Labor shortage leaves restaurants, distributors in the lurch

There appears to be significant pent-up demand for Americans wanting to dine out, but restaurants and foodservice distributors face a weighty new dilemma: how to find enough employees to service returning customers. Food and seafood distributors are also facing a myriad of transportation and supply chain issues caused by the COVID-19 pandemic.

Warmer weather, stepped-up vaccinations, economic stimulus payments, and people just wanting to get out of the house after quarantine are pushing up traffic to restaurants, Technomic Managing Principal Joe Pawlak said during the Food Institute webinar, “State of the Industry - 2021 Supply Disruption” this week.

Sales at full-service restaurants surged 80 percent in March 2021, compared to March 2020, Pawlak said. And sales at casual dining restaurants climbed 67 percent, fast casual dining sales jumped 40 percent, and quick-service restaurant sales increased 24 percent, the Food Institute found. Separately, NPD Group reported customer transactions at major restaurant chains soared 32 percent this March, compared to March 2020.

There are no signs of the growth slowing, as 68 percent of consumers surveyed by Technomic said they are “very excited” to dine at restaurants once they feel safe to do so.

However, emerging from the pandemic, restaurants face a new set of problems: labor shortages, higher food prices, and supply chain challenges.

“Labor is probably the number-one issue for restaurants right now, the number one issue for distributors, and a big issue for manufacturers,” foodservice distributor Dot Foods Executive Chairman John Tracy said during the webinar. “Every distributor is more challenged with labor right now than in my 40-year-plus history in the business. We are competing with the government; People are motivated, in many cases, not to take a job, and some people are not able to go back to work because of COVID.”

Large restaurant chains such as Dunkin’ Donuts are offering hiring bonuses and incentives due to the labor shortage. Some restaurants are closing down for part of the day because they do not have enough staff, which is causing issues for distributors making deliveries, according to Tracy.

While New York City continues to limit dining capacity to 50 percent, managers at some of the city’s restaurants are reporting they can’t find enough staff even to serve a half-full house.

“It’s  as bad as I’ve ever seen in my 17 years in New York,” Bernard Collin, a partner in the Upper East Side’s Orsay, La Goulue, and Bar Italia, told The New York Post.

Samuel D’Angelo, the CEO of Philadelphia, Pennsylvania-based distributor and wholesaler Samuels & Son Seafood in Philadelphia, Pennsylvania, told SeafoodSource that distributors and the restaurants they service are battling severe labor and supply chain challenges.

“Our labor force is down about 10 to 20 percent,” D’Angelo said. Some of the employees the distributor had to lay off at the beginning of the pandemic have not returned and it is challenging to hire new employees. You can stay at home and continue unemployment.”

Samuels & Son has increased compensation and incentives to attract new employees, and has hired additional recruiters, according to D’Angelo. The management team is also trying to “get closer to every employee we have, because they are a tremendous resource to our business,” he said.

Seafood distributors also reported facing supply chain disruptions due fewer commercial airline flights, truck-driver shortages, and warehouse labor shortages. D’Angelo predicted the problems won’t be significantly resolved for another six months.

“Moving the product from one area of the country to another or from one country to another has caused big problems,” D’Angelo said. “You don’t have enough people to unload ships, drive the trucks, and work in the warehouses. It is a global situation. Nobody can get caught up.”

Higher demand and supply chain issues have pushed up overall seafood prices around 15 percent, while crab prices are up more than 20 percent, according to D’Angelo.

“We anticipate further [price] increases, as long as the supply does not need demand,” D’Angelo said.

Tracy, of Dot Foods, said sea ports have become increasingly backed up and distributors are being forced to push loads further out. And he predicted labor shortages won’t be going away anytime soon, saying he is hopeful that the situation will improve somewhat by the fourth quarter of this year.

Photo courtesy of Sorn340 Studio Images/Shutterstock