Jun 182014
 

Less than a year after writing the report on the state of the restaurant job / labor pool balance I find that the trend in restaurant growth and labor pool decline continues. Fewer cooks and culinary professionals are being courted by more jobs. We have what in supply and demand terms would be termed a “sellers’ marker.”

Why?  

1)      More restaurants  have opened in this year alone than opened during the recession,  and the trend continues. Not only are edgier restaurants opening in San Francisco but in the Midwest, the South and even in Florida. Washington DC has been celebrating it’s own culinary revolution.

2)      Hotels, which spent the recession and in some cases the previous years reducing their food service to a simple restaurant and catering are now adding fine dining restaurants in order to attract more guests, again diluting the labor pool while creating more culinary employment.

3)      Increases in chef owned restaurants continue. The recession motivated many young chefs on the way  up to stay in one place rather than move around, as was the trend prior to 2011. Job commitment always provides a more solid learning experience than frequent job change.  As they stayed in second positions fewer cooks moved up to the sous and chef de cuisine positions. The result: No additional chef jobs, dilution of the labor pool removal of some very talented support staff from existing restaurants.

5)       The cost of culinary school plus the spiraling cost of living in most of the culinary centers, especially San Francisco: Culinary school graduates from the last four years – those from 2011 would now be moving into junior sous chef positions – cannot afford to live on restaurant wages and seek employment elsewhere.

6)      More non production choices and media aspirations on the part of culinary schools. During a SF Chefs panel discussion last year four young women stated during the question session that they were about to graduate. Every chef on the panel requested to speak to them afterwards. When they spoke with the chefs, they all stated they were not interested in working in a kitchen. They wanted to be in the media, either as  food writers or on television.   The Art Institute is affiliated with the Food Channel, which attracts many of their students when they graduate. Other schools now teach media with their regular classes.

7)      Housing (primarily San Francisco). The once  steady stream of cooks and chefs from Chicago and New York is hardly a dribble, as the cost of  housing in the San Francisco area has skyrocketed.

8)      Silicon Valley: As more and more companies develop subsidized in house facilities for their employees, the number of qualified cooks and managers working in them increases. These positions, although they are generally not  high end learning experiences, can offer higher wages or salaries, better benefits and bankers’ hours with  holidays off. That giant sucking sound you  hear is probably Google or Apple, which have resources unavailable to independent restaurants and small groups.

9) Stricter INS immigration enforcement has removed undocumented talent from kitchens, and many documented personnel have chosen to cash in and return home. Fewer qualified and documented replacements are entering the country.

10) Gen Y appears to have a more demanding and less committed crop of ready restaurant staff. Like the little girl, when they are good, they are very, very good, but when they are bad……

 

The results:

1)      Many restaurants continue to work understaffed.  Restaurants are raising the wages and salaries they pay, but flexibility limited by what they can reasonably charge for food as food prices rise,  wages for the back of the house usually lag behind earnings on the floor.

2)      There are more chef owned and managed restaurants, which do not offer chef jobs.  Some of these will expand in the next years, which will require more culinary management staff. Most of the very high end properties.

3)      Some restaurants are paying their cooks to convince their friends from other restaurants to come over and work.

4)      Salaries for chefs are on the one  hand raised by supply and demand, but the increases are sometimes limited by the increased wages of cooks. We have seen more generous six figure salaries in 2014.

What does this means to you:

1)      It is no longer perilous to change jobs.  New positions are risky, but if one does not work out, you will not  have to look months for another one. If you wish to relocate it is still wiser to inquire as to the local job market. Not all areas of the country have recovered to the same extent.

2)      You have the luxury of choice. If a job does not seem quite right, you can turn it down knowing that another will at some point come along. It is still, however, wise not to quit one position before obtaining another.

3)      The rules of engagement remain the same.  Calls in response to resumes sent should always be returned. Appointments must always be kept. Cards should always be played on the table Within the limits of discretion. If you have an offer from one restaurant and another asks you to try out, you should tell them.  The food and beverage industry remains small, and people talk.

4)      There is no more room for the testy chef. Cooking and qualified front staff are at a premium. If a chef alienates cooks,  s/he may find him/herself more expendable than the dishwashers.

 

Trends for the future:

We have had several consulting positions for very upscale and edgy quick serve recently, while restaurant trends report that the number of millennials eating out is declining. With the enormous number of new restaurants in the City, some booked for weeks but others struggling, there may be something like a restaurant correction  in the works accompanied by an increase in take out/ order in business models. (Which is an excellent reason to be courteous and responsive in interviews).
Proposed minimum wage hikes in many cities in California, where there is no tip credit, along with steeply rising food costs are going to force restaurateurs to tighten their belts and raise their prices. As there is a tipping point where higher prices cause guest loss, it seems highly probable that a number of both newer and older restaurants may not endure.

While this probably will not constitute a restaurant bubble, it could suggest a herd thinning.
The number of highest level and very expensive restaurants in San Francisco and elsewhere may have reached a limit. As the newly wealthy diners buy homes and have babies, the demographics for $200 plus tasting menus will decline.  As one chef said on taking a position in a new luxury Quick Serve Café roll out, “I have decided that dining is just another expensive habit.”
Labor – the ten cooks needed to prepare one dish in a tasting menu – is the new restaurant luxury. The expected rises in labor costs will test the sustainability of fine dining.

Fine dining vs casual: While I do not expect restaurants to return to the overplayed mac n’ cheese menus of the early millennium, I think it is a foregone conclusion that the majority of new restaurants will be looking at more approachable menus and pricing.

More and more restaurants are finding profit points in volume and will expect volume skills from any culinary management they hire.

With a lot of free cash flowing from  Silicon Valley there should be more chef owned restaurants opening (meaning again a tighter labor pool as those chefs are no longer available for employment and will further dilute the hourly staff available).

High end restaurants will continue to expand with more approachable concepts (again diluting the labor pool).

Disclaimer: I am not an economist. Your choices need to be  yours. The above insights derived from continuous observation and our own challenges is based mostly on San Francisco conditions, but supported by our interaction with chefs and owners around the country. It  is intended merely to provide some insights into factors that you can consider in your decision making.