Introduction Hospitality industries found in college towns across the United States live under constant threat of cost of labor, subnormal profits, stiff competition, escalating prices of food, and economic meltdown. Not so many people have labored themselves to study the problems that hospitality businesses that are found in college towns especially restaurant go through despite the fact that massive resources have been spent in studies pertaining to hospitality businesses. This study’s objectives were to answer questions touching on the extent to which shortage of labor affected restaurants found in college towns. If employee turnover was an issue to such enterprises, to what extent did it impact such businesses? Finally, the study sought to establish other challenges that proprietors of small restaurant in college towns endured or succumbed to. Because of not so elaborate literature in this area of study researchers and stakeholders have been forced to contend with very harsh realities associated with coming up with amicable solutions to such scenarios. The main objective of the study was to ventilate the possible problems that proprietors of restaurants in college towns face while trying to address the aforementioned challenges. Literature Review The major problem that hospitality industry faced was the difficulty associated with retention of employees coupled with high rate of employee turnover. They had difficulty attracting, retaining and motivating their employees (Baron, 2008). Reasons that were attributed to high rate of employee turnover included the odd working hours, instability because of its seasonal nature, low remuneration, and the law status of jobs that hospitality businesses offer (Wildes, 2009). Findings from contemporary hospitality studies emphasized the nobility of environmental studies. This depicted restaurants as barring employee retention (Dermody, 2002). Studies also suggested that the working conditions and the employ fulfillment are very critical to employees so much so that payment was a distant third. A stable workforce translates into employee satisfaction, their motivation. This lifts their self-esteem. It was therefore imperative that proprietors of such business enterprises come up with employee training programme, nurture employee empowerment and their autonomy. Such employees become consistent in their service delivery. Leadership skills, it was reported, could be positively used to tame high rate of employee turnover. This put leadership at the helm of effective management of any business enterprise (Erkutlu and Chafra, 2006). Owners of restaurants failed to move to tame the high rate of employee turnover because of fear of incurring losses related to high wages and salaries (Enz, 2004). This showed lack of leadership skills in such proprietors. Restaurants owners had a perception that their casual staff would not work for them in a protracted period. This was coupled with their monetary worries. Basically, the inability of restaurant owners to treat their employees well is evident in the way the employees left such organizations (Taylor et al 2001). This impacted negatively on the quality of services offered and their market share. An organization will try to put up