With workforce still down, Delaware restaurants at ‘most vulnerable’
WILMINGTON — For nearly two years, Delaware’s restaurants have struggled to keep food on the table and in take-out boxes. But now, the Delaware Restaurant Association President and CEO Carrie Leishman thinks that unless something is done fast, the First State could see many eateries close their doors for good.
During the pandemic, Delaware’s restaurant industry lost more than $1.2 billion in sales, according to figures from the DRA and the state finance department. That number has not been updated since mid-May.
“Restaurants are at the most vulnerable point of recovery, where the workforce still hasn’t come back and many establishments are making slim to no profit,” Leishman said. “One restaurateur told me recently that we should expect to see more restaurants close, up and down the state, in the next 18 to 24 months.”
Nationally, the restaurant industry has yet to hire more than the 650,000 jobs lost in the early days of the pandemic. In Delaware, the hospitality industry has shed 4,300 jobs between December 2019 and December 2021.
Leishman and the DRA are campaigning for new measures to ideally boost the restaurant workforce in 2022, namely loosening labor laws for teenagers and the re-entry workforce as well as subsidizing benefit programs.
In Delaware, minors 16 and 17 years old cannot work more than 12 hours in a combination of school and work hours per day, and must have an 8-hour period of no work and no school in between.
For those who are incarcerated, the Carney administration established a blueprint last year to create apprenticeship programs and work with Delaware Technical Community College to expand opportunities for human services. Later that year, the National Restaurant Association awarded Delaware funds to establish a Hospitality Opportunities for People (re)Entering Society (HOPES) program, which is a job skills program for formerly incarcerated people looking to work in the restaurant industry.
“We’re grateful for the ARPA money from Gov. Carney, and it’s the first step in recovering our workforce. But there’s more that needs to be done, whether it’s raising the number of apprenticeships for re-entry or disability issues. There’s systemic issues at work here, and it’s just one more obstacle that restaurants have to overcome,” Leishman said.
A new DRA report shows that against the backdrop of the national labor shortage, Delaware restaurants are facing hard challenges between inflation and shifting consumer patterns. Inflation continues to rise at a record-setting pace, and 83% of 200 Delaware restaurant operators surveyed reported costs were higher in 2021 compared to 2019. In the same time period, 68% of restaurants said sales volumes were lower.
“Inflation can eat up about 3% to 5% of your profit margins, and restaurants are already operating on razor thin margins,” Leishman said. “Prices are at the highest we’ve seen in 40 years, and customers value their dollar, especially since it doesn’t have enough buying power as it used to. Restaurants are competing with groceries, streaming services, and other entertainment — there has to be a breaking point somewhere.”
Compared to 2019, 68% of restaurants said sales volumes were lower in 2021. It’s a trend that’s echoed across the country. The Morning Consult, a global business intelligence company, reported that 68% of adults are not eating at restaurants as often as they would like, the highest it has been before the omicron variant disrupted life starting in November.
More than half of nationwide restaurant operators say it will be a year or more before business conditions return to normal, according to the DRA report.