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VOL. 41 | NO. 36 | Friday, September 08, 2017

Restaurant workers are in control amid high demand

It takes more than higher pay, perks to prolong their loyalty

By Hollie Deese

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In 2011, Nick Pellegrino had one of those life-changing ideas that he just couldn’t shake. A musician and songwriter, he was exhausted from the hustle of that industry.

The Staten Island native couldn’t stop thinking about launching a once-a-week, family-style Italian meal for customers. He decided to trade music for food, and Mangia was born.

With dinner, dancing, singing and lots and lots of eating, the concept that boosted fellowship and flavorful fare was an entirely new experiment in the Middle Tennessee market back then, and an instant hit. He soon added Friday nights, got plenty of media coverage and was booked well out in advance.

“I had no idea what a pop-up was,” Pellegrino says. “My friend said, ‘Oh, you’re doing a pop-up,’ and I’m like, ‘What the hell is that?’”

But in the past six years, the Nashville hospitality industry has undergone drastic changes.

The pop-up frenzy that followed Mangia’s lead has come and gone, and since Pellegrino, 52, hosted his first Saturday night family dinner at Cool Café in Franklin, the local food scene has exploded, creating a nationally recognized food scene and an almost nonstop hunt for workers.

The number of restaurants in Nashville has grown by 10 percent – nearly 500 restaurants – since 2010, compared to the U.S. growth rate of 0.1 percent, the National Restaurant Association states.

The greater Nashville area is home to nearly half of all of the state’s restaurants.

Mangia became one of the more than 5,000 area restaurants when Pellegrino opened his brick-and-mortar location in the Melrose neighborhood in 2016. And he began to have difficulty finding and keeping workers from the moment he opened.

“I call it the hostage crisis of 2017,” Pellegrino half jokes. “I wasn’t as busy as some of the other places in town, so I’d get people that’d come in here, and they’d try it out and maybe they weren’t making the money they’d thought and they’d just take off.

“They know that they can come in and check it out, and if they don’t like it after a week, they can have another job by this afternoon. And you know what? They’re right. They will.”

Here today, gone tomorrow

Pellegrino thinks some of that “on-to-the-next-restaurant” attitude comes from the abundance of jobs. Ten percent of the state’s employment comes from the restaurant and service industry, according to the National Restaurant Association, a number it predicts will grow another 11.3 percent by 2027.

But much of that growth has been from big chains coming into the market, which only makes it harder for the smaller guy to compete for workers. Since 2010, the number of chain restaurants in the Nashville areas has increased 16.3 percent, while independent restaurants have increased by 3 percent.

“I don’t have a staff of over 50, so I can’t offer health insurance to people,” Pellegrino says. “I wish I did. But when you’ve got people that are being offered dish washing gigs for $17 an hour and health benefits, and after a certain amount of time a 401K, how do you compete with that as an independent restaurant owner? I can’t afford to pay what a chain restaurant or chain hotel can pay.”

Pellegrino has been clocking many long hours himself as a result, especially in the last few months after his early-morning baker left his key on the register and sent him a text to let him know he had a new gig that started the next week.

“The thing about being the owner and the chef is if somebody steps out, you got to step in,” Pellegrino adds. “It’s difficult, but I feel like it’s worth it. People walk out of here and they’re happy about what they’ve experienced and the food they’ve eaten and the way they’ve been treated. I feel like it’s all worth it to me.”

‘Fishing in the same pond’

Dan Piotrowski, general manager at the Omni Hotel downtown, manages a hospitality staff of 720, 640 full-time workers and 80 part-time. He is looking to fill more than 60 openings.

Most of the vacancies – and the hardest to fill – are in culinary. Some of that has to do with the 24/7 volume.

“It’s definitely getting more challenging,” Piotrowski says. “It was a challenge even when we opened four years ago. But as the markets evolve, the competition’s gotten greater, both on the food and beverage side due to all the freestanding restaurants and venues that have opened up and continue to open every year.”

Not many of the 100 people a day moving to Nashville are looking for work in hospitality, Piotrowski says. “We’re all fishing in the same pond right now.”

Nick Pellegrino, Chef Owner of Mangia Nashville

-- Michelle Morrow | The Ledger

Piotrowski says he has been recruiting outside of the United States and using J-1 interns to fill some of those roles, but it’s a short-term solution that lasts one year. The J-1 Exchange Visitor Program gives foreign students and recent graduates the opportunity to develop their skills. After that, the associate has to go back to their home country. There are currently 26 J-1 interns on staff at Omni.

He would prefer to be able to train and retain more local folks to become a part of the hotel’s culture and stay long term.

“Once you get a person here, obviously, the goal is to retain them and turn it from a job to a career for them.”

To accommodate their own worker shortage, Piotrowski says the hotel has a “task force” of workers that come in from other hotels. Those employees are now being pulled in from two Houston-area hotels that will be closed for repairs and restoration after the flood.

High employment: blessing, curse

The hospitality industry employs 65,000 people in Davidson County alone, State of Tennessee statistics show, and workforce development for the hospitality industry has been a focal point for the Nashville Convention and Visitors Corp. during the last couple of years as more hotels, restaurants and attractions have opened in Music City, says Bonna Johnson, NCVB vice president of corporate communications.

In 2016, it created the city’s first centralized website that links employers in the hospitality industry with job seekers as part of a new workforce initiative called Hospitality Works, Johnson says, and NCVB staff regularly visit job fairs at regional universities with hospitality programs to promote Nashville as a place with plenty of good and varied hospitality jobs.

The NCVB also hosted two citywide hospitality industry job fairs in 2016 – the first time industry-wide job fairs have taken place – and it will be hosting another in the fall.

“The growth of hotel and restaurant supply has certainly affected the ability to recruit and retain employees in the industry,” says Janet Kurtz, president of Kurtz Hospitality Marketing. Kurtz launched her business last year after nearly 13 years as director of sales and marketing at the Hermitage Hotel.

“Right now, in some positions, many employees are moving from place to place because there may be higher pay. At the same time, institutions need to understand that being proud of paying the lowest rate in the city, right now, is not the best strategy.”

It’s not just Nashville

As president of the Hendersonville Chamber of Commerce, Kathleen Hawkins has seen firsthand how chamber members have struggled to find and keep staff.

“Everybody that I know in the restaurant, or in the hospitality industry, is hiring right now,” Hawkins points out. “They can’t keep people. Nobody is staying in a position long enough to get rooted. And they don’t even attempt to pull from Nashville because Nashville’s struggling even more. There’s definitely a concern.”

Hawkins attributes the staffing issue to growth, as well as rising hourly rates and lots of competition.

“Panda Express is starting people out at $13 an hour, and Macy’s is up to $13.50,” she explains. “So, where Panera Bread, for example, used to have an advantage by starting at $9 an hour and capturing that market, people are jumping. It becomes very competitive.”

And here’s a Catch-22 Hawkins sees: Employers are unable to raise hourly rates because their labor funds are being devoured by overtime pay, which they are forced to pay employees because they are understaffed.

“Our unemployment rates stayed the same from June to July and is still at 3.3 percent,” Hawkins adds. “Because it is so low, which is a blessing and a curse all at the same time, it does become more competitive.

“I think what a lot of employers are really out there doing is they are looking for other ways to create benefits. To make their business and their establishment more enticing to young workers,” she adds. “And to figure out ways that aren’t just monetary pay. To help create a culture and an environment, to make it more exciting to be in.”

Hawkins says the chamber just hosted a job fair at Union University with more than 70 employers, from Waffle House to Black-Eyed Pea, recruiting students. The chamber recently launched a “Hendersonville is Hiring” Facebook page to create awareness of all the jobs that need to be filled, and are actively recruiting from nearby Madison, Goodlettsville and Gallatin.

Hawkins acknowledges hospitality hiring issues are about to become even tougher.

“What are we going to have to do to stay competitive and grow?” Hawkins asks. “There are so many new restaurants on the horizon. The problem is only going to get worse.”

Making a good start

Sam Case moved to Gallatin from Knoxville three weeks ago to open a new Zoës Kitchen fast casual restaurant in Hendersonville.

He has been with the company for three years, and this is his first time to relocate for the company. He needs to hire 35 people, 17 for the back of the house, 13 for the front, and has taken to social media to drum up interest.

He is already ahead of the game. Two of his cooks followed him from Knoxville, and he has hired 75 percent of his opening staff.

“I know how important staffing is,” Case explains. “I needed to hit the ground running and just do whatever I needed to do. I’ve been working every day, either outside or at home, just blowing up Facebook, blowing up any type of opportunity that comes along to where I can just recruit.”

Before he worked for Zoës, Case worked for Cheddar’s for six years as a manager. He was a corporate trainer for Romano’s Macaroni Grill before that, where he opened 43 stores.

He says the starting pay at Zoës is competitive to other restaurants in Hendersonville and is looking for people who are excited about the Mediterranean brand.

“I think making sure that you’re fully staffed and ready to go at the very beginning is super crucial, because I’ve always been one to say that first impression is a lasting impression,” Case acknowledges. “And if someone were to come in those front doors the very first day we open and I’m not ready to give them what Zoë’s has to offer, then I have the potential of losing them forever. That’s the risk that I’m definitely not going to take.”

Case’s current hires are already training at the Green Hills and Belle Meade locations, so a certain percentage of his staff will have four weeks or more of training in place when they open September 21.

“I’ve found it’s been a lot easier for me to recruit here than it actually was in Knoxville,” Case adds. “A lot of my people are coming from either Gallatin or Portland. I think there’s just people that are trying to get out of those smaller cities just to work a little bit closer to Nashville.”

“We’re trying everything’

Greg Adkins, Tennessee Hospitality and Tourism Association president and CEO, says staffing shortages are the No. 1 issue members are talking about right now as the THHA is taking proactive measures to pull in more workers. They partnered with the NCVB on job fairs and are working with the Department of Labor to try and get tax incentives to help employers.

“We’re trying everything,” Adkins says. “We’ve always told Congress, the state legislature and other folks that we can’t find enough workers, and the good economics is hurting that. We operate in a capitalist society, which means there generally is an unemployment level of 4 percent. When it drops down into the 2s, that’s where the worker shortage gets severe.

“There’s not a silver bullet that will fix the problem. It’s a combination of things that you really have to do.”

Davidson County’s unemployment rate is 2.1 percent.

The industry is trying to attract workers is by, among other things, offering culinary scholarships through Metro with the Hospitality Academy and working with the mayor’s office on a program called Opportunity Now. That program tries to find folks that potentially are in areas that have a higher unemployment rate than Nashville. The association is also working with groups such as Room in the Inn and Goodwill Industries to offer hospitality training.

“Our industry offers a really good place where people can start and grow in the industry without a college education,” Adkins says.

“It’s one of the few, I would argue, that you can go all the way to the top if you have a hard work ethic, and you’re willing to learn the business. Most of my board members that are either owners now or general managers started as either a server or a front desk clerk.

“We’re the industry of opportunity.”

Still, he worries how Nashville’s affordable housing shortage and the Trump Administration’s potential actions on the deferred action for childhood arrivals will only exacerbate the problem.

“Some of the national programs that Trump is trying to push, like reducing the amount of legal immigration, legal workers, whether it’s seasonal or on work visas, is not helping the situation, including not being able to pass an immigration reform package that helps kids, potentially that are in college here, that maybe are undocumented, but are here and have been here since they were little kids or six months old,” Adkins points out. “Those things are not helping either.”

Adkins says his team met with the Department of Labor at the association’s last board meeting and explored ways to educate members on using unemployment services, and are ready to welcome workers from Houston.

They have already been working with the Texas Restaurant Association and Texas Lodging Association to ensure evacuees and workers willing to come here are charged a reasonable price.

“It’s something that’s going to be definitely ongoing, and it’s something that we have to be creative about,” Adkins adds of hospitality staffing. “It’s something that is going to be a problem going into the foreseeable future.”

Ultimately the staffing shortage can affect a hotel and restaurant’s brand, not to mention Nashville’s brand as a tourist destination, if it translates into a less-than-stellar night out in Music City.

“Bad reviews are primarily a result of bad service,” Kurtz says. “That can be on the product side itself or the service that is offered by the employees.

“Even a fully-staffed hotel or restaurant can suffer from bad service if the leadership or culture of the location does not support their employees by allowing them to be successful.”

Kurtz says a culture of collaboration, trust and communication among the team is a key factor in success. This creates an environment where employees feel that they are able to voice their ideas and take initiative to accomplish the goals that are set by the hotel or restaurant.

“In the service industry, your team is your most important asset,” Kurtz adds. “A hotel can have great sheets and soap, but it is really the team that makes the brand come alive.

“The successful brands work to create a culture for employees to see the opportunity for advancement and to make a difference in their work.”

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