Paid leave, bonuses, and 401(k)s: How some restaurants are tackling staffing shortages

Business Insider

16-05-2025

When Laurie Schive and her husband opened Blue Loon Bakery in a small New England town in 2018, she didn't expect hiring and keeping workers would present much of a challenge.
After all, earlier in her career, Schive darted around dozens of countries as a clandestine service officer for the CIA, focusing on limiting the spread of weapons of mass destruction. She later served as a director of global risk consulting at a Big Four firm.
Nonetheless, finding people to bake the European-style viennoiserie and sourdough breads she'd grown to love living abroad wasn't easy, Schive told Business Insider.
Harder yet was getting them to stay, she said.
Hiring in the restaurant business has rarely been straightforward. Now, to attract and retain staffers, some employers say it's necessary to take a kitchen-sink approach: deploying various benefits, training, technology, and added flexibility in scheduling.
An all-of-the-above strategy is often necessary because labor shortages remain a perennial challenge in the restaurant and food service industry, which is estimated to employ about one in 10 US workers. The National Restaurant Association projects that the industry will add 200,000 jobs in the US in 2025, boosting employment to 15.9 million by year-end.
At so-called quick-service restaurants, many workers don't last a year or even six months, David Henkes, a senior principal at the market research firm Technomic, told BI.
"When you talk to restaurants about what they're doing, a lot of it just involves trying to stem the flow," he said, referring to the succession of hires and quits. That's because people often view restaurant work not as a career but as an "entry-level stepping stone," Henkes said.
For that reason, and because industry profit margins often hover around a scant 3% to 5%, it can be tough to persuade bosses to invest in workers who might not even last an entire burrito season. Yet, Henkes said, restaurants are increasingly putting money into hourly workers by offering "carrots" like partial college tuition, scholarships, and 401(k) plans.
These measures, Henkes said, "show that the restaurant is investing in the person." That, in turn, can pay off by reducing the share of workers who hand in their aprons well before making it a year in the job.
Finding a career, not just a job
The burrito chain Chipotle's turnover among hourly restaurant workers — crew and managers — dropped from 164% in 2022 to 145% in 2023 and then to 131% in 2024, the company told BI. Turnover above 100% means that the business, like many of its peers, has to replace more workers in a year than it employs at one time.
Salaried restaurant managers and field staff have also been leaving the Newport Beach, California-headquartered company at lower rates in recent years.
These are decreases that Lois Alexis-Collins, Chipotle's chief people officer for field operations, attributes in part to the company's efforts to show workers that there are ways to progress in a career rather than just hold down a job.
That growth could mean going from burrito slinger to regional vice president, which involves overseeing as many as 500 locations. Compensation for those management jobs tops $600,000 annually, the company said. Alexis-Collins said part of the messaging to newbies includes being clear about what it takes to get ahead.
"You're not guessing," she said. More than 85% of Chipotle managers started on store crews, Alexis-Collins said.
The company offers quarterly bonuses of a week's pay to crew members whose restaurants do well, up to $5,250 a year for education, and a debt-free degree program.
Still, most of its restaurant workers "come in wanting a job," she said.
Alexis-Collins said Chipotle has tried to make improvements, especially at the general manager level, because they are "the captain of the ship."
One effort involves an artificial intelligence platform that chats with job candidates, collects their information, schedules interviews, and sends offer letters on a manager's behalf. Chipotle thinks the tool, called Ava Cado, could cut the time it takes to hire restaurant workers by as much as 75%. That's a help to management.
"The more stable the restaurant leader is, the better retention for the crew team," Alexis-Collins said.
Chad Moutray, the National Restaurant Association's chief economist, likewise told BI that having the right manager in place matters not only for the bottom line but also for "making sure that your workers are sticking around."
He said a lot of food service workers tend to get jobs at places where they already eat. That creates a level of buy-in from the start, Moutray said. Yet, for employees to stay, they also need to feel appreciated, have colleagues they like working with, and have managers who lay out what's expected, he said.
Getting tech to do some gruntwork
Henkes, from Technomic, said more restaurants are making "a big push" to increase job satisfaction by using technology to take some menial tasks off workers' plates. That can include adding kiosks where customers place orders or introducing automation to the back-of-house areas where food gets prepped.
Henkes said that while a lot of the investments that restaurants are making in technology relate to labor, the goal generally isn't to replace workers. Instead, he said, it's to do things like automate taking inventory to free up workers to interact with customers.
"What it's doing is redeploying them to higher-value activities," Henkes said, referring to technology.
He said software that juggles workers' shift requests can give employees more predictability and flexibility in their schedules. That's important for boosting job satisfaction, but it also helps restaurant workers who hold down more than one job.
"It has become a very scientific approach to making sure that people are scheduled when they want to be and that shifts are covered," Henkes said.
Boosting pay and benefits
Schive, at Blue Loon Bakery, said that while labor is the cost that she has the most control over, corralling employees is the hardest thing about running the business.
"You recruit them, you train them, and then you have to retain them," she said.
Schive uses a calculator from the Massachusetts Institute of Technology to determine a living wage for full-time workers at her New London, New Hampshire, bakery, which occupies a white clapboard house built in the 1830s and an attached barn.
As the pandemic began to subside and workers in many industries stepped up their job-hopping, Schive and her co-owner and husband, Mike Morgan, decided they needed to boost pay and other benefits, especially for full-time workers.
Blue Loon covers 75% of full-time workers' healthcare premiums and offers a retirement account with a 3% match.
Recently, the bakery added six weeks of paid family medical leave for part-time and full-time workers.
"I don't know that it really contributed a large part to our recruiting effort, but it helps," Schive said.
She and her husband have worked with real estate agents to try to find workers a place to live in a tight housing market. The couple also let an employee use a small cottage on their property while she looked for a home.
Schive, who is the chair of the Bread Bakers Guild of America, said other bakeries and restaurants had taken similar steps to help workers secure housing because a dearth of affordable options can be a barrier to attracting employees.
Blue Loon now has more than two dozen staffers in place for the busy summer tourist season — about double what it has in winter.
The goal now is to keep them. That includes the overnight baker Schive hired after pandemic lockdowns temporarily closed a nearby college where he had been working.