Higher prices, staffing shortages, angst. Here’s what to expect as restaurants emerge from the pandemic

For diners stopping in at Marjorie, a restaurant on Seattle’s Capitol Hill, the full tables and busy staff might give the impression that the pandemic is truly, finally over.

They can eat and drink like before times and “walk away thinking, ‘well, they made it … everything is back to normal,'” says owner Donna Moodie.

But for Moodie, everything is most assuredly not back to normal.

Her menu is smaller now, in part because two years of supply chain chaos and price inflation mean some items were too costly to serve — among them, Moodie’s signature bestseller, crabcakes.

She also has just eight employees, half the number she had before the pandemic, thanks to a labor shortage that is still wreaking havoc on restaurants across the region. That’s limiting how much business Moodie and other restaurants can do, and thus how fast they can recover.

Moodie expects things to improve somewhat as the pandemic fades. But after two years of false starts and setbacks, she no longer hopes to get back the life she had before COVID. “The future we’re looking at,” says Moodie, pausing. “It’s a different model.”

On the surface, the Seattle area’s restaurant scene is roaring back to its pre-pandemic self. Consumer spending at restaurants has nearly recovered. Many of the old hot spots are packed again on weekends. Masks, social distancing and other public health measures are in decline — for now, at least.

Yet COVID’s effects are still visible everywhere. Once-exotic labor-saving technologies, such as QR code ordering, have become everyday and routine.

But restaurants are also still grappling with many of COVID’s less positive consequences.

In others words, diners should be prepared for restaurant experiences that may be quite a bit different from what they had before.

Yes, prices will be higher (but not as high as they should be)

For diners like Adam Levy, the Great Reopening has been bittersweet. As delighted as he is about in-person dining, the prices many restaurants now charge mean dinner for Levy, his wife and two teenage sons “could easily get [to] $120, $130 bucks — and that is a big expense,” adds the Seattle resident. “We’re definitely cooking more.”

He may be cooking even more still, given how hard inflation continues to hit restaurants.

At Spice Waala, a popular Indian street food counter, co-owner Uttam Mukherjee watched his wholesale prices nearly triple since 2020. In the past six months alone, eggs are up 229%; spices, 225%. Onions, an eye-watering 415%.

“Restaurants are currently at the mercy of things that are not in our control,” he says.

Yet like many of his peers, Mukherjee has been reluctant to pass those increases to his customers, in part because he’s seen the backlash other restaurants have faced after boosting prices.

In April, he raised prices for the first time since opening in 2019, and then only barely. His popular chicken tikka roll went up 50 cents, to $7.50. His other rolls and snacks increased by a mere 7%.

Mukherjee’s situation isn’t unique. Many restaurants have simply absorbed the narrower profits rather than risk losing customers, or jettisoned menu items that became too costly to sell profitably.

When wholesale wing prices quadrupled to $4 a pound, Trey Lamont, owner of Jerk Shack in Seattle’s Belltown, knew he had to drop his popular jerk-fried chicken wings or take a loss on every order. “The regulars hated that,” Lamont says, but such decisions were necessary “so that we could stay afloat.”

Those tactics are only short-term. With restaurant profit margins being squeezed — from 12% in 2019 to 10% in 2021 nationally, according to a report by TouchBistro, a restaurant automation company — and inflation unabated, many restaurateurs will have little choice but to start pricing realistically and hope customers understand.

“No one is ripping you off — there is a ton of thought that goes into pricing of food,” says Syd Suntha, who this spring started a Sri Lankan food cart, Kottu.

“If you think I charge too much, know that I don’t have health insurance,” he adds.

Labor pains

As diners crowd back into restaurants and bars, another big pandemic hangover has become glaringly obvious: Many places are still woefully understaffed, despite offering higher wages, benefits and even hefty signing bonuses.

In the Seattle area alone, restaurants were still down around 12,000 jobs, or 10%, in March 2022 versus two years earlier, according to state data. By contrast, the region’s job market as a whole has almost completely recovered.

That has forced restaurants to make major changes, some of which may outlast COVID.

Many of the temporary workarounds restaurants adopted to replace missing workers are becoming permanent. At Chengdu Taste in the Chinatown International District, for instance, most patrons now scan their orders and even pay for their meal without a server.

“The most [time] consuming labor part is the ordering process,” says co-owner Sean Xie. “You have to have one server standing by the table to get the order. And the second thing is the paying process, where you have to get the card and swipe the card.”

Xie estimates that 90% of his food orders now come directly via QR codes, and about 20% of customers pay by scanning their credit cards. The system is now doing the work equivalent of at least one server and freed up his understaffed crew to answer phones and clean tables.

The labor shortage has also brought other, less attractive changes. Early in the pandemic, many customers sympathized with overworked staff. But some workers say that early solidarity has soured.

Many customers are less patient and more easily irritated by longer waits. “Now, they’re just fed up,” says Samantha, who worked until recently at a restaurant north of Seattle and asked that her last name not be used to avoid upsetting a former employer.

And while some industry data suggests tipping increased during the pandemic, a number of workers said that honeymoon is also over. Tips have “normalized” back to 18%-20%, says Jason, an Eastside bar manager. That “isn’t bad,” but it’s not as high as when restaurants were just reopening and “people were just … super grateful.”

That points to the industry’s deeper labor problem: Many restaurant workers laid off early in the pandemic simply don’t want to come back.

When veteran chef Lucas Steinmacher was laid off from a Seattle cooking job in 2020, he noticed that his chronic back pain began to fade. He also resumed the outdoor activities he used to enjoy.

After some “soul searching to find out what I actually wanted to do,” Steinmacher realized that no longer meant restaurants; he’s training for a career in software development. Steinmacher’s escape is hardly unique. When he talks with former colleagues, “a lot of people have transitioned out,” he says.

“The pandemic made people self-reflect more,” admits Eric Banh, who hasn’t found an experienced sous chef for his Capitol Hill noodle house Ba Bar despite offering $70,000 in salary and tips, health insurance and a retirement plan. “They want to spend more time with family. They don’t have to work weekends. They want to finish by 5.”

Playing for time

Chronic understaffing isn’t just making customers wait. It also means restaurants may be turning away customers and forgoing revenue at a time when many are struggling to cover financial losses and repay debts racked up during the pandemic.

In Washington state, the average restaurant location incurred more than $160,000 in back rent, bridge loans and other COVID-related debt during the pandemic, according to the Washington Hospitality Association.

Federal and state governments have tried to help struggling restaurants, but those efforts fell far short.

For example, more than 3,200 Washington restaurants got grants under the federal Restaurant Revitalization Fund — the grants averaged $284,000, though some, like Sea-Town Restaurants, the company behind chef Tom Douglas’ restaurants, got $10 million. But another 4,000 Washington restaurants that applied didn’t get any funds from the now-depleted RRF program.

Washington Sens. Patty Murray and Maria Cantwell are pushing to replenish the RRF, but the prospects are unclear. For now, the uneven distribution of relief has added to financial challenges for those who missed out and created what some see as a two-tiered industry.

Restaurants that got the federal funding can “pay their employees a lot higher salaries,” says Jerk Shack’s Lamont, who just lost a prep cook to a restaurant that got the funding. “I can’t compete with that.”

The pandemic isn’t only limiting how fully restaurants can operate, but also where.

Before COVID, downtown Seattle’s restaurant scene, though not as big or vibrant as Ballard’s or Capitol Hill’s, was gaining ground. But after two years of empty offices and hotel vacancies, some restaurateurs say downtown’s attractiveness is on hold, even as many restaurants in neighborhoods, especially those with lots of still-remote office workers, are booming.

“Queen Anne, Ballard, Capitol Hill — all those places are all busy,” says Seattle-area restaurant owner Ethan Stowell, whose neighborhood locations bustle even as his downtown locations are either still closed or are running behind pre-COVID volumes. “Downtown Seattle is pretty dead.”

Those challenges point to a sobering irony: many restaurateurs who survived the pandemic now may opt to pull the plug rather than go deeper into debt. “We’re already starting to see some closures,” says Anthony Anton, president and CEO of WHA, which has recorded more than 3,300 closures statewide since January 2020.

Waiting for the ‘new normal’

Just how all this plays out over the next year or so is hard to forecast. Many veteran restaurateurs expect that much of the old restaurant business model and culture will eventually return — but they also think many of the COVID impacts will stick around, and maybe permanently.

For example, diners should expect more waits but also more labor-saving adaptations, such as QR ordering, counter service and even tasting menus, as restaurants adapt to the labor shortage.

Takeout and delivery will likely remain a bigger part of the restaurant experience than they were before COVID. Even though many restaurants regard these services as a hassle that can compromise food quality, they can still help restaurants deal with short labor.

As important, because customers now expect the convenience and safety that take-out and delivery can offer, recovery-focused restaurants may have little choice but to keep offering them.

Even post-pandemic, those services could still bring in as much as 10% of a restaurant’s total sales, says Stowell. “Ten percent is what I do in beer sales,” says Stowell. “And no one would cancel beer sales” just because they’re complicated.

Paradoxically, for all the innovation, many post-pandemic restaurants are likely to be even more cautious.

Desperate though they are to regain their old levels of business, many restaurants are nonetheless only slowly ramping up their capacity and only as they see proof of demand and can confidently hire staff.

Likewise, while labor-saving technologies and tactics may be helpful, they may also bring new challenges. Restaurants that rely more on delivery, for example, could face new uncertainty as delivery drivers demand better wages and working conditions. And restaurant owners will be watching closely for any sign that customers are getting turned off by the strategies and gadgetry.

Some already are. Though he understands why restaurants went to QR code menus and ordering early in the pandemic, Levy can’t wait for that innovation to go away.

“I didn’t like it then, but I especially don’t like it now,” says Levy, who sees the act of ordering food as a small but essential chance to break from our self-absorbed, digitized work lives and reconnect with people, with the physical world, with food.

Ordering off a screen, says Levy, “I just think it’s so impersonal.”