Restaurants grapple with vaccine mandate policies in historically tight labor market

KEY POINTS

• Restaurants are navigating vaccine mandates during one of the most challenging hiring environments in decades.
• Some have opted to encourage workers to be vaccinated, while others have had to mandate the shot due to local policies.
• Between enhanced unemployment benefits, hesitancy surrounding Covid, child-care hurdles and more, the industry is already facing a shortage of available workers and adding a vaccine mandate to the picture could cut both ways.

To mandate, or not to mandate?

That's the question facing down restaurant owners and operators during one of the most challenging hiring environments in decades. The Food and Drug Administration approved Pfizer and BioNTech's Covid-19 vaccine on Monday, opening the door for workplaces to opt to require workers to have the shot. But between enhanced unemployment benefits, hesitancy surrounding Covid, child-care hurdles and more, the industry is already facing a shortage of available workers and adding a vaccine mandate to the picture could cut both ways.

Big players in the industry have mostly remained silent on vaccine mandates for restaurant staff. McDonald's recently pushed back its return-to-office date to Oct. 11 and said it will require its U.S. corporate workforce to be fully vaccinated by Sept. 27, with exemptions for religious or medical reasons permitted.

Chipotle CFO Jack Hartung told CNBC this week after the FDA's approval that the company was looking to get feedback from employees and had not yet made a decision on mandating the shot, but was in "active talks" on the topic. The company has been encouraging employees to get the vaccine, Hartung said, adding he was hopeful the FDA approval might help those on the fence to take the step to get inoculated.

In New York City, restaurant workers need to have at least one dose of Covid vaccination under Mayor Bill de Blasio's Key to NYC Pass program, which began this month and will be enforced on Sept. 13. Philippe Massoud, owner and chef at Ilili and Ilili Box, said that the mandate was not an issue for most of his staff. But he lost two, possibly three, workers who did not want to get vaccinated, and is short about 20 workers overall due to the labor crunch.

"Certainly, it's exacerbating the situation," he said of workers leaving over the mandate. "We hope they'll change their mind down the line. … In addition to all that you're dealing with the surge of the delta variant, which also creates its own complexity. So, we're getting hit a bit from everywhere."

In Austin, Texas, restaurateur Eric Silverstein owns The Peached Tortilla and Fat City, and said some 95% of his workforce is vaccinated. The company has encouraged vaccinations, paying workers $30 to get the shot and setting it up through its human resources department, but he stopped short of requiring workers to be vaccinated.

"We had such a high participation rate in voluntarily getting the vaccine, I did not feel we had to mandate it," he said, adding that all workers are wearing masks at his restaurants indoors.

But for those who choose not to get the vaccine, there are consequences.

"If you do come down with Covid as a breakthrough case, even though you're vaccinated, we pay you for your time off work so you don't have to come in and get other people sick. However, if you are not vaccinated, we don't offer that," he said.

The labor crunch did not factor into his decision regarding the vaccine policy, Silverstein said.

But for some, it is hard to separate the labor issue from thinking about whether to mandate vaccinations for workers.

David Barr owns 44 franchise locations of KFC and Capriotti's Sandwich Shop in Alabama and Georgia. While he has concerns over mandating from a legal standpoint as a small business owner, he's also considering what such a requirement might mean for staffing.

"We've decided to encourage, versus mandate, vaccinations," Barr said. "Both because of the tight labor force today — we don't desire to lose potentially another 20 to 30% of our employees — and just from a policy standpoint of looking to D.C. or the statehouse as to what the policy should be regarding vaccines."