattanooga and a lounge in the Miami area, said they try to make employees feel like family.

"We focus on family first," she said. "When they join us, it's 'welcome to the family.' It's much larger than coming in and clocking in and clocking out."

But, Alcala said, "you have some skip around from restaurant to restaurant."

Seth Champion, who started Champy's Famous Fried Chicken, said while his restaurants don't have much employee turnover, the Chattanooga market is getting saturated with eateries.

"More restaurants you're probably going to see out of business at some point," he said.

However, just last week, the developer of the Waterside mixed-use development in East Brainerd announced three new restaurants are slated to open there within the next six months. Drake's restaurant, Newk's Eatery and a Korean barbecue eatery are to open, the developer said.

Williams said Mojo's East Brainerd location has always been her least-performing unit. Also, it saw a slight decline in sales when the Ooltewah location opened, she said.

But, Williams said, it seems as if every restaurant in Chattanooga is hiring.

"I've got the luxury to close one store to help the other stores," she said. "I'm not going out of business. I'm trying to solve the problem in the best way I can."

Business editor Dave Flessner contributed to this story.

Contact staff writer Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.