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Surveys: Industry’s rate of layoffs, pay cuts may slow

Surveys: Industry’s rate of layoffs, pay cuts may slow

Recession-induced restaurant closures, job cuts and salary reductions may be slowing, according to a recent survey.

Seventy-one percent of the 111 restaurant companies that participated in an online study by Dallas-based People Report said they were closing units or reducing the number of new openings but noted that most of the downsizing already occurred.

“We interpret the results of this survey to indicate that a lot of the worst misery could be behind us,” said People Report senior analyst Victor Fernandez. “While there are not a lot of operating executives willing to promise any employee that they are not going to lose their jobs in 2009, there is still a note of cautious optimism in these results.”

People Report tracks human resources practices for 120 member companies. Its recent survey also found that 69 percent of companies participating in the survey reported reducing staff levels either by cutting back on the number of managers or hourly employees per restaurant, or reducing employees’ hours.

People Report also found that 43 percent of respondents planned to adjust compensation either by freezing salaries for unit-level employees or eliminating bonuses.

Cuts were more dramatic at the corporate level, with 54 percent of companies laying off staff and 46 percent introducing a hiring freeze for all corporate positions.

Plans to cut or freeze salaries and positions also recently were reported by the Chain Restaurant Compensation Association, a group of more than 100 restaurant companies.

In a survey conducted by the Hay Group, 50 percent of participants said they expected to offer smaller salaries than initially planned, and 25 percent were going to consider or implement salary freezes. The average pay increase this year is expected to be between 1 percent and 2 percent—if pay is raised at all, said Tom McMullen, vice president and head of the Hay Group’s U.S. Reward Practice in Chicago.

Eighteen CRCA members participated in the global study of 2,589 companies in 91 countries. Thirty-six percent of CRCA participants said they were considering layoffs, compared with 19 percent of U.S. participants across all industry sectors.

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