Hiring: Freeze or Fire?

Why a Fluctuating OC Restaurant Industry Means Business by Taryn Sauer

13

By Taryn Sauer

Great Taste Magazine Sept/Oct 2016 Issue

Orange County is jam-packed with supreme restaurants. There can be seven or more sardined into a single shopping plaza and 15 within a two-mile radius. With such a condensed market, the OC Restaurant Industry is one of the fastest growing local industries. And with such growth—and the constant increase to minimum wage—staffing patterns are in a heightened flux.

But first, the good news:
Nationally, the Restaurant and Hospitality Industry added 34,000 jobs in August 2016 and
the US economy has continued to add jobs for 71 months straight, according to the US Bureau of Labor Statistics.

And, according to Middle Market Power Index from American Express and Dun & Bradstreet, Eating and Drinking Places have grown exponentially in the past five years: increasing 134.5 percent in revenue and 179.2 percent in
employment.

While there were 656,000 job openings in July 2016 and 858,000 hires across the country,
employees are quitting at a rate of 4.3 percent. Although that number may look high, with
577,000 people quitting within the industry in July alone, the turnover rate also suggests a
positive side: when people feel comfortable quitting their jobs, they are potentially more
hopeful in other possibilities in the job market, suggesting a secure outlook on the rising
economy.

But with such a constant movement of bodies in and out of any single restaurant, employers are finding it more difficult to staff the BOH. Orange County’s geographical diversity comes with a blend of factors contributing to the flux.

“As the labor market tightens and the economy approaches ‘full employment,’ many small
employers have a tougher time filling positions, especially in our industry at the end of summer when many seasonal workers return to college and take on fewer work hours in order to accommodate schooling,” the California Restaurant Association said in a statement. “Meanwhile, Orange County is a year-round tourist destination, so many restaurants are able to stay busy well past summer. However, the minimum wage increase is fast approaching $15 and at that rate, employers will have a harder time finding workers with the experience to match the wage rate.”

In California, restaurant and hospitality wages typically depend on experience and range from about $10 – $18 per hour, plus tips. With the $15 minimum wage increase looming in the near future, restaurants are prepping for the big change in a variety of ways, including how they staff the FOH and BOH.

It is a general consensus that staffing the BOH is much more difficult. Finding and hiring
experienced culinarians has declined greatly.

Hiring Freeze Or Fire Info Graph
http://www.bls.gov/news.release/jolts.t04.htm

But there’s good news in that area as well:
Over the next 10 years, the Bureau of Labor statistics projects a 9 percent annual job growth for chefs and head cooks—that’s 2 percent more than the national average across all job sectors. Whether or not that time spans will readily solve present demand is yet to be seen.

Currently, restaurants are facing another problem:
“There are plenty of bodies [and] plenty of jobs,” Mac Gregory, Chief Executive Officer of Saint Marc Pub Café Bakery & Cheese Affinage, said, “but retention is hard.”

Full-service restaurants have to up their recruitment strategies by fine-tuning their brand to appeal to the diverse needs of workers.

Because the market is so dense, with new restaurants continuously sprouting out of the pavement, workers are able to be a little bit more choosey in their job selection. While some may look for flexible hours, good benefit coverage and/or competitive wages, others are more interested in what type of environment a specific restaurant has to provide.

“If you’re a genuine person who is devoted to being progressive and learning each and every day, it’s hard to find an environment that is stimulating and receptive,” Santa Ana Bartender Jordan Fernandez said.

Fortunate for Fernandez, he said he’s found that environment at Playground and has been an active team member for 15 months.

Saint Marc’s Bartender, Noelle Bay, has been in the industry for ten years and working for the restaurant since its opening in December 2015. She said the CEO swung by during her initial interview and told her that Saint Marc’s position as an employer was to facilitate her own dreams.

Bay plays beach volleyball competitively and, like Fernandez, is working to build her own business.

“I’ve got other goals outside of here. For me, I’m exactly where I want to be in this restaurant,” she said.

Branding is a key recruitment strategy to not only increasing qualified hires, but also maintaining a loyal team.

Orange County’s Restaurant and Hospitality Industry is an ever-changing market and it will need to continue to be flexible with the evolving needs and aspirations of its staff.

 

A RESTAURANTEUR’S PERSPECTIVE:

DON MYERS
OWNER OF CHA CHA’S LATIN KITCHEN AND BRUNOS ITALIAN KITCHEN
Is hiring harder or do you see shortages as compared to 5 years ago? Much more difficult, especially for hiring management. Very few people want to do what it takes to become a true leader in the restaurant business any more. They all want to open their own restaurants and become instant Celebrity Chefs; that is why you are seeing such a high percentage of quick openings and quicker closures. They think they have a great idea for a concept and borrow too much and earn too little.
What three things do you attribute the shortages to? Too few full-service restaurants around anymore vs. 5-10 years ago. Everything is QSR and that environment does not teach the true hospitality and skills necessary for our brands.
What do you think about the no tipping concept? I think it is a bunch of baloney. The meaning of TIP is To Insure Prompt Service; and nowadays too few people care.
What strategies do you use in order to compete in recruitment? As a restaurant owner, you want the longest line of guests wanting to get into your restaurant through the front door and the longest line of potential candidates going into your back door to apply to work. You must be the “Employer of Choice!”. Qualified candidates want to come work for you because you care.

LINH HOANG
DIRECTOR OF OPERATIONS, ORANGE COUNTY CULTURAL CENTERS – PATINA GROUP
Is hiring harder or do you see shortages as compared to 5 years ago? Shortages in BOH are more substantial. Overall, less applicants coming through for both BOH and FOH.
What three things do you attribute the shortages to? Ability to offer competitive pay, increased density of the restaurant market, millennial mentality of entitlement.
What do you think about the no tipping concept? We are far from adopting it.
What strategies do you use in order to compete in recruitment? Prestige/reputation of brand.
Does your restaurant pool gratuities? No.
Do you see a difference in staffing patterns in OC in comparison to LA? LA is a less stable market.

RUSS BENDEL
PRESIDENT AND PARTNER OF VINE RESTAURANT & BAR AND IRONWOOD, CELLAR. CRAFT. COOK.
Is hiring harder or do you see shortages as compared to 5 years ago? Shortages right now.
What three things do you attribute the shortages to? Less desired work, new generation, more restaurants opening.
What do you think about the no tipping concept? I oppose it and I feel that tipping is a good motivation for working harder and being more hospitable.
Does your restaurant pool gratuities? Some positions do team service and pool.
What strategies do you use in order to compete in recruitment? We encourage our team to recruit and recommend great people. We also create a culture that attracts great talent and similar people.

THAD FORET
GENERAL MANAGER/PARTNER OF THE WINERY RESTAURANT & WINE BAR, NEWPORT BEACH
Is hiring harder or do you see shortages as compared to 5 years ago? Yes, hiring is harder.
What three things do you attribute the shortages to? The increase in restaurants in OC and the training necessary to work in the BOH.
How will the minimum increase affect the pool per position? It’s definitely going to affect the FOH more than the BOH. But in the end, it’s going to fall on the consumer’s.
What strategies do you use in order to compete in recruitment? We work very closely with our hires to cultivate their talents with a lot of training sessions and reviews every six months to a year.
Do you see a difference in staffing patterns in Tustin versus Newport Beach? Yes, our Newport Beach location is bigger and the geographical location makes for a different market. In Tustin, you’re surrounded by people who value things differently and dining out becomes lower on the list of priorities.

MAC GREGORY
CHIEF EXECUTIVE OFFICER OF SAINT MARC PUB CAFÉ BAKERY & CHEESE AFFINAGE
What three things do you attribute the shortages to? Southern California [is] a very diverse demographic — a melting pot of an employee pool, [so] retention is hard.
What do you think about the no tipping concept? No tipping/automatic gratuity creates bad service.
How will the minimum increase affect the pool per position? In my lifetime, I’ve seen minimum wage increase almost $13. It would make your Chili’s nachos $18; an $8 beer during Happy Hour because the guy that’s carrying it makes $15 an hour.
Does your restaurant pool gratuities? Our grat. pool is based on hours, position and experience. [On a weekly basis,] everyone gets a percentage. The harder they work, the more the tip will be [accumulatively]. It creates an atmosphere where everyone works together.
What strategies do you use in order to compete in recruitment? We offer [very good] insurance, we do it the best, provide the best. [We also provide] tuition reimbursement [on a variety of studies]. Little things to accommodate employee’s lifestyles.

MARCOS COSTAS GM, SALT CREEK GRILLE, DANA POINT
Is hiring harder or do you see shortages as compared to 5 years ago? Especially concerning the BOH, there aren’t enough bodies to fill the positions with the amount of restaurants opening.
Does your restaurant pool gratuities? I include the kitchen in a tip percentage. In addition to it offsetting hourly rates from other restaurants, it
creates comradery.
What do you think about the no tipping concept? In CA, the margins are more unforgiving than the East Coast, where our locations have adopted the tip share with a minimum wage set at $2.90. Real estate and the cost of running business is higher
here. But as the minimum wage increases, I think more people are going to adopt that concept.
What strategies do you use in order to compete in recruitment? The tip pool for culinarians is one thing and the culture and environment goes a long way. If employees feel valued, like they are part of a family, something special, then we can’t really put a price tag on that.