Labor market tight for growing number of Northwest Arkansas restaurants

Jeff Hodges, owner of Springdale-based restaurant chain Foghorn’s, has never seen so many new restaurants opening locally with a labor pool so small.

“My first reaction when I hear of a new [restaurant] opening is, ‘Where are they finding 50 employees?’ They just aren’t there,” he said.

A recent survey of local food service jobs on Indeed.com lists more than 1,000 full- and part-time job opportunities in Northwest Arkansas. The number of food and drinking establishments, the No. 3 growth industry in Northwest Arkansas, is projected to increase 5.45% between 2016 and 2018, according to the 2017 Arkansas Labor Market and Economic Report.

A NATIONAL TREND
It’s a perfect storm all across the country. Americans are eating out more, and the restaurant business is growing. But the labor market is tight. Americans spend 44 cents per dollar of their food budget eating out, up from 39 cents in 1996, according to the USDA’s Economic Research Service.

In July 2018, restaurant sales were up 5.8% for the previous three months, the strongest three-month gain in more than 30 years. Restaurant industry sales are estimated to be $800 billion this year, or 4% of the GDP. Restaurants employ 15.1 million people, or 10% of the nation’s workforce, as the second largest private sector employer behind retail.

Restaurants continue to open across the country, with the Bureau of Labor Statistics reporting there were 635,677 establishments for the first quarter of this year, a growth of 16,223 restaurants from the same time in 2017.

Finding employees to staff restaurants is a top challenge for owners, according to the National Restaurant Association’s website. With a strong economy, the lowest unemployment in years at 3.9%, and more young people pursuing higher education and better paying jobs, restaurant owners find it harder to find qualified employees to fill vacant restaurant positions.

“The workforce is becoming more educated, specialized and selective when it comes to their fields. Ultimately, this has led to a shortage of workers willing to take less than full-time work for minimum wage,” according to Toast’s 2018 survey of 844 restaurant owners and managers.

NWA SOLUTIONS
Scott Bowman, owner of Fayetteville-based Bowman Restaurant Group  (BRG), has been in the restaurant business for 25 years. Bowman, an Arkansas native, worked for more than a decade in the bar and restaurant scene in Boston and Atlanta before opening Theo’s in downtown Fayetteville. His holdings have grown to include Fayetteville restaurants East Side Grill and Deluxe Burger. In Rogers, BRG operates Theo’s and The Grill at Pinnacle Hills (formerly known as Pinnacle Bar & Grill).

“I have lots of friends nationally [in the restaurant business], and staffing is a problem everywhere,” he said. “But here, locally, it’s a combination of things.”

Northwest Arkansas is home to a lot of large companies offering a great number of jobs, which means that people in their 20s, who traditionally might have taken a restaurant job, have many choices, Bowman said.

“What we have is a smaller market with a lot of big companies and a lot of jobs, and you also have a lot of restaurants,” he said.

The competition and choices in restaurants are good, Bowman believes, because “more people eating out is good for us in general. We want to encourage a vibrant restaurant market, but it makes staffing it a lot harder.”

Employment is Bowman’s No. 1 operational challenge, so in addition to competitive compensation, he focuses on a good employment experience, good training, serving good products and making people proud of what they do.

“Restaurants are hard to work in,” he said. “People don’t realize that it’s a very hard job, an active job. And you’re criticized a lot — more than you are praised — for your performance on the job. So we try to have competitive pay, but what really sets the difference is how people are treated in the workplace.”

The quality of Bowman’s staff dictates the success of his business, he said.

“We’re only as good as our staff members produce food and serve food and drinks,” he said. “It all starts with our employees. That’s what we depend on every single day. It’s absolutely the No. 1 thing in the restaurant business. Anyone who tells you different doesn’t understand the restaurant business. How we hire, how we train, how we operate, how we manage people — that all reflects itself in our relationship with our customers.”

The staffing challenge has been beneficial, Bowman said, because “it’s made us make sure we do our job right. Part of that is seeing mistakes or subpar work as an opportunity to reinvest in staff with more training or moving people to a job that better fits their strengths.”

Bowman continually interviews applicants. But with fewer of them out there, he is careful who he recruits.

“We want people who understand hospitality and taking care of people and want to make others happy,” he said. “I’ll take that over a skilled industry veteran any day of the week. We can teach you how to cook. We can teach you how to pour a drink. What we can’t teach you is how to be kind and generous and how to take care of someone for a while.”

OFFERING INCENTIVES
Bill Mathews also believes the key to successful staffing is taking care of employees for the long term. He and his brother Walter own 35 McDonald’s restaurants, mostly in Northwest Arkansas but a few in northeast Oklahoma and southwest Missouri. They employ about 2,000 people, with an average age range of 20 to 35.

Last year in order to attract staff, McDonald’s Corp. began a $3,000 scholarship program to be used for higher education. The Mathews brothers have awarded more than $140,000 in scholarships to their employees this year and believe the program helps them attract a better quality of job candidate.

In addition, the Mathews offer competitive wages and liberal benefits including meal discounts, flexible hours, paid uniforms, free tickets to Silver Dollar City in Branson, Mo., and a bonus for an employee’s referral of another employee.

Turnover is the nature of the industry, but Bill Mathews stressed that 90% of his 450 managers came from his crew, and 35 general managers have more than 10 years of experience in his restaurants.

Self-order kiosks are “the experience of the future” for McDonald’s, but the technology is not replacing jobs, Bill Mathews said, because employees not needed at the counter now deliver food to customer’s tables and take mobile pay orders to cars.

Neither Bill Mathews nor Bowman think the staffing shortage will lessen any time soon.

“It’s going to force businesses in our industry to start rethinking their current staff and how they manage people and how much they invest into training and creating a good work environment so people stay,” Bowman said.