Fewer restaurant workers translates to lower profits for seafood processors

the inside of a restaurant, with patrons sitting at tables
The waterfront restaurant Six Seven in Seattle, Washington, serves a variety of dishes involving Alaska seafood. (Jeffrey Zeldman/CC BY-NC-ND 2.0)

Six Seven, an upscale restaurant located in Seattle’s historic Edgewater Hotel, serves Northwest cuisine with a focus on fresh seafood. The eatery sources some of that product from Alaska’s fisheries, which provide more than half of the country’s wild-caught seafood according to the Alaska Seafood Marketing Institute.

The restaurant is open seven days a week but the hotel’s general manager, Ian McClendon, said that he has noticed that other fine dining spots are operating for fewer hours.

“I would say several high-end restaurants that used to be open seven days a week down here at the waterfront are not open full time,” he said.

As restaurants reopened to in-person dining after pandemic closures, they struggled with staffing shortages. According to the National Restaurant Association, at the start of this year, 80% of restaurant operators reported they had a hard time filling open positions.

McClendon said Six Seven has kept staff due to their union contracts. But the Bureau of Labor Statistics reports that leisure and hospitality job openings are near 20-year highs.

And one seafood processing exec said all those openings are hurting their bottom line. Mark Palmer is the CEO of OBI Seafoods, which operates 10 processing plants throughout Alaska. 

In a November meeting hosted by the United Fishermen of Alaska, Palmer said that restaurants are operating with a smaller wait staff, selling fewer dishes for higher prices.

“Some of them have identified a new business model that doesn’t move more pounds of product. They move less, and it’s just as profitable,” he said.

That new model means they’re buying fewer fish from processors like OBI. 

Last year, a presentation from DataEssential for the Alaska Seafood Marketing Institute showed that Alaska seafood had a much higher median price point in fine dining institutions than the overall seafood average — $33.00 per dish compared to $19.95.

Palmer said that many processors have traditionally depended on their sales to fine dining restaurants like Six Seven to turn a profit.

“We rely on fine dining. We rely on white tablecloths. And that’s where we really can drive margin and that’s where a lot of premiums are paid,” Palmer said.

University of Alaska Anchorage emeritus professor of economics Gunnar Knapp has studied fisheries for decades. He said restaurants have adapted to having fewer workers by catering to this smaller clientele.

He said grocery and fish markets are also changing what and how much they buy to adjust to having fewer workers.

“Similarly, on the retail side, they’re trying to do less that involves labor, and this can affect the mix of products they want to buy and have to stock and so on,” Knapp said.

These changes, Knapp said, come as many processors are contending with a shifting international market, including a shrinking amount of frozen salmon sold to Asia. Knapp said processors are paying to hold large quantities of some products.

“The longer that they have to hold those fish, the higher their storage costs, but also the higher their interest costs from borrowing,” he said.

Knapp said that in the future, retailers are likely to return to buying larger quantities of available fish like sockeye salmon.

“Eventually, some stores will say, ‘Hey, we can sell more,’ and ‘All those other stores are keeping their prices high. We’ll buy a sockeye salmon, and offer consumers this cheaper price that the other stores aren’t passing along,’” he said. “Then the other stores have to price match, and then prices get into adjustment.”

Restaurant job openings have started to come down from last year’s peak. But a return to more normal labor levels may not be the whole picture. 

At the Edgewater Hotel, McClendon said that even with a full restaurant, staff are buying less from Alaska because of continuing supply line constraints and occasional lack of availability for catches like crab. He said that the restaurant, which is part of a larger hotel network, tries to buy in bulk from vendors. Now Six Seven has to source from more groups.

“Pre-pandemic, we had a pretty strict routine. Coming out of [the] pandemic, we’ve never had this many seafood vendors,” he said. “So we’re having to find more people. It’s harder for us to find products than it used to be before the pandemic.”

Some processors have called for legislative change to help address challenges the industry is facing, including liquidity issues. That change could include involving the U.S. Department of Agriculture or providing low-interest financing solutions. For now, processors and their clients will have to continue to grapple with the challenges of labor shortages and a fluctuating market.

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