How restaurants are responding to another tight labor market

The latest numbers show that at this point in the post-2020 development, restaurant hiring trends have normalized a bit. The restaurant and bar industry added 3,700 jobs in October, with an unemployment rate of 3.7 percent, according to the Bureau of Labor Statistics. While a massive decline from September, when 39,000 jobs were added (a figure that was significantly reduced from preliminary reports of 70,000), it does reflect seasonal trends more in line with the charts than in past years when consumers were not followed traditional models. Essentially, restaurants are setting up, staffing and preparing for the holiday season, with potentially more staffing to come.

Looking at the higher end, the industry still exceeds its pre-COVID peak of 12.3 million jobs in February 2020 by nearly 118,000. Full service remains about 4 percent (234,000 jobs) lower , and fast service was 3 percent (156,000) higher than it was. Considering that the cafeteria/grill-buffet/buffet segment alone is down 33 percent from 2020, one can assume that some of this is due to closures on one side (full service) and growth on the other (quick service).

But, as we said earlierincreased levels of job vacancy data don’t necessarily mean business as usual. “The Great Retirement” and reality restaurants today often hire from workers who reached working age during or after COVID, which has led to a different set of expectations. 7shifts surveyed 973 restaurant managers on pay, technology use, employee retention tactics and more to provide further insight into how the workforce will evolve as the calendar turns to 2025.

An important factor is that the talent pool, as always in the sector, is feeling tight as industries continue to compete for talent amid rising wages. Many employees who once gravitated toward restaurants are finding other options when they enter. 7shifts said that despite the growing economy, restaurants are still struggling to attract workers who see it as a viable long-term option. The election year unrest didn’t help either. When asked to describe the current state of the restaurant labor market in their region, 65 percent of respondents said it was “tight” or “very tight.” Only 28 percent called it “balanced” and 7 percent called it “light.”

You can see this in the bifurcation of job growth—it’s driven primarily by segments that typically employ fewer people (fast-casual companies).

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In the survey, 30 percent cited recruiting as their top challenge, while 27 percent cited employee retention. Nearly 40 percent (39) said the quality of candidates was better than in previous years; 38 percent said the situation had not changed much compared to last year.

What strategies have you implemented to improve retention this year?

• Flexible scheduling: 70 percent
• Salary increase: 53 percent
• Employee recognition programs: 36 percent
• Career opportunities: 26 percent
• Improved benefits: 21 percent
• Changes in tip distribution: 17 percent.
• No: 8 percent
• Other: 1 percent

As Danielle Hester, director of team member experience at fast casual gusto!, said in the survey, “We’ve revamped our hiring process by training managers and creating guides to help them better interview and hire employees. We are not a typical organization; We prioritize our values, driving core principles down to the shop floor. We began to evaluate employee development and performance based on these values. Since we began aligning our operations with our company values, I have seen a positive impact on our employee turnover rate.” Read more about the culturally-focused development of the 14-apartment brand here..

There remains free space to meet changing requirements. According to the data, 69 percent of respondents said their restaurants do not offer benefits such as child care or mental health support.

Pay wisely, there is no doubt that they pay more. Average base pay rose year over year to $14.20 an hour from $13.64, or 4 percent. Median total pay rose to $18.16 per hour from $17.45.

What average wage (if any) did you achieve for hourly employees in 2024?

• No increase: 20 percent
• 1–2 percent: 41 percent
• 3–5 percent: 32 percent
• 6 percent or more: 7 percent

Esther added to the fun! changed pay scales to offer better benefits and now provides a 401(k) plan and better health insurance to help retain employees.

Naturally, salary discussions vary by region.

Average hourly earnings in Seattle-Tacoma-Bellevue, Wash., rose 3.5 percent to $25.35, according to Square’s wage index. San Francisco-Oakland-Berkeley, Calif., rose 1.98 percent to $25.34. Portland-Vancouver Hillsboro, Oregon/Washington rose 3.49 percent to $23.02. San Jose-Sunnyvale-Santa Clara, Calif., rose 2 percent to $22.30. San Diego-Chula Vista-Carlsbad, Calif., rose 3.75 percent to $22.15.

These were the best subways. Here’s the other side of the spectrum.

• Charlotte-Concord-Gastonia, Carolina: Increase 5.22 percent to $15.
• Houston-The Woodlands-Sugar Land, Texas: Up 2.8% to $15.
• Cincinnati, Ohio-Kentucky-Indiana: Up 7.37 percent to $15.27.
• Dallas-Fort Worth-Arlington, Texas: Up 1.49 percent to $15.28.
• San Antonio-New Braunfels, Texas: Up 1.74 percent to $15.50.

“The bottom line is that restaurant workers are taking home more than they did in 2023,” 7shifts said. “It also makes it more difficult for operators everywhere to face rising costs, squeezing already thin profit margins. Seventy-three percent of those surveyed say pay increases impacted their profits last year.”

The company’s survey also found that tipping practices have not changed much recently. Sixty-three percent of restaurants reported no change in tipping patterns. This may reflect the industry’s reluctance to move away from tipping, 7shifts noted, given that it still serves as a vital source of income for many workers, especially in regions where base wages are lower (and tips continue to apply).

However, some operators have reported experimenting with alternative compensation models, including service charges or higher menu prices to compensate for the elimination of tipping (often in regions where tipping has disappeared). Although these models are gaining popularity, they are not yet widely used.

It’s also worth mentioning how tipping for fast service has further blurred price levels across different segments. This too is an evolution that is in progress, but it has eclipsed offerings in categories such as fast casual and casual dining. This has helped full-service brands increase their value as quick-service businesses work to rebalance their barbells by providing options for both value-seekers and higher-income diners willing to spend more.

“This is a volatile issue that draws opinions from both diners and servers. Change may be on the horizon as the new Trump administration has promised to eliminate tip taxes for service industry workers,” 7shifts said about tipping in general. “State governments have also gotten in on the act, with the ban on trash charges leaving some restaurants unsure whether service charges will continue.”

While it’s unclear, what is clear is that employees today are more aware of how money flows to them and what work is available.

Here’s a look at some of the hiring trends in 2025 from the experts featured in the report:

Closer to home

Yana Domaniko, HR specialist at the BOKA restaurant group:

“Having hired hourly employees this year, I have noticed that more and more employees are trying to eliminate commuting and work closer to home. Employees used to look for the busiest restaurants in the trendiest areas, but that may be changing a bit. Employees prioritize their time and try to save on parking/transit costs. It seems positive for local people with higher level service industry experience to work in their communities with knowledge and love for the region.”

The Great Reboot

Alice Cheng, founder and CEO of Culinary Agents. Read more about Alice’s story in this article..

“Overall, this year has been a year of reset, planning and growth for many businesses. For the most part, we have seen (and continue to see) businesses becoming more efficient with the tools they use and streamlining operations. The companies that are most successful are the ones that use tools in which they have invested their full capabilities.”

Pulse check

Esther with pleasure!:

“If we see people leaving after about six months, we’ll do 120-day surveys to get an idea of ​​how they’re doing and take a more data-driven approach to retention.”

The 7shifts survey also asked operators how they use technology to solve problems.

Which tech-savvy restaurants have adopted in 2024 to help with team management?

• Planning software: 27 percent
• Payroll and HR software: 33 percent.
• Tip management software: 12 percent.
• Task management software: 16 percent.
• Performance management tools: 21 percent
• Learning platforms: 29 percent
• No: 32 percent
• Other: 1 percent

Overall, 65 percent of restaurants reported using some form of technology to improve efficiency and solve labor problems. A quarter of companies said they use HR software to track employee performance, and nearly half (48 percent) said they use cloud-based software for shift planning. When it comes to team communication, 48 percent of operators said they use messaging apps to receive important updates; 22 percent use dedicated scheduling or workforce management software.

There are many opportunities for development. Twenty-seven percent of respondents said they still make plans on paper or a whiteboard, while 23 percent rely on Excel or Google Sheets. Sixty-four percent added that they track tasks manually using paper or spreadsheets, making it difficult for teams to be accountable. “Those who invest in these technologies will be able to improve their operational efficiency and ability to retain top talent in an increasingly competitive market,” 7shifts said.