• By Lisa Brody

Struggling to staff restaurants – not just locally

The resurgence and gentrification of the city of Detroit has been epitomized by a burgeoning and exciting dining scene that is echoed throughout the metropolitan area. Seemingly every day, a new restaurant is opened with a novel and innovative menu in a cool and creative atmosphere. Investors are hopping on the bandwagon, eager to sprinkle their fairy dust in a city seen rising from the ashes of bankruptcy, or in vibrant pockets of suburbia. After decades of fallow dining, we're now in the throes of creative feasting.

The only blip on this thriving horizon? An unemployment rate of four percent in Michigan – essentially full employment – leaving restaurateurs labor-challenged and increasingly short staffed.

It's not a problem unique to the restaurant industry. Amazon chose to split the choice of its second headquarters – which Detroit had bid on, but was not chosen in the first round – between Long Island City, Queens, in New York, and Crystal City in Northern Virginia, near Washington DC, due to a concern about finding 50,000 employees in one city. There are still concerns about finding 25,000 qualified workers in each of those locations – cities that already attract the young and educated.

Foxconn Technology Group, which has a large plant under construction in Wisconsin, is considering bringing in personnel from China to help staff the facility, according to the Wall Street Journal, as it struggles to find engineers and other workers in this tight labor market.

“This is the biggest issue,” noted chef and restaurateur Zack Sklar, chef/owner of Peas & Carrots Hospitality Group, which currently has 11 restaurants in metro Detroit, including Social Kitchen, Mex and Beau's Grillery, as well as in Chicago and Grand Rapids. “Everyone has a couple bucks in their pocket. There's all this development and everyone wants to put in a restaurant. Every hotel needs food service; every hospital needs a commissary; every new building wants a restaurant. There's not enough people to manage all this. It affects quality and turnover is extremely expensive.”

Bill Roberts, proprietor, Roberts Restaurant Group, which includes Beverly Hills Grill, Bill's, Streetside Seafood, Cafe ML, Roadside B&G and Town Tavern, said, “It's a different market for staff, period, in the metro area – and it's the same all over the country.

“Unemployment is lower,” Roberts continued, noting the difficulty in finding staff members all the way down the restaurant level, from managers to cooks, servers and dishwashers. “It makes you work harder to take care of your team, to keep your staff. You have to keep talking to your people.”

Metro Detroit foodies have been enjoying a cornucopia of new and previously unheard of dining options in the last few years, with adventurous and innovative chefs and owners taking the reins and venturing into what had previously been a “food desert” in Detroit, at the same time invigorating formerly desolate blocks and neighborhoods. Early pioneers like Andy Hollyday at Selden Standard and Greg Holm of the former Antietam restaurant paved the way for recent Detroit entrees Lady of the House, Prime & Proper, Besa, SheWolf, Grey Ghost, Marrow, and oh so many others, including ones that have come and gone, as well as many more on the horizon that are looking to open.

The suburbs have seen an explosion of dining options at all ends of the economic and dining spectrum as well. Just take a look at Big Beaver Road in Troy, with one chain restaurant after another, from Eddie V's Prime Seafood, from the owners of The Capital Grille, to Kona Grill, Shake Shack, Stoney River Steakhouse, Granite City Food & Brewery, Bonefish Grill, Sedona Taphouse, and soon, Yard House and Seasons 52. Independents such as Cantoro Italian Trattoria and Gran Castor have also opened recently in Troy.

While each and every one symbolizes another notch on the belt of the economic boom, every single one requires dozens of staffers – from those in the back of the house, such as sous chefs and line cooks to dishwashers, to the front of the house, where waitstaff, bartenders, bar backs, hostesses and management must be hired for every restaurant.

“The explosion started about seven, eight years ago with restaurants opening in Ferndale and Royal Oak – like Vinsetta Garage and Crispelli's. Then you had Ferndale. Then in the last five years, there's been the explosion in Detroit with all the restaurants. It's impacted the quality of everything,”said Joe Vicari, founder and CEO, Andiamo Restaurant Group.

“My perspective is – if you're an outsider looking to get in the restaurant business, it's going to be harder with the overabundance,” said Aaron Belen, principal, AFB Hospitality Group, owner of Bistro 82 and The Morrie in Royal Oak, and soon, in Birmingham. “That Big Beaver corridor has really been an explosion. Royal Oak is feeling it a little bit more because of Detroit; Birmingham is feeling it because of Troy.”

He noted quality is always an issue, and the labor shortage impacts that. “Our mantra is to leave the ego at home.”

Detroit and local suburbs are not the only restaurant market undergoing a transformation and a boom. From Grand Rapids to South Haven to Petoskey, gourmets are on the move.

Northern Michigan, long the home of “the planked whitefish,” is enjoying a surge of small and unique bistros and restaurants as tourists from all over the country have been visiting the last several years and real estate values have skyrocketed after the Great Recession. But what that has meant for restaurateurs there as well is a labor shortage.

“We're in a bubble,” said chef/owner Eric Patterson of The Cook's House in Traverse City, who believes the market there is oversaturated. “It'll be interesting to see what happens. On the other hand, it's good because you can't serve mediocre food. If you're going to serve whitefish, you better make it damn good.”

He said the area is getting “good chefs who are coming up here to open restaurants, who are choosing to come up here because it's so good. As for labor, there is a worldwide shortage of qualified cooks – you can no longer find good cooks to man your lines. Even dishwashers are hard to find.”

There's a further ripple effect, and Roberts said it's simple Economics 101 – “It's supply and demand. The shortage of staff is causing salaries to increase. Every industry in metro Detroit is having to pay more for people than before.”

“Every time we open a restaurant, the pay scale increases,” Vicari concurs. “They won't work for minimum wage. You can't get them to work (often at all) – even dishwashers. High school kids don't want to be dishwashers. We're reaching out to different ethnic groups. Bengalis, Indians – they seem to have a good work ethic – we use them at our downtown (Andiamo) restaurant and at Joe Muer's Seafood. They're busboys, bar backs and dishwashers. In the suburbs, it's tough. We use Mexicans and Hispanics. We try to go to high schools. We look for kids who play sports – they have a better work ethic. We'll go to the Brother Rice football coach and say, after the season – but between studying and training year-round and community service, we get a few, but not as many as we need.

“It's the biggest issue,” he commiserated.

If you're an employee, that's terrific. If you're an employer, it's impacting your bottom line. And that means, if you're a restaurant, prices are going up on menus, Roberts said.

“The chains drive up wages because they're opening a place and they'll do whatever it takes,” Roberts said, pointing out all the new chain restaurants on Big Beaver Road in Troy. “They take from competitors.”

“Now when someone comes to town, I'm a target,” said Peas & Carrots Sklar. “They say, 'well, he was a chef at Social.' So they'll offer him $20,000 more to someone, because they're developers or a chain restaurant, and they can spend the money. So now we're a target, and other restaurants like mine, and I can't keep up with that money.”

The National Restaurant Association, a restaurant industry business association representing more than 380,000 establishments across the United States, reported that in 2017, 37 percent of its members said that labor recruitment was its top challenge, up from 15 percent in 2015. In an industry with very low profit margins, leaving little room for restaurateurs to increase wages, as other businesses usually do in a tight labor market, restaurant owners are looking for all sorts of ways to incentivize their employees.

The U.S. Bureau of Labor Statistics, in data cited by U.S. Foods, reported that nearly two million new restaurant jobs are expected to be created by 2025 as the restaurant industry continues to expand.

“I'm not sure there is an industry that is more competitive or has a more fickle customer base than the restaurant industry,” noted Justin Winslow, president and CEO, Michigan Restaurant Association.

In Michigan, Winslow said that 62 percent of members said their number one concern is their ability to recruit and retain employees. “It's really a challenge,” he said.

Winslow said owners reported that the concern has caused wages to increase. “In 2018, there has been a 6.7 percent increase in wages,” he said. “That is substantial – that is the direness of the situation,” noting the proliferation of restaurants is at a high.

“Southeast Michigan is feeling the benefits of the economy,” Winslow noted. “Detroit coming out of bankruptcy lowered the barriers for young entrepreneurs. Everyone felt they had the opportunity for investment.”

Winslow noted there has been benefits to the boom.

“A lot of very creative restaurants have been developed,” in the last few years, he said. “Southeast Michigan hasn't had this much opportunity or diversity in a very long time.”

While restaurateurs view the shortage of labor, and the subsequent increase in wages, as a significant business challenge, for workers in the field, it can be an opportunity, providing a chance for them to earn a living wage, hold down one job, rather than several, pay off student loans, and rise from a low-income worker to middle-income level.

Téofilo L. Reyes PhD, research director with Restaurant Opportunities Center United, as well as a visiting scholar at Goldman School of Public Policy, University of California Berkeley, said a labor shortage should lead to rise in wages.

“A labor shortage does lead to a greater turnover in staff,” Reyes pointed out, although “for those employers who do pay higher wages, it leads to reduced turnover and an increased investment in the success of the establishment.”

The swell in local dining options has altered the circumstances for many restaurant workers, he said – but it can also be a double-edge sword.

“Workers can leave an establishment and quickly find another employer,” Reyes said. “But they can just as easily be terminated.”

Local restaurateurs concurred that workers can – and are – easily finding work all over. They also expressed their concerns and hesitations about terminating staff – because of the difficulties in replacing and training them. Couple that with the millennial generation, those born between 1981 and 1997, and restaurateurs are finding themselves between the proverbial rock and a hard place.

According to the Pew Research Organization, most millennials were between five and 20 when 9/11 took place, and grew up in the shadow of the Iraq and Afghan wars and came of age during the height of the Great Recession. Social media and technology are primary and immediate parts of their way of communicating. Because of the upheavals they societally experienced during their formative years, they are considered more “self-absorbed” than baby boomers, and more interested in experiences and immediacy.

“It's crazy. We've lost some servers and some managers – but mostly servers – without any notice,” said Andiamo's Vicari. “They just get up and go. They're all for themselves.”

Scott LePage, owner with his father and mother, Norman and Bonnie LePage of Big Rock Chophouse and Griffin Claw Brewing Company in Birmingham and the new Lumen restaurant in Beacon Park in Detroit, along with other restaurants, said, “You could literally walk out the door in Detroit and be hired at any establishment within a half-hour.”

That said, he loves being open in Detroit after decades in the suburbs, from Wolverine Lake to Birmingham to Rochester Hills.

“It's awesome down there. It's been incredible,” he said.

But, the business is as difficult as others have said, and those working in it, notably the millennial generation, are a different breed.

“The restaurant business is very competitive, and there's no unemployment,” LePage said, noting it has even effected his business at his breweries. “You pay through the nose (for labor) or you get the bottom of the barrel. And I want the best if I'm paying for it.

“This new generation, coming of age, is a new dynamic,” he continued. “The industry I grew up in – it was 'how many cuts do I have on my fingers and how many burns on my hands.' Not today. Today, I'm holding their hands.”

LePage said that what is cool about the generation is “they know how to get things done more creatively. When I was coming up, I never saw daylight. Not these kids. Quality of life is a big part of the equation for them. It's huge. Our average hours when I was growing up for managers were 60 to 65 hours a week. Now, they are getting it done in 45 to 50 hours a week.”

On the converse, he is also seeing some lawyers, nurses, teachers, and other professionals deciding to chuck it all and return to the restaurant or brewery business rather than continue in a field they really don't enjoy.

“At the brewery (Griffin Claw), we have lawyers working there,” he said. “We're going to have a nurse coming over from Beaumont (Hospital) who decided nursing is too regimented. She has her pension, and she's coming over to us.

“It's amazing how many kids who put themselves through school working for us, and after getting their degrees in teaching or nursing, or something, and unemployment is zero – it's not as great as they thought. It's competitive. They have to move to Detroit or downriver, and they don't like it. They decide it's not worth it, and they come back and work for us again, as a manager.”

Zack Sklar, noting that while he is on the tail end of the millennial generation, he has been a chef for 18 years, and studied at the Culinary Institute of America in Hyde Park, New York. He opened his first business, Cutting Edge Cuisine, a catering business still operating, 10 years ago.

“My first job, I made $6.50 an hour. I was in high school, working 40 hours on top of going to school,” he recalled of his time working at Emily's in Northville with Chef Rick Halberg and Loving Spoonful in Farmington Hills with Chef Shawn Loving. “I remember for a while my mom would drive me to work. Then, when I got my own license, I was petrified to be late. I wanted to be a professional. I wanted to be a chef. Money wasn't the driver. I understand you had to earn your stripes.

“Today, things have changed. The world is more fast-paced,” Sklar said. “Now kids are on Instagram. They're wearing Prada and Rolex and posting trips to Bali. They say, 'I can't earn $6.50 an hour.' But you can't come out of school and earn $80,000 a year.”

Sklar said that also, because it is an employees market, “if they show late, don't show up at all, call in sick, if you fire them, they don't care,” because, as LePage said, there's another job down the street that is available to them within the hour.

“Everyone is looking at it as a stepping stone,” noted Dan Sutter, general manager at Ann Arbor's Knight's Steakhouse. He acknowledged that when he started with the restaurant, “I never thought I'd be a manager. The mindset is that 'This isn't going to be my full-time job.'” Knight's has two locations, one downtown, and the original on the west side of the city, which has been there since 1952. He said they have been able to retain people “a little longer than others because our owners treat people very well.”

Noting that the industry has a very high turnover, and “what you can afford to pay someone for a job may not be what they want to earn, so we give them a raise right away,” Sutter said. “Entry level jobs especially are hard to fill,” noting that nobody wants to wash dishes.

“It's said but true,” he said, of the difficulty of finding dishwashers, although he said they have more turnover in the front of the house, with servers and hostesses.

Traverse City's Eric Patterson said he and his restaurant values dishwashers as much – or more – than cooks and chefs.

“I would rather go a night without a cook than a night without a dishwasher,” Patterson said. “A dishwasher is essential – it's the most important position in the kitchen.”

Reyes, of Restaurant Opportunities Centers United, believes they have the answer to the labor shortage, and it is definitely not one that is widely shared.

“The way to rectify it is we're supportive of a minimum wage and riddance of a sub-minimum wage,” Reyes said.

“We're big believers in a livable wage, especially for our core staff,” Patterson said.

The minimum wage Reyes and his organization is supportive of is $12 an hour.

The current tipped minimum wage in Michigan for restaurant servers and bartenders is $3.52 an hour, compared to the state's minimum hourly wage for other workers at $9.25. The reason behind the tipped minimum wage is that restaurant servers and bartenders are tipped on checks, making up at least that difference. Many servers earn many times that amount per hour, depending on the restaurant, the number of tables they have, if there is alcohol on the tab, their ability, and other factors.

There was an attempt to put the issue on the November ballot here in Michigan.

One Fair Wage was a campaign supported by Restaurant Opportunities Center, which is considered a progressive labor group, worked in Michigan, New York, Massachusetts and the District of Columbia to increase the minimum wages of servers and to eliminate the tipped minimum wage. The group ran a petition drive in 2018 to get the minimum wage increase on the ballot, which was challenged by the Michigan Restaurant Association, representing businesses and restaurant owners, who opposed the increase. It would have been on the November ballot as a voter-approved initiative, but on September 5, 2018, the Michigan legislature voted to gradually increase the state minimum wage from $9.25 in 2018 to $12 in 2022, and for tipped workers, to increase the minimum wage by 48 percent in 2019, 80 percent in 2022 – and 100 percent increase in 2024, at which point the tip credit would gradually be phased out.

Because it was done by the state legislature, and not voted on by the state's voters, there is always the possibility of it being killed through legislation, since changes in passed laws require only a majority vote. If it had been passed as a ballot initiative, it would have required a two-thirds vote of the state legislature to change. And the current lame duck session of the legislature – which has overwhelming Republican majorities in both houses, and a Republican governor – is currently discussing scaling back those minimum wage increases and the tip credit phase out.

“Adopting this proposal only to gut it in lame duck is a slap in the face to Michigan’s 1.3 million tipped workers,” said actress Jane Fonda said in a statement released by the One Fair Wage petition committee. Fonda has been working with One Fair Wage across the country to increase the wages of tipped workers.