Eric Levin: What has been the biggest challenge for restaurants this summer, especially on the Shore?
Dana Lancellotti: It’s wonderful that restaurants can fully open with no restrictions, but now it’s, “Oh, no, we just don’t have the staff to manage it.”
In a normal year, we have about 5,000 students coming from overseas, just on the J1 program, to work summers. That program had been cancelled for a period of time. It reopened at the end of March, but that was too late. There was already a huge backup of applications for work from people overseas, like 300,000 applications. Domestic students don’t come to work until the end of June. So we’ve had a lot of issues preparing for peak season.
Senator [Bob] Menendez and others were supportive and tried to help expedite the visa program, but the floodgates weren’t able to be opened immediately. Now we have more people coming, but it’s still a fraction of the normal number.
EL: What impact does that have?
DL: The problem is broader than just hiring staff. Labor shortages affect the construction industry and the transportation industry. If they can’t find enough people to drive trucks and transport things, it makes prices go up for the purchasers of those supplies. That includes food and other supplies needed by restaurants, which are still trying to recoup lost revenue from Covid over the last year and a half. Restaurants have also spent money on things like plexiglass partitions, air filters, sanitation and tents for outdoor dining.
Restaurants are desperate to say, “Come on in, we’re happy to have you back,” but they don’t have enough staff to serve the people who want to come in. One of our great boardwalk destinations told me after Memorial Day weekend that they had their hands full. But people who were lined up outside, waiting to get in, were looking through the windows and seeing empty tables.
How much more aggravated do you think people get when they’re not being given a table they see empty? They immediately think the establishment isn’t organized. “Why aren’t you seating me?” Well, it’s because they don’t have a server for that table.
In most cases, the restaurants are not only looking to hire but saying, “We’ll pay you more per hour or a sign-on bonus after you stay for a couple months.” How do you walk that back later? Do you continue to pay $10 an hour more for a job that used to pay $10 an hour less?
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EL: What about raising prices?
DL: Unfortunately, that’s exactly what’s going to happen. The governor has made the statement that, if it means passing along the cost, people will have to pay more for a burger. Well, people don’t want to pay more for a burger, and a lot of people are still having hard times now.
EL: Outdoor dining kept a lot of restaurants afloat.
DL: A lot of great street dining has come from that, but it means restaurants have needed to buy more tables and chairs. Tents themselves can cost thousands of dollars a month just to rent, and a restaurant may need to rent more than one. If a restaurant can double its capacity with outdoor dining, hey, great, they can double their revenue. But they don’t get those options for free.
EL: What issues do towns have with outdoor dining?
DL: There are municipalities that are saying the state of emergency is over, so they want to consider telling businesses that they can’t have sidewalk or street dining anymore. If there are residences nearby, you can only imagine that they worry there will be complaints about noise and inconvenience. The problem is that the town can’t do that case by case; they’d have to do it across the board.
We need to find some way to protect the restaurants from that because they’ve already made the investment and need the opportunity to recoup that investment. And once you get into the fall, people will want to be under a tent.
EL: Will takeout stay as strong as it’s been?
DL: I think there have been great new opportunities for takeout because people have invested in upgrading their website to enable online ordering, or they’ve connected directly with a takeout service online or hired someone to deliver. If they see it as adding to their profitability, I imagine they will continue with that. It is certainly a benefit to people at home, who really want better food that they can have delivered or go pick up themselves.
Now there is a much wider range of dining types that offer delivery, not just pizza or fast food or whatever. I’m not pointing a finger at any particular takeout company, but there are people in our membership who have had a lot of difficulty affording the rising fees that the delivery companies are putting in place. Typically they are charging as much as 30%, and sometimes, higher. The restaurants pay those fees. That’s another issue we’re dealing with. l’d like to see some kind of regulation in place to deal with that. Right now, there’s none.
It hurts the customer in the end as well because the restaurant has to raise prices to cover the cost of delivery. DoorDash gave us half a million dollars for grants, and we distributed those grants, of $2,500 or $5,000, to 120 restaurants that met the requirements. The restaurants had to be in New Jersey, not part of a chain or national brand, have five locations or less and showed a 30% loss in revenue year-to-year from 2019 to 2020.
Some applicants wanted to hire a marketing company, but we wanted to make sure the money was going for immediate needs—to pay rent, make payroll or buy supplies, things they need to do to survive. It was an amazing [gesture], and we are very appreciative. DoorDash is an outstanding company, and they’ve been tremendous partners.
EL: What about the state of fine dining?
DL: Personally, I went to a fabulous restaurant in the Cherry Hill area. Thursday, lunchtime. This was a couple months ago. People were still wearing masks, but the place was fully occupied, following required limits indoors and outdoors, and this was a very upscale and expensive restaurant. I personally haven’t seen a drop [in patronage]. I think people are even doing takeout from fine dining–type restaurants that didn’t use to offer it.
EL: Fine dining requires an investment of time as well as money.
DL: I haven’t heard that fine dining is struggling more than any other level of dining. People didn’t go out much last year. They didn’t travel like they normally would; they didn’t spend money. I know there are people who are still challenged economically as a result of the past year.
What I’m saying is there are pockets of people who have money to spend, and that’s why the tourism industry is just exploding. Even if [they] don’t want to go on an airplane, people are coming to the Shore. I mean, people want to be out and doing things. That’s why the hiring is so incredibly frustrating. It hinders something that would otherwise be booming.
Dana Lancellotti was named president and CEO of the New Jersey Restaurant and Hospitality Association earlier this year. To the learn more about the NJRHA and the work they do, visit their website.