Restaurant Reboot

Zeana Attisha

The economics of staffing

by Sarah Kittle

For restaurant owners, the Omicron variant of COVID-19 is yet another blow to the return of a healthy dining-out economy. Things were getting under control, with a fair vaccination rate and the gradual ease of mask mandates — and just like that, we are back in the thick of things.

Since March of 2020, when the World Health Organization (WHO) declared COVID-19 a global pandemic, an estimated 3,000 Michigan restaurants have gone out of business, according to the Michigan Restaurant and Lodging Association (MRLA).

It is just too difficult to balance money going out for rent and payroll with too little money coming in from patrons, who are also having to deal with higher costs for food, an effect of higher transportation costs and supply chain breakdowns. When will it end?

Struggling to survive

Last year, University of Michigan economists warned that the state was on a two-track recovery and said low-income workers in the leisure and hospitality and restaurant industries would see job losses persist. The economists said jobs in those industries — after plunging by more than 30% at the start of the pandemic — have come back, but still remain 10% below their pre-pandemic level.

Zeana Attisha, owner of Sahara Restaurant and Grill in Oak Park and Sahara Restaurant and Banquet Center in Sterling Heights, has unquestionably went through turbulent times in the last two years.

“2020 was a roller-coaster ride of regulations from the State and Health Departments,” Attisha stated in an interview. “Mask mandates, carry-out only, no banquets allowed, temperature checks, limiting numbers of people at each table, and requiring social distancing definitely made it tough to work. Even collecting names from patrons was not an easy task.”

The spate of regulations that restaurants had to abide by were extensive, but they had no choice if they wanted to remain open. Even with that, thousands struggled beyond endurance. “The relief package of PPP (Paycheck Protection Plan) for employees and the Restaurant Revitalization Fund did help pay the costs of continuing operations, but we watched fellow restaurants struggle. Some even closed their doors,” laments Attisha. “My restaurants were debt-free and are now in debt to the SBA (Small Business Association) because of the need for emergency funding.”

Food costs have increased tremendously, and wages are going up. For Blake George, founder of Crown Jewel Investments, a key investor in the Adachi and Zao Jun Restaurants, understanding is key. “We are in a competitive market, where we need to pay competitive wages,” said George in an interview. “We have been blessed that our restaurants are in high-demand areas where booking reservations hasn’t been an issue.”

Motivating workers

George is grateful for his employees as well as his patrons. “Many people in the hospitality industry took time off to change their career paths,” said George. “It has been a struggle to staff properly, which puts extra stress on your current team.”

George and his partners offer a referral incentive to all employees and give motivational bonuses as well. The entire approach is team focused. “The best training is done by learning from others,” he explained. That extra spirit is reflected in the size of their tips. “Our tip average is 25%,” said George, “Our customers appreciate people showing up to work and reward them because of it.”

Attisha says the biggest obstacle in the restaurant and banquet industry currently is finding employees. “Once the dining rooms were open, we had a difficult time getting servers back to the workplace,” she shared. “We are looking for servers and cooks and even a bartender.” Cooks are hard to find for specialty restaurants such as Sahara, which serves ethnic Middle Eastern fare. “We are willing to pay more and train cooks,” Attisha said, “Everyone has received a raise.”

According to the National Restaurant Association, 75% of employers reported that recruiting employees was their top challenge of 2021. 89% of Michigan operators say their current staffing level is lower than it would be in the absence of COVID-19. The report goes on to state that the restaurant and hospitality sector have one of the highest levels of unfilled job openings of any industry.

Supply chain issues

Everyone is talking about supply chain issues, especially around the holidays. “Every week,” says George, “it’s something new. We source a lot of our ingredients from overseas, and whether it’s a labor issue (no fishermen), logistics issue (no drivers), or packaging issue (no plastic), we see delay or shortage with items and availability in general.”

For Attisha, it could be an even bigger problem. Sahara in Detroit is in full construction, but they are experiencing a surplus of supply chain issues. “Contractors are delayed as are deliveries,” she said in an interview. “This has a domino effect on the job of every contractor hired.”

Throughout 2021, Sahara was at times unable to offer certain menu items such a quail and chicken wings. Prices increased on these items as well as on carryout supplies such as boxes and trays. “We are using multiple sources, “says Attisha,” and they are all much more expensive.”

Some may suggest raising the prices to meet demand or charging extra for packaging, which some dining establishments have implemented. Sahara has no such plans. “How do we raise prices every time supply costs go up?” asks Attisha. “Redoing menus costs thousands of dollars and additional stress.”

Moving forward

For restaurant owners and operators, tipping is key. “Patrons must realize it’s not just the wait staff serving them,” said Attisha. “When a person goes out to eat, they don’t have to buy groceries, prepare the food, clean the kitchen, cook, or wash their own dishes.” It’s the convenience you are paying for, as much as the meal.

Convenience is going to be even more crucial as restaurants adapt to life post-COVID. The National Restaurant Association reports that 52% of adults would like to see restaurants incorporate more technology to make ordering and paying easier. They enjoy being able to order alcoholic beverages “to go” and want to see that continue. More than half have changed their restaurant use due to COVID, with nearly 20% of the respondents forgoing dining out altogether.

As we move into the winter months and the Omicron variant spreads across the nation, we would be wise to keep precautions; however, it is still possible to support your local restaurants and eateries, even if it’s only takeout. And keep tipping those servers – it is a vital part of keeping servers and bussers on the job.