For most diners in Pittsburgh, it feels breezy to eat out again. But on the other side of the curtain, things are more fraught.
Labor issues brought on by the pandemic remain a top concern to restaurateurs, one that dovetails into the stressors of inflation and the economic challenges of delivery apps. All of these, not so breezy.
Sweeping changes in the hospitality industry’s labor force — from the number of staffers employed, what employees are paid and how they are treated on the job — are in progress. Supply chains are stabilizing but still scattered. Inflation is affecting everything from the price of beef to the lids you put on your coffee cup.
“We’re still working, changing, adapting to keep moving forward to what’s next,” says Tolga Sevdik, director of operations and co-owner of the Richard DeShantz Restaurant Group. “We have three major concerns right now. Labor concerns are still number one. Then there’s product availability. Then there’s the increase in prices.”
Sevdik oversees an eight-restaurant portfolio that ranges from Poulet Bleu, a refined French restaurant, to Coop De Ville, a fun-filled barcade with fried chicken sandwiches and a sparkling-wine machine. Two DeShantz restaurants, Butcher & the Rye and Fish Nor Fowl, have been closed since March 2020 but are likely to reopen before the end of the year.
Its newest restaurant is Sally Ann’s, a fast-casual Downtown joint that opened in June with an all-day menu. Orders for sandwiches, salads and cocktails can be placed table-side on a smartphone via a menu accessed by a QR code.
“We’re all trying to make the equation work. But we’re not sure the same equation we used to know still exists,” says Joey Hilty, co-owner of an upscale restaurant, The Vandal, and managing partner of a fast-casual concept, Field Day, both in Lawrenceville.
What’s clear now is that Pittsburgh is in an altered era of dining. It’s too early, however, to know precisely how it will play out.
“Everybody is still a little shell-shocked from COVID, but it’s starting to even out,” says Cat Cannon.
She and her business partner, Cecil Usher, run St. Clair Social, a restaurant and bar in Friendship, and Mindful Hospitality, a cocktail consulting business.
“Where are we right now? We’d all love to know. That’s a million-dollar question,” Cannon says.
A livable wage
Labor remains the most significant issue facing Pittsburgh restaurant operators.
“It’s clear at this point that most of the people who left the industry during COVID aren’t coming back to it,” says Sevdik. “At least for us [at DeShantz], the people who were working on the lower end of the pay scale, the hosts and hostesses, the busers, servers’ assistants, line cooks, a lot of them left the industry for good.”
But that doesn’t mean that the hospitality industry’s issues are the same as they were during the height of the pandemic. Although some establishments remain short-staffed, many jobs are being filled.
“The overall numbers are just about back to where they were in early 2020,” says Chris Briem, regional economist at the University of Pittsburgh Center for Social and Urban Research.
“But that doesn’t mean the same type of numbers are back,” he says. “It seems like there’s a shift between full-service restaurants and limited-service restaurants, and that may be more of a much longer shift in terms of consumer preferences.”
Limited-service and fast-casual restaurants are trending right now, particularly as the cost of labor is rising overall.
“From what I’ve gathered from watching Pittsburgh and elsewhere, we’ve seen a big shift that we saw coming for a while, with more casual concepts,” The Vandal’s Hilty says. “People want to offer things that are more accessible. The trends were going that way before COVID, but that definitely reinforced it.”
It’s not just that consumers are tilting toward casual meals. With labor costs rising, particularly for back-of-house workers such as line cooks and dishwashers, owners are looking to change their employment structure. Operators are trying to retain employees who are invested in their jobs as well as new hires who might want to build a career in the hospitality industry.
“We’re trying to meet a new expectation for what people should be paid,” says Hilty. “Many of us are earnestly trying to get to the goal of paying a livable wage. So how do we get there, and what do we need to change to make that happen?”
Along with many other restaurant operators, Hilty has moved to a tip pool. A change in Pennsylvania law that went into effect in August allows tips to be split with more restaurant employees, so long as everyone is paid a $7.25 per hour minimum wage (as opposed to the $2.83 per hour tipped-employee minimum) and are considered hourly workers rather than managers or owners.
“It’s a much more predictable way to retain staff,” says Marlene van Nelson, founder and principal attorney of Trellis Legal, a Lawrenceville law firm that works with restaurant owners.
At The Vandal, Hilty has nine full-time and two part-time employees.
“At a place our size, those new regulations have made it easier to pay everybody a good wage,” he says. “We couldn’t pay our kitchen staff what we need to if we did it another way.”
He says that the only other way is to raise prices even higher than they are now, and that won’t fly with diners. So at both the fast-casual Field Day and higher-end The Vandal, tips are factored into the math of employees’ final salaries.
“Like it or not, we’re in a social construct where tipping is still used to make up for the full price of an item,” Hilty says.
Labor pains
Challenges remain for restaurant employees, even with the new regulations.
“Wage theft is an ongoing issue,” says Bobbi Ann Linskens, an organizer for the Pittsburgh branch of Restaurant Opportunities Center United. “You have employers who know they are not allowed to participate in tip pools but are trying to find ways around it by saying managers aren’t really managers.”
And, Linskens says, many restaurant owners don’t have the same altruistic outlook that Hilty has about what to pay workers.
“Wages haven’t increased to keep up with the fact that prices all around are increasing,” Linskens says. “[At a minimum] the wage should be enough so that people can pay their bills and take a vacation once a year. And then we can go up from there.”
Full-service restaurants require more significant investment in labor and more staff in general. And that’s a challenge with so many new or newer hospitality industry employees.
“It’s completely from the ground up. You’re starting from the basics in a lot of places, especially new ones. So you have to put a pretty big focus on getting back to technique and consistency,” says Usher, co-owner of St. Clair Social and Mindful Hospitality.
“Training takes time and means slowing down. And that’s the last thing people want to do after not being at full capacity for two years and still dealing with fluctuating food costs,” he adds.
Dining out, differently
Restaurant owners report that diners are once again filling their eateries, particularly on weekends. But higher menu prices mean that spontaneous weekday dinners aren’t happening as often as they did during the peak of Pittsburgh’s pre-pandemic dining boom.
“People are going out more intentionally now, as opposed to just shelling out some extra cash for a meal they’re not totally excited about,” says Cannon, Usher’s partner. “They can save that money and cook at home, and, unless there is an event or something special happening, they’re not driving as far to go to places, too.”
People aren’t just staying home and cooking; it’s almost certain that the rise of delivery apps is here to stay, permanently eating up a portion of consumers’ dining-out budget.
“During the pandemic, restaurants had to pivot to a delivery or pickup model, which changed how customers engaged with them,” van Nelson says.
“Things are just more expensive. We need to help guests understand why that’s the case without trying to sound self-congratulatory about what we’re doing,” says Hilty. “The ship has sailed on the era of restaurants getting a pass because times are tough.”
Most restaurants are low-margin businesses — the point-of-sales software company Toast estimates the average profit falls between 3% and 5% — and the fluctuating price of ingredients and uncertainty of customer demand is affecting how chefs design their menus.
Sevdik says DeShantz’s culinary teams might hold back an item from being listed on the menu because customers will perceive the price point necessary to break even is too high.
“Some people understand. They’re going grocery shopping, so they see the price increase themselves and know that if it’s up for them, it’s up for us, too. But other customers get upset because they paid $12 for a burger before COVID, and we have to charge $18 now,” he says.
Hilty reports that he has a little more flexibility at The Vandal, which has tilted toward a finer dining sphere following a redesign earlier this year. Menus can be more concise at establishments thought of as chef-driven, and (in a time-honored tradition for restaurants) ingredients can be redirected without seeming repetitive. For example, trimming from a ribeye steak can make the small plate menu as elegant beef tartare.
“We also source as much as we can from local farmers and growers, which helps keep our cost of items pretty consistent. It’s not as subject to market fluctuations as big suppliers are,” Hilty says.
Even so, he acknowledges, “We are now a more expensive restaurant than we ever were. But that’s what it costs right now to do this. All we can do is keep actively working to make it a better experience for our guests.”
There might be some good news on the horizon. Sevdik says menus at DeShantz restaurants might soon expand as prices on items such as fryer oil have stabilized and chicken wings are less expensive. But, he cautions, restaurants are nowhere close to solid ground yet.
“It’s the little things you wouldn’t necessarily think about. You can’t find to-go containers or lids. And there’s still a big shortage in clear cups. Our customers would be disappointed if we served cold brew in a Styrofoam cup, so we end up having to buy these more expensive clear cups and that changes the margin on the drink,” he says.
Going forward
There’s enthusiasm for dining in Pittsburgh despite the challenges. There are more component-based menus; you’ll see the same vegetable side dish accompany multiple main courses, for example. Hours are still limited both in terms of how many days a week a restaurant is open and how many hours it operates.
“We’re seeing more and more walk-in customers, which is a good sign that things are starting to return back to something more normal,” Sevdik says.
For the time being, it looks like Pittsburgh is going casual and leaning into technology to do it.
“Everyday eating has gotten better here over the past few years,” Hilty says, adding that some former restaurant workers now run pop-ups and specialty food businesses.
Some sell handmade ravioli and pierogies that they started as a means to earn income when restaurants were takeout only. And former fine dining chefs are now focusing their talents on making everyday food more enjoyable.
Sevdik says that using smartphone technology and cross-training employees to work in various parts of the restaurant (which is easier with pooled tipping) allows him to operate his establishments with smaller and more nimble staffs. And apps like the one he uses, Yelli, help speed up onboarding new hires.
“We used to take weeks to get people ready, but now we need people out there almost as soon as they are hired,” he says.
That’s helpful because, with the attrition in the hospitality industry, it’s going to take some time to get things up to where they were prior to the pandemic.
“A lot of the skills come with time and experience dealing with people,” Cannon says. “When you have people on the floor with you, you can speed it up with that mentorship. And we don’t have the same brain trust support system.”
In time, things will likely find an equilibrium. How long that will take and what that means are still to be determined. However, van Nelson says the signs are there. Despite the higher cost of doing business and lingering uncertainty, she sees an uptick in people interested in starting food businesses.
“There’s a drive for innovation,” she says. “Pittsburgh restaurant owners are resilient because Pittsburgh is resilient. That’s what brought the city back from the collapse of industry in the 1980s. We’re now going to see that happen in the hospitality industry.”
Hal B. Klein: hklein@post-gazette.com, Twitter @halbklein and IG @halbklein.
First Published: October 1, 2022, 10:00 a.m.
Updated: October 3, 2022, 2:05 a.m.
