2025 Restaurant Labor Shortage: 4 Solutions to Implement Right Away

Staffing challenges in restaurants and c-stores aren't new, but as of 2025, they're shifting in ways that call for sharp thinking and adaptable strategies. As the restaurant industry continues to rebound from the pandemic and navigate economic pressures like inflation, the ongoing labor shortage is reshaping how restaurants operate and grow. 

Beyond the numbers, businesses are facing a mix of realities: high turnover, strong competition for talent, evolving employee expectations, and changes in customer behavior. Together, these trends are transforming the hiring landscape. They also open the door to investing in employee retention programs and reevaluating wages and benefits.

According to a National Restaurant Association survey, bars and eateries lost a net 25,500 jobs in the first quarter of 2025. That's the lowest quarterly performance since late 2020, when the industry shed more than 266,000 jobs. Despite this rocky start, the restaurant industry is still projected to grow by 200,000 jobs this year, reaching a total of 15.9 million employees by the end of 2025. 

This article explores the labor shortage in the food and beverage industry, its impact, and strategies for your business to navigate and overcome workforce challenges. 

Understanding the Restaurant Labor Shortage 

A labor shortage in the restaurant industry is influenced by factors such as economic shifts, rising wage expectations, and changing work-life balance. In recent years, these challenges have intensified, creating a tighter labor market. 

Today, restaurants around the world must adapt to a shrinking labor pool. They are focusing on wage growth, benefits, and adjusting job expectations. Inflation also plays a key role, as it affects consumer purchasing power. As people spend less, restaurants must balance cost-effective pricing with the need to attract talent and retain employees. Consumers are seeking value, putting pressure on restaurants to offer quality service, which requires skilled staff. 

In this environment, restaurants must rethink compensation and invest in worker retention strategies to keep operations running smoothly. 

Key Restaurant Labor Shortage Statistics for 2025 

The first quarter of 2025 showed mixed signals for restaurant employment. Nearly 30,000 jobs were regained in March, but the quarter still ended with a net loss of over 25,000 jobs, the most significant dip since 2020.

Despite this, total employment in the industry remains slightly above pre-pandemic levels, and full-service restaurants are steadily narrowing the staffing gap, now just under 3% below pre-pandemic benchmarks. 

Trends and Strategic Responses 

Faced with the restaurant workforce fluctuations, several restaurant businesses are revisiting their approach to staffing. Flexible scheduling, retention-focused training, and investments in the employee experience are becoming key tools to stabilize operations. Others are testing smaller teams supported by automation and cross-training to meet service demands efficiently. 

3 Causes of the Restaurant Labor Shortage

The workforce shortage in the restaurant industry persists in 2025, even as the broader economy recovers. The reasons go beyond just staffing numbers, it’s about a shift in how people approach work. Post-pandemic job market changes, rising interest in remote or flexible roles, and growing expectations for wages, benefits, and work-life balance have all played a part. 

The effects vary across restaurant segments. Fast-casual restaurants often attract younger, part-time workers, while fine dining establishments rely on trained professionals. This means that each segment faces unique challenges and will need tailored solutions. 

How Rising Wages and Benefits Impact Hiring 

With competition for talent rising, many restaurants are shifting to more flexible and creative compensation models. Some are moving beyond hourly rates, introducing performance-based bonuses or retention incentives to stand out. Minimum wage increases and evolving tip pooling regulations are also reshaping how operators budget for staffing, often prompting smaller businesses to adjust their hiring pace or raise menu prices. 

Health insurance, paid time off, and mental wellness programs have become essentials. Offering these benefits can make the difference between attracting long-term talent and repeatedly starting from scratch. 

The Restaurant Industry Labor Shortage vs. Other Sectors 

Since COVID-19, sectors like healthcare, construction, transportation, retail, and travel have all reported significant workforce shortages. Each industry faces its own set of challenges, but in hospitality, the struggle to retain employees has proven especially tough due to irregular hours, lower wages, and high stress.  

Restaurants are adopting strategies from retail and the broader hospitality industry to tackle workforce challenges. Practices like flexible scheduling, streamlined onboarding, and cross-training are proving effective in improving employee retention and engagement, while also helping to reduce turnover, which is critical in environments where staffing stability is key for smooth operations. 

Actionable Solutions to Address the Restaurant Labor Shortage

While the causes of the labor shortage are complex, operators can take practical steps to manage its impact. The following solutions combine financial clarity, recruitment tactics, and operational tools that can help restaurants of all sizes adapt and stay competitive.

Step-by-Step Labor Cost Calculation Framework

Understanding how labor costs affect profitability is essential for operators navigating a tighter workforce market. A clear formula offers immediate visibility into margins:

Labor Cost % = (Total Labor Cost ÷ Total Sales) x 100

As a benchmark, labor typically represents 25–35% of revenue for most restaurants and convenience stores. Quick-service restaurants (QSRs) often fall at the lower end of that range, while full-service restaurants (FSRs) tend to run higher due to additional staffing needs.

Turnover can push these percentages upward. Recruiting, onboarding, and training new employees often add hidden costs, such as overtime pay for covering shifts or reduced efficiency while new staff learn the ropes.

Tiered Recruitment Strategy by Budget Level

Recruitment efforts often assume large HR budgets, but in practice, many restaurants operate with limited resources. A tiered approach helps align tactics with available funding and ensures operators take action quickly.

Low/No Budget:

• Announce openings through Google Business Profile posts.
• Cross-post free job listings on Craigslist, Indeed, LinkedIn, and local college boards.
• Launch a simple referral program that rewards employees with free meals or gift cards for successful hires.

Mid-Budget:

• Offer sign-on bonuses to attract immediate interest.
• Host virtual hiring fairs through social media channels or Zoom.
• Use SMS platforms to automate outreach and follow-ups with applicants.

Enterprise/High Budget:

• Partner with recruiting platforms that provide pre-screened candidates.
• Build a dedicated “careers” microsite optimized for SEO to capture ongoing applicant traffic, and/or advertise open roles on industry websites and social media channels focused on hospitality talent.
• Leverage Paytronix loyalty and labor segmentation tools to identify loyal guests who may also be interested in employment opportunities.

Tech Stack Comparison for Labor Efficiency

Effective labor management is critical for restaurants navigating staffing shortages. Scheduling tools, POS systems, and integrated loyalty platforms can all help streamline operations, improve employee efficiency, and enhance guest experiences.

For example, Paytronix integrates loyalty and ordering data to optimize staffing needs, allowing operators to maintain service standards with fewer employees while still driving revenue.

The following table compares key technology solutions commonly used in the restaurant industry:

Tool Type	Benefit for Labor Shortage	Example Vendors
Smart Scheduling Software	Cuts overstaffing, automates shift swaps	7shifts, Toast
POS Integration	Reduces manual entry, syncs labor costs to sales	Square, Revel
Loyalty & CRM Platforms	Tracks employee-like guest behavior and upsells labor-free	Paytronix
Kiosk Ordering	Reduces front-of-house staffing needs	Bite, Toast Kiosks

Real-World Case Studies by Segment

Each segment, from QSRs to full-service restaurants and convenience stores across the U.S., offers examples of how operators are addressing staffing shortages. Employee turnover, whether leaving the industry or moving to other restaurants, compounds the challenge. These case studies show concrete actions and measurable results.

Lion’s Choice: QSR

Lion’s Choice, a regional quick-service restaurant specializing in roast beef sandwiches, leveraged Paytronix’s integrated platform to unify online ordering, mobile app functionality, and a personalized loyalty program. This integration allowed for extensive menu customization and data-driven marketing.

As a result, online orders grew 110% and 50% of lapsed customers were re-engaged. By streamlining operations through a single platform, Lion’s Choice maintained service quality with fewer staff, improved efficiency, and increased guest retention, demonstrating how digital ordering and loyalty solutions can help restaurants manage labor shortages.

Olive & Oak: FSR

Olive & Oak, a full-service restaurant in St. Louis, used Sling by Toast to improve employee retention amid staffing challenges. By integrating the scheduling platform with POS data, Olive & Oak streamlined operations, reduced scheduling conflicts, and improved team communication, contributing to enhanced employee satisfaction and retention.

Automated shift scheduling, easy time-off requests, and flexible shift swaps gave staff more predictable schedules. At the same time, aligning labor with customer demand helped maintain service quality with fewer overall hours, showing how technology can directly support workforce stability in full-service restaurants.

Wesco: C-Store

Wesco, a Michigan-based convenience store chain, expanded the deployment of AI-powered self-checkout kiosks to over 20 locations to address staffing challenges. During the pilot program, kiosks rang up nearly half a million transactions at more than 10 Wesco locations, with a median transaction time of 18.7 seconds.

These kiosks use computer vision to identify items without barcodes, reducing transaction times and freeing staff from repetitive tasks. By streamlining operations and allowing employees to focus on customer service and other critical duties, Wesco has maintained efficiency and service quality despite labor shortages.

Predictive Scheduling and Demand Forecasting

Unpredictable shifts and fluctuating customer traffic are major challenges during labor shortages. Restaurants can address this by using POS data to forecast slow and busy periods, automate shift coverage based on sales trends, weather, and local events, and create rotating part-time schedules that ensure peak hours are staffed without overstaffing during slower periods.

By integrating Paytronix ordering and loyalty data, operators can predict sales volume by daypart and optimize labor accordingly. For example, a quick-service restaurant might identify a lunchtime surge on Fridays driven by repeat customers and allocate additional staff only during that window, reducing unnecessary labor costs on other days.

Compliance, Risk, and Retention in Policy Practices

Following labor laws and workplace policies is especially important during labor shortages, because mistakes can make staffing problems worse and increase turnover. Restaurants need to know the rules in their area and put clear policies in place to protect employees and keep operations running smoothly.

Key areas to watch:

• Fair scheduling regulations by state: Make sure employees get proper notice for shifts and avoid conflicts that could cause fines or frustration.
• Minimum wage increases and tip rules: Update labor budgets as laws change to prevent understaffing or unexpected costs.
• Mental health leave and PTO: Providing paid time off and support for mental well-being helps keep staff engaged and reduces burnout.
• Harassment and safety training: Meeting required training standards keeps employees safe and reduces legal risk.

Using digital HR tools or Paytronix-integrated feedback systems can make tracking compliance, documenting training, and monitoring employee satisfaction easier. Restaurants that use these tools often see employees stay longer, fewer mistakes, and a more reliable team, even when competition for talent is high 

4 Strategies for Overcoming Labor Shortages 

As a restaurant owner, you know that balancing talent retention with operational success is challenging. Maintaining profitability, keeping your team engaged, and ensuring customer satisfaction all require constant attention. If you're looking for actionable steps to improve hiring and retention, consider these four strategies:  

1. Investing in Employee Retention Programs

New generations value opportunities for growth and a sense of being appreciated. By offering career advancement opportunities and leadership training, you can reduce turnover. Retention programs that foster loyalty also play a crucial role in keeping restaurant workers engaged and creating a stable workforce. 

Several restaurants have succeeded by focusing on culture-building strategies. A positive work environment, clear communication, and opportunities for advancement can significantly boost long-term commitment and reduce the need for constant rehiring. 

2. Leveraging Technology to Reduce Staffing Needs

Technology plays an important role in reducing labor dependency within the restaurant industry. AI-powered scheduling systems can optimize staff allocation, while self-service kiosks and online ordering streamline customer interactions, allowing for fewer staff on the floor. 

Additionally, automation in kitchen operations and inventory management improves efficiency, reducing human error and the need for manual labor. These technologies not only improve operational effectiveness but also allow restaurants to maintain high-quality service while addressing staffing shortages. 

3. Creative Hiring Strategies to Attract Workers

Restaurants are expanding their recruitment efforts to reach untapped talent pools, such as students, retirees, and gig workers, to address staffing shortages. Leveraging social media and digital platforms improves visibility and engagement for job openings. 

Additionally, employee referral programs and sign-on bonuses serve as effective incentives, motivating current workers to recommend new hires and attracting fresh talent with competitive perks. These approaches help restaurants cast a wider net in an increasingly competitive job market.

4. Fostering a Positive Workplace Culture

Restaurant employees who feel aligned with a business's values and mission are more likely to stay long-term. Creating a culture of respect, recognition, and collaboration can foster employee loyalty and improve morale. 

Encouraging open communication, promoting work-life balance, and celebrating achievements can significantly impact job satisfaction. Restaurants that prioritize employee well-being and recognize their contributions are more likely to attract and retain dedicated employees. 

Adapting to the Restaurant Labor Shortage in 2025 and Beyond 

While consumer inflation and the lasting effects of COVID-19 continue to challenge the industry, restaurants still have room to grow. Success now depends on how well you can adapt, tailoring solutions to your restaurant’s unique goals, needs, and people. The key is staying flexible, focusing on continuous improvement, and being open to what’s next. 

The Future of Workforce Management in the Restaurant Industry 

Looking ahead, restaurants that align workforce strategies with employee values—like fair wages, growth opportunities, and a positive culture—will be better positioned to retain talent. The same hiring and retention tactics discussed earlier will remain critical. 

To future-proof your operations, flexibility is essential. That might mean investing in automation, adopting hybrid staffing models, or adjusting to changing employee expectations. Your workforce strategy should be scalable and adaptable to whatever the next few years bring. 

Policy and Government Impacts on Restaurant Hiring 

Government policies, including immigration rules and labor laws, have a direct impact on your hiring and compensation decisions. Staying informed and compliant helps you avoid setbacks and opens doors to broader talent pools. 

Restaurants that build HR practices around fair pay, compliance, and inclusivity will be more resilient when regulations shift. These efforts not only strengthen your team but also make your business more competitive in the long run. 

Frequently Asked Questions About the Restaurant Labor Shortage 

The restaurant labor shortage is a challenge that many owners are still navigating in 2025. These questions highlight common concerns and key points covered in our article, focused on practical strategies and what to expect moving forward. 

Why is there a labor shortage in restaurants? 

The pandemic caused many restaurant workers to leave the industry, and not all of them came back. Rising costs of living have pushed workers to look for restaurant jobs with competitive wages, benefits, and work-life balance. At the same time, the industry’s traditionally high stress and low salaries have made it harder to attract and retain talent, especially when other sectors are offering more options. 

How much does the average person spend on restaurant food per month? 

Spending can vary widely by region and income level, but recent data from the U.S. Bureau of Labor Statistics shows that American households spend around $300 per month eating out. That number may shift depending on inflation and lifestyle trends. 

Is fast food becoming less popular? 

Fast food remains popular, especially with digital ordering and delivery. However, consumer expectations are evolving, faster service isn’t enough anymore. Quality, healthier options, affordable prices, and tech-friendly experiences are becoming more important. 

How much should a small restaurant make per month? 

It depends on the concept, size, and location, but small restaurants often aim for monthly revenues between $20,000 and $100,000. Profit margins in the industry are typically slim, so managing costs, especially labor, is key to staying sustainable. 

What types of restaurants make the most money? 

Full-service restaurants business with liquor licenses, high table turnover, and efficient cost control tend to be more profitable. Fast casual concepts that keep labor costs low and operate at scale can also generate strong margins. 

Moving Forward in a Tight Labor Market 

Understanding restaurant labor shortage statistics and implementing proactive solutions is essential for maintaining stability and growth. Although the challenges persist, strategic hiring, retention programs, and the use of technology can help restaurants adapt and overcome these obstacles.  

As challenging times persist, it’s crucial to focus not only on reducing turnover but also on customer demand. Check out our guide to learn how predictions can help drive your business forward. 

Want support for your labor management needs? Request a demo with Paytronix solutions to explore strategies for increasing employee engagement, reducing turnover, and optimizing workforce management.