As the hospitality and F&B sectors continue their recovery from the economic impact of Covid-19, the industry is facing a fresh challenge in the shape of a shortage of talent, according to recruitment experts and industry insiders.
The rising gap in talent supply-demand – across positions and categories – is driving hiring costs in the sector by as much as 20-30 percent, forcing F&B players to consider resorting to hikes in menu prices.
“The demand for talent in F&B at all levels [currently] is the most competitive it has been across the 12 years I’ve been in the industry,” Greg Wright, co-founder and managing partner of Food People, termed as the only end-to-end food sector recruitment firm in the Middle East, told Arabian Business.
“As we approach the busiest time of the year, and with borders opening, the number of vacant jobs in the [F&B] industry across the region has hugely increased,” added Wright, whose firm recruits talent across the entire value chain in food service, restaurants, food retail and food tech, besides a few other select sectors.
However, he conceded it was tough to quantify the talent shortage in the region as the situation is quite dynamic.
Talent crisis could hamper industry recovery
Unfortunately for the F&B sector, the talent shortage comes at a time when the industry is seeing a strong recovery – a one-third jump in diner foot traffic in recent months – led by Expo 2020 Dubai and the resumption of tourist travel.
Aside from the lack of availability of enough local talent, the rising expectations of F&B businesses to have strong skill sets is cited as a major factor for the rising talent mismatch for hiring.
Greg Wright, co-founder and managing partner of Food People.
“[As the industry is on a firm recovery path], stronger skill sets are required to ensure that F&B investments see a quicker return on investment. The pressure is on as some companies look to recuperate losses from 2020,” Wright pointed out.
“There is, however, not enough talent in the local market to meet the requirements of F&B businesses across the region,” he added.
Tech integration adds to talent shortage
Senior executives at other leading talent search firms cited the increasing trend of technology integration happening in the industry – seen as a vital component to the future of the hospitality and F&B industries across the wider GCC region – as the other reason for the rising gap in talent demand and supply.
“With the growing integration of e-hospitality platforms, we are observing an increased demand for leadership talent specific to this sector to drive transformation through bottom line impact by virtue of creating measurable and tangible depth-based outcomes,” Charlie Burke, client director at EMA Partners UAE, a global leadership search and consultancy firm, told Arabian Business.
“The Covid-19 pandemic was clear evidence that improvisation is inevitable. There has been an observed revenue spike across the GCC’s hospitality and food services industry in multipliers of billions of dollars [as a result of the improvisation on the technology front],” Burke said.
Charlie Burke, client director at EMA Partners UAE.
The hospitality sector in the region is expected to grow to $32.5 billion in 2022 from $22.9bn in 2017. Burke said major events such as the Expo 2020 Dubai and various government initiatives are seen as the primary drivers behind this growth.
“This has led to an increased demand for impactful leadership talent across distribution, digitisation and consumer loyalty programs across the region,” Burke added.
Rising hiring costs to impact margins
F&B industry insiders said with a huge number of restaurants opening annually just in Dubai itself, the industry is currently facing a huge obstacle in hiring and finding skilled labour to match the requirements across all levels of management, leading to a rise in the overall wage costs.
“We are seeing a surge in wage cost by 7-8 percent, leading to restaurant hiring expenses reaching about 28-30 percent of the revenues which is way higher than industry norms,” Panchali Mahendra, Dubai-based managing director of global hospitality major Atelier House, told Arabian Business.
“This will surely increase menu pricing for many venues,” Mahendra cautioned.
Many international markets have already seen a huge surge in menu pricing due to widespread food shortages and massive inflation.
Panchali Mahendra, managing director of Atelier House.
The veteran F&B top executive revealed that the business on an average runs on 20-25 percent profit margins, and now employers and owners are losing a big margin due to rising hiring costs.
Mahendra also pointed out that the sector employees have been able to take advantage of this situation across the GCC, as they are poached locally for higher salaries despite a lack of uniquely special experience.
“If the situation is not addressed across the board in the coming months, this will lead to a significant surge in expense cost for the restaurant industry in the UAE,” she cautioned.
Wright, however, said there was also a gap between what some companies believe they should be offering versus what is attracting ‘in demand’ talent.
“Talk of salaries decreasing is a myth and operators must be prepared for pressure from competition. The talent pool is tight and therefore the people that make a real difference, in some circumstances, are receiving multiple opportunities and offers at the same time,” Wright pointed out.
The Food People top executive also has a word of advice to the industry players: “Employees’ mindsets and motivations have changed post-pandemic, if you are not proactive, you will lose great talent.”
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