Longer waits; higher prices: The ‘new normal’ for dining out in Hampton Roads
A steady stream of diners entered Harvest, an Oceanfront restaurant, midday on a recent Sunday.
One cashier handled dine-in and to-go customers. A worker at the bar hurriedly peeled a banana for a Beach Hangover smoothie. Another zipped through the dining room to drop off a lavender lemonade. He then grabbed a rag and started wiping down another table. Owner Michal Mauch was cooking in the kitchen.
Meanwhile, the line of hungry people grew with several studying the menu to decide if they wanted to wait or explore another spot on Atlantic Avenue.
Mauch changed his tip policy last year, hoping to keep more staff. Tips are now shared among kitchen employees, jobs that have become more difficult to fill. Mauch said he’s been lucky to have some of the same employees for three years and is having some success with the new tipping policy. But he still doesn’t have enough workers.
As of January, restaurants were 3.6% or 450,000 jobs below pre-pandemic staffing levels, which represents the largest employment deficit among U.S. industries, according to the U.S. Bureau of Labor Statistics.
During the past two years, diners came to expect fewer workers and less seating, which resulted in longer waits. But many expected a return to pre-2020 life once the pandemic became less of a threat. The U.S. government declared in May it was no longer a public health emergency.
Restaurants are not only still struggle with hiring, they have resorted to tacking surcharges and fees to diners’ checks to cover the increased wages, food and fees. Restaurants are shortening hours, closing days at a time, or using newer technologies to fill gaps. The wait to eat is only expected to get longer.
“Restaurants are the heartbeat of the community,” said Martha Davenport, the executive director of the Virginia Beach Restaurant Association.
“They want to stay open and whatever the norms were prior to 2020 are not the norms now.”
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Facing challenges
Last year, Amber Ox Public House in Williamsburg started charging customers a 20% hospitality fee. Employees serving the tables get 18% and the back of the house — the kitchen workers — splits the 2% based on hours worked.
Nicholas Graziano, director of operations and managing partner for Against the Grain Restaurants — which includes Amber Ox, Precarious Beer Project and The Bake Shop in Williamsburg — got the idea from a fine dining restaurant in Minneapolis.
“It has been amazing for numerous reasons,” he said. “It holds the kitchen team accountable. It provides a little bit of extra drive knowing that the amount of food and the quality of food that’s being sold is a direct relation to their earning potential which has been great. It has also unified the team.”
Explaining the change to customers has been the biggest obstacle. At first, guests found out when they received their checks. Now, staff tells people when reservations are made and the restaurant has included a note on its website, menu and on posters. Additional tips are optional and are split, too.
The restaurant averaged a 17% to 18.5% tip percentage before the surcharge. Graziano said if he were to guess based on June sales, it’s now 24% to 25%.
“This proves to me that this has worked well and the team is benefiting from it as well.”
Filling positions is also a challenge worldwide.
Svenja Gudell, chief economist at Indeed, said in an article for the Society for Human Resource Management that the working population is aging and many countries, including the U.S., will experience working and hiring challenges for years.
Nationally, the quit rate for the accommodation and food service industry was 7.7% in May, meaning about one in every 15 workers quit every month, said Robert McNab, professor of economics at Old Dominion University. That’s higher than other industries, including manufacturing (2.3%), education and health services (2.5%) and the government (0.9%).
In Hampton Roads, there were roughly 1,000 more leisure and hospitality jobs in May than in May 2019. Other industries saw job losses such as retail trade, 5,700; and local government, 4,300. By 2030, the National Restaurant Association projects Virginia will add 56,800 restaurant and food service jobs.
Takeout, delivery and outdoor dining services also grew because of the pandemic and remain, according to the association. Nearly 80% fine dining restaurants offered delivery for the first time during the pandemic; 8 in 10 plan to continue.
This could strain an already thin workforce.
The strain among local restaurants is obvious. Little Dog Diner in Norfolk posted a notice stating a 13% surcharge. It helps cover the increased cost of food, labor and other items, the sign reads. Mary’s Kitchen in Virginia Beach closed in October and reopened in March, citing “economic reasons” on a sign on its front door. Some of the same staff returned and a new general manager was added.
Busch Gardens brought in food trucks for Howl-O-Scream and Christmas Town last year when its food outlets didn’t have enough staff, said Debi Schaefer, executive director of the Williamsburg Area Restaurant Association.
Her organization has more than 100 members and none closed permanently because of COVID-19. But she saw restaurants reduce seating and not add it back because of staffing shortages. Schaefer also attends job fairs for her members. She didn’t do that before the pandemic.
The 1607 Grill inside the Williamsburg National Golf Club decreased seating to better serve guests, Hugh Powell, the general manager, mentioned in an email. It has mostly part-time help, which has made it difficult to cover weekend shifts.
The tourist season also was crippled by a rainy spring — tourists were visiting intermittently.
The J-1 visa program, which allows foreign students to work here in the summers, is an integral part of restaurant and hospitality business, said Davenport, with the Virginia Beach restaurant group. But the numbers of those workers has dropped.
Now, during the height of the tourist season, some businesses have changed their hours. Owners pick up the slack bussing tables, washing dishes and cooking instead of focusing on operations.
Also, the school year for Virginia Beach and Norfolk public schools starts before Labor Day, meaning high school workers will leave their jobs earlier.
Increased wages, food prices and fees that come with operating a business have also become more of an issue.
“Wage competition is real,” Gray Nelson, owner of Mellow Mushroom Pizza Bakers in Newport News and Williamsburg, wrote in an email.
He said, “employees are shopping,” with restaurants rivaling to pay more.
Graziano with Amber Ox said the company has implemented other changes as well. The pub increased the minimum base pay for kitchen staff. Dishwashers and line cooks used to get $11.50 to $12; now, it’s $16 with no experience.
It has always offered health benefits to full-time employees after six months and provides supplemental insurance through Aflac to everyone. This month, it started offering paid time off for full-time associates. Amber Ox is fully staffed now with everyone is getting 40 hours a week. But it’s accepting applications like many places.
Restaurants are also finding it difficult to fill particular jobs.
“Even when talking with the interviewees, no one wants to work on a kitchen line anymore,” wrote Nicole Pereira, director of operations at Pierce’s Pitt Bar-B-Que in Williamsburg, in an email.
This summer, Pierce hired more front of the house staff — hosts, servers — and cross trained a few seasoned ones to work in the kitchen.
Azalea Inn Grill and Time Out Sports Bar in Norfolk has been open for more than 60 years. Some of its employees have been there for more than 20, including general manager Christy Sioredas, who has punched 27. It had 40 to 50 employees at one point but now struggles to find people. A “help wanted” sign hangs in the window; management never needed one in the past.
“Out of 10 people that come in, we may end up hiring one because of the quality of applicants,” Sioredas said.
She also uses Facebook and Craigslist to recruit. The restaurant allows employees to make their own schedules and the pay is competitive, but it still hasn’t been enough to attract employees to add to the pool.
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Rising prices
Restaurants also are bracing for increases in the minimum wage. Virginia’s is $12 and went into effect in January. The rate is scheduled to increase to $13.50 in 2025 and $15 in 2026 with votes by the General Assembly.
Nelson, owner of Mellow Mushroom, said existing employees would want an increase, too.
Restaurants also deal with the leaps in food prices.
Eric Drexler, owner of Drexler’s Wood Fired Grill in Hampton, said the jumbo lump crab that was once $30 a pound is now $40 to $45. Mayonnaise went from $8 a gallon to about $21.
Victoria Sgro, owner of Kahiau’s Bakery & Cafe in Virginia Beach, paid about $1.70 a pound for butter before the pandemic. The price went up and she switched to another brand. That price has doubled in the past six months and she now pays about $3.50 a pound. Other items such as flour, vegan cheese and baking powder have gone up and fluctuate from week to week.
“Sugar recently went up a dollar in one week,” she said.
Sgro shops at three or four places to save money. She also sets up tables at weekly farmers’ markets to supplement her business income.
Chris-topher and Susan Slater opened Post Secondary Brewing in Portsmouth in April. Susan said glassware prices have risen since they first started buying items for the business; she has been waiting more than two months for growlers.
Then there are costs customers don’t see.
For example, Harvest pays 22% to offer Uber Eats, an online ordering and delivery platform. The business doesn’t lose money with the service but it doesn’t make much either, Mauch said. If the restaurant becomes too busy, he stops the service. But he says Uber Eats is good for getting the business name out there.
He also pays 3.5% to 5% in credit card fees, depending on the card. It’s cheaper when customers use a debit card, Mauch said.
Swipe fees are one of the most expensive costs behind food and labor costs, said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association.
In addition, it costs Mauch $500 a month for equipment used to accept the payments.
Some restaurants have resorted to using robots to fill staff holes. Last year, Virginia Beach businesses Fisher’s Neighborhood Kitchen and H Bar used robots to deliver dishes tableside. Shay Horst, general manager for both restaurants, told The Pilot in a December article that a robot costs about $33 a day to operate, which is cheaper than paying a person.
Restaurants nationwide may get some help from the Essential Workers for Economic Advancement (EWEA) program, which was introduced by U.S. Reps. Lloyd Smucker, R-Pa., and Henry Cuellar, D-Texas, in May. It would grant three-year, nonimmigrant visas to nonagricultural workers to fill jobs that have remained open for a certain amount in areas where the unemployment rate is 7.9% or less. The visas don’t apply to occupations that require a bachelor’s degree or higher. The bill is still in committee.
The Credit Card Competition Act has also received bipartisan support. It would enhance credit card competition, sponsors say. Two credit card companies currently process more than 80% of credit card transactions in the United States. This could potentially decrease swipe fees and save businesses and consumers an estimated $11 billion a year, according to the National Restaurant Association.
“Restaurants really are trying to develop the best formula and we appreciate the diners working with us,” Davenport said. “We are doing our best.”
Rekaya Gibson, 757-295-8809, rekaya.gibson@virginiamedia.com; on Twitter, @gibsonrekaya
