State of Hospitality Staffing Report
with guarded optimism
2022 was a year of booming consumer demand and economic recovery for many hospitality businesses—while some made small financial strides, others bounced back toward pre-pandemic levels and even flourished.
To evaluate the current state of the hospitality industry and get a pulse from its industry leaders, in November 2022 Instawork surveyed 180+ hospitality businesses ranging from caterers to hotels to food service operators. Chefs and culinary staff, general managers and owners, presidents and COOs, and HR and staffing decision-makers shared how their businesses performed over the last year, what challenges they anticipate in the year ahead, and more.
Going into 2023, leaders in the industry are looking forward with a mixture of optimism and uncertainty. While staffing has become less of a challenge as more workers return to the sector, hospitality businesses still see major challenges ahead. Fortunately, a growing number have been able to lean on new solutions in the ever-evolving labor market.
Looking ahead to another year of growth
If 2021 shocked businesses by exceeding expectations, 2022 only got better. Across the board, hospitality businesses saw more growth last year as pent-up consumer demand led to a rise in profits. While businesses still faced public health concerns and market volatility, they weathered the storm and came out on top.
Many respondents say they were better able to focus on their core business than the year prior, when many businesses developed alternative revenue streams to make up for shortfalls in demand.
What's more, demand in the hospitality industry is projected to surpass 2019 levels while revenue continues to climb, leading many businesses to expect even more financial growth in the upcoming year.
Almost two-thirds of respondents say they expect revenue to rise by 10% or more in 2023. This is a major leap from last year’s expectations when only 37% of surveyed respondents said they expected any revenue growth at all in 2022.
they expect revenue to
rise by 10% or more.
Cost increases and staffing are among top challenges for 2023
Going into 2023, businesses’ biggest concerns include cost increases, staffing, and uncertain industry demand. Even though the majority of respondents expect more revenue in the coming year, rising supplier costs—a concern that has almost doubled since 2022—are particularly top of mind as the burdens of inflation and supply chain disruptions worsen.
Financial consequences of staffing difficulties
While businesses expressed less apprehension about staffing difficulties in 2023—32% as opposed to 45% in 2022—the challenge of securing reliable staff remains a prominent concern. According to respondents, reliability outranks quality as the most difficult trait to find among workers.
Even businesses that rely on permanent employees are struggling to find committed, reliable workers due to the large number of people who have left the sector altogether. This has further contributed to understaffing, lost revenue, and a greater need for outside help.
Almost half of respondents lost 25% or more of their labor force to churn in 2022. This churn had financial consequences that impacted many businesses, resulting in revenue losses of 5% or more for almost half of respondents.
More than a quarter of respondents say they had to forgo at least 10% of potential revenue because of a lack of staff. Among those, more than half offered pay increases of $3/hour or more to attract and retain staff.
Staffing challenges impact the bottom line
Even as the labor market softens, hospitality job vacancies are still close to record highs and staffing challenges continue to impact businesses’ margins. Many respondents say recruiting will be as difficult in 2023 as it was in 2022, but they’re turning to a delicate balance of tactics to attract and retain talent, including pay increases, flexible schedules, and benefits.
Limitations of pay increases
Among respondents who cite staffing as their top challenge in 2023, the majority say they will do more to raise pay. However, the number of businesses giving pay increases to attract and retain workers dropped over the past year, from 64% to 52%.
This may be because many businesses already increased pay significantly in 2022—73% of respondents who say they plan to raise pay in 2023 already did so by $2/hour or more last year.
Flexibility when pay increases don’t cut it
Over half of businesses plan on to raise hourly pay this year, but raises haven't always been enough to attract and retain staff.
As workers show increasing demand for flexibility, businesses are offering it as a new benefit to ease hiring challenges. In fact, 38% of hospitality businesses say they will do more in 2023 to offer flexible schedules than they did in 2022.
Why flexibility is better for businesses — not just employees
At a time when reliability is king but businesses are finding it difficult to find and keep permanent workers, flexible workers are filling the gap. Not only are they better educated and more diverse than the overall pool of hourly workers, flexible workers unlock new efficiencies for businesses that can successfully integrate them into their operations.
This increase in flexible work shows no signs of slowing down. The share of respondents saying they planned to use temporary or flexible workers in 2023 was 73%, compared to 66% in 2022.
These responses shouldn’t be surprising. Recent expansion in the supply of flexible labor and increasing business expertise makes incorporating flexible workers into the hospitality workforce easier than ever. It can reduce downtime and ease the burden of recruitment, too. According to our survey results, it takes recruiters three weeks, on average, to fill hospitality roles. Compare this to the 12 hours or less it takes to fill flexible work shifts booked up to seven days in advance on the Instawork platform.
Businesses that rely on Instawork know that meeting the increasing demand for flexibility doesn’t just address their recruitment and retention challenges—it allows them to fine-tune their labor supply the same way they’d fine-tune their supply of goods and services.
Using flexibility to navigate uncertainty
While increased costs have made it harder for businesses to maintain their bottom lines, flexible workers are providing the just-in-time labor supply needed to navigate an uncertain market and ensure long-term success. In 2023, more workers will make themselves available for flexible work as they face their own budgetary challenges, find new career paths, and seek to expand their options in the labor market.
With inflation easing, labor becoming more accessible on new platforms, and leaders committed to attracting and retaining reliable workers, the outlook for 2023 offers many reasons for hospitality businesses to feel optimistic.
Want to view the full survey results? Check out the data below.