Rehiring Employees Can Present A Challenge for Local Restaurants

After more than two months of state mandated coronavirus closures, Colorado restaurants were finally able to reopen for dine-in service in late May. Now, many owners find themselves in a new predicament: They are struggling to hire enough workers to operate, even at limited capacity.

Some restaurateurs say the difficulties in rehiring their laid-off staff, or hiring new workers, is due to the extra $600 per week in unemployment benefits workers are receiving via the Federal Pandemic Unemployment Compensation program under the CARES Act. “It’s absolutely because of that,” says Chris Verikas, owner of four-year-old Mtn Prime in Idaho Springs. “At least in our field, that’s a lot of money for people. I think they’re making more money (on unemployment) than they would working. The shutdown of Colorado was really hard to go through, and now we have people who want to come in and eat and we can’t even staff. It’s just crazy.”

Verikas says that he’s regularly turning diners away—not because of reduced capacity limits, but because he simply doesn’t have enough people working to feed and serve those guests. He estimates that only five to 10 percent of his pre-COVID staff returned to work, and hiring new people has been a struggle. He’s posted ads on the usual work-for-hire sites, but even when he gets responses, applicants skip interviews or don’t show up after being hired.

Many restaurants just can’t compete with that extra $600 in weekly benefits—which comes on top of the regular state-issued benefit. The extra funding, which is set to end in late July, was put into place to help laid-off workers during these unprecedented times, but critics say it creates a disincentive to get people back to work.

“I fault the government,” Verikas says. “And it’s not just restaurants—I’m talking to people who come to my place who have other businesses. All these small businesses are struggling, and finally when they get to reopen, they can’t staff adequately. They’re going to end up closing.”

Bryan Dayton has been facing similar issues staffing his Front Range restaurants: Acorn, Oak at Fourteenth, Brider, and Corrida. He estimates that 30 percent of the staff he’s tried to bring back to work have declined. “It’s been frustrating that some of the staff have passed because of the increased unemployment benefits,” Dayton says. “There’s definitely been a few that have straight up said they’re making good money (on unemployment), and they don’t need to do this.”

With Colorado restaurants currently operating at 50 percent capacity at best, there’s certainly less business being transacted—and for tipped workers, less business means less take-home pay. The unemployment benefits are guaranteed; how many people will walk through a restaurant’s doors each night is a wild card. On the other hand, employees may choose not to return to public-facing work because of safety concerns. Whether they’re at a higher risk themselves, live with an elderly or compromised person, or just fear the disease that shut everything down in the first place, many people feel that staying home is safer.

Still, other owners haven’t had issues rehiring in recent weeks. Juan Padro, founder and partner of the Culinary Creative Group that operates Highland Tap & Burger, Señor Bear, Mister Oso, Bar Dough, Morin, and others, says that less than 10 percent of his staff declined to return to work. “It’s been largely good. We have a culture of work, and I think that’s the biggest thing,” he says. “I don’t think most places have a culture of hard work, so you run into the entitlement issue. Not to say we’re immune to it—there are some people who decided not to come back—but our kids take a lot of pride in what they’re doing. And they’re getting rewarded for it.”

Padro says that many Culinary Creative Group servers are making more money now in tips, as his restaurants are doing well. The company is at 76 percent of normal sales, and that’s with Morin still shuttered. Because the demand is there, Padro says the company has hired back upwards of 80 percent of its pre-COVID staff.

Fiona Arnold, co-owner of Blue Sparrow Coffee, Room for Milly, and Queen’s Eleven, says that not only was she able to rehire all 29 original employees in spite of the current unemployment benefits, but she just hired two more bartenders for Room for Milly.

“We didn’t lose a single person. We made the commitment from the get-go to take care of our team,” Arnold says. “We really let everybody know throughout that we were taking care of them, and that when they come back, we’ll still take care of them and make sure they did as well as they did pre-shutdown.”

Arnold and her team paid their staff supplemental wages if the money they made after reopening was less than their average wages pre-COVID. They even paid wages to employees who, for whatever reason, were unable to receive unemployment benefits during the closure period. They did this by taking money out of their own pockets, as well as by using Payroll Protection Program loan money. Besides helping the employees, Arnold stresses that it also helps the business.

“Our staff is really highly trained. You can’t lose people like that—they’re so good at their jobs. We hired a great team, and we invested a ton of time training. Just putting aside the fact that it’s the right thing to do, selfishly, we needed to keep that group to reopen at the high quality we deliver with our rock star team,” she says.

For those struggling to rehire in the face of inflated weekly unemployment benefits, the extra competition for workers is another obstacle that the already-struggling industry doesn’t need right now. That federal money is set to expire at the end of July, but it could continue through early next year if Congress approves an extension.

“It’s been a hindrance for sure,” Dayton says of trying to rehire workers receiving the extra benefits. “Most of my staff made more money (on unemployment) than what they could make at the restaurant. I can’t say that I fault them for trying to make money—we all need to make money—but do I agree with it? No.”