When Goose Sorensen put out online job posting, he got a measly three responses. During the holidays he lost a bar manager and a floor manager at Solera, where he’s executive chef and owner. He still hasn’t found replacements. Regarding the labor pool, he’s “never seen it this bad.”
Sorensen isn’t alone. Restaurateurs in the Mile High City, and surrounding areas, are facing a talent crisis as a strong economy, growing competition and even the rise of the legal marijuana trade put pressure on the industry.
It’s a “perfect storm,” Sorensen, who has owned his Spanish restaurant and wine bar for 15 years, says. “Everybody’s moving here and everybody and their mother is opening restaurants.”
“Our workforce is being drained by the pot industry”
He’s not far off. The burgeoning city is going through some serious growing pains, bursting at the seams and unable to keep up with supply and demand. According to Carolyn Livingston, communications director for the Colorado Restaurant Association, the state led the nation in pace of restaurant job gains in 2015. “Eating and drinking establishments generated approximately $12 billion in annual sales in Colorado,” Livingston adds, explaining that’s a nearly 40-percent uptick since 2010.
That strong growth in restaurants could explain why finding good chefs, managers, servers and other talent is such a struggle. But some suggest there’s another factor at play: the fast growing cannabis industry.
“Our workforce is being drained by the pot industry,” Bryan Dayton – who co-owns three popular restaurants and a fourth on the way between Denver and Boulder – recently told Bloomberg. Similar accounts emerged from local culinary celebrities, including Jennifer Jasinski and Bobby Stuckey, who said that at his Pizzeria Locale chain, an employee departs every few weeks for opportunities in the pot or construction industries.
Part of the issue is how compensation in the cannabis industry compares to restaurant salaries. At Veritas Fine Cannabis, for instance, cultivators earn $20 an hour starting salary, and restaurants can’t afford to mirror that. “Money talks,” Dayton says. “And in restaurants, we can’t afford to compete.”
But even Dayton says legal weed isn’t the only issue. A voter-mandated minimum-wage hike impacted the service industry starting at the beginning of 2017. By adding a $1 raise to each of his front-of-the-house employees’ checks, “We had $54,000 at each restaurant that came out of the bottom line,” he says.
Chef Tony Hessel at Via Perla in Boulder says his team recently implemented a 2- percent service fee included in menu prices to distribute so those who do not receive tips on staff can receive a higher rate of pay. “If we charge a little more for food without tips, we’re able to cover our line chefs and give them a rate of pay that allows them to live in the area of Boulder.”
“Money talks,” Dayton says. “And in restaurants, we can’t afford to compete.”
Without all the calculus, the marijuana industry has been able to pay its employees – from budtenders to harvesters and weed processors – well. Still, many downplay the effect the cannabis industry has on the talent pool for restaurants in Denver and across the state.
“Yes, the cannabis industry is a competitor for restaurant workers to a degree,” says Livingston. However, she notes the marijuana industry employs roughly 18,000 people, paling in comparison to the foodservice sector, which employs 275,000 statewide.
“While the pot industry is contributing to the tight labor market, it is more the impressive growth of the industry that is fueling the huge demand for workers,” Livingston says.
Indeed, Juan Padro, owner of four metro area restaurants, including Bar Dough and Highland Tap & Burger, says he has had a couple employees dabble in the newly legal business, but remain on staff or quickly bounce back after trying their hand. “We haven’t lost anyone,” Padro says.
Tommy Lee, of Uncle and Hop Alley fame, says the same, but adds he has come across employees who specifically moved to the Mile High City because of legalization.
“I think it’s probably exacerbated by Colorado having the lowest unemployment rate in the country”
“It’s something you have to deal with, no different than alcohol use,” Lee says, admitting that marijuana use has been prevalent in the service industry long before legalization, but whether his staff shows up to work high or drunk is no different – “They are held to consequences.”
Lee offers that he can see the appeal for folks who are new to Colorado, finding less demanding, higher paying jobs in the marijuana business, as opposed to the service industry. But along with many of his fellow industry members, he says staffing in general is difficult in Denver for the time being.
“I think it’s probably exacerbated by Colorado having the lowest unemployment rate in the country,” says Joe Hodas, chief marketing officer at Dixie Elixirs. “That creates a tight job market regardless.”
He adds that Dixie hasn’t seen the mass exodus from restaurants into their operation, as has been suggested.
“I don’t think, if I went back into our production area, any of our people were looking at long-term careers in restaurants and then jumped ship over to cannabis,” Hodas says. He does admit there are a number of parallels between skill sets, training and experience.
“I think the bubble’s going to burst here in Denver”
Some restaurants are attempting to address the issue by creating learning paths and career development locally. Big Red F, an area restaurant group, launched training programs to funnel more people into the industry, including a partnership with Emily Griffith Technical College to offer a free four-week course to anyone interested in learning how to become an entry-level line or prep cook. The Colorado Restaurant Association also promotes workforce development, with its Colorado Restaurant Foundation.
Many suggest the shortage is a sign of growing pains, both in terms of the state’s population rise and in the increased competition among restaurants. “The industry is going to start shaking itself out more before it gets better,” he anticipates.
Sorenson similarly predicts a major market correction to come.
“I think the bubble’s going to burst here in Denver,” Sorenson says. “I hear it from the wine reps who are going downtown to collect money and I see it in restaurants that are half empty on a Thursday night.”
Padro, who was a headhunter for 15-years before entering the restaurant world, says he invests in his people and doesn’t think of it as a numbers game. “I’ve watched people bounce from investment bank to investment bank on Wall Street for an extra $20,000 a year, and a year and a half later, they’re looking for something new. In Denver, I see a lot of people investing in other restaurants, or their brands or PR. Our entire marketing and ad budget goes into training.”
He says his key to success and retaining his team is finding the right people to fill roles, looking for intellectual curiosity, emotional intelligence and empathy.
“If you don’t fit into our company, no matter how good you are – I’m not hiring you.”