Restaurant worker turnover and recruiting difficulties remain high in the first quarter of 2016, and the long-insulated casual-dining and fine-dining segments are beginning to see the strains, according to the People Report Workforce Index, which measures expected market pressures on restaurant employment.

Photo: People Report Workforce Index

The first-quarter overall index rose to 76.4, from 71.4 in the fourth quarter, marking the seventh consecutive three-month period in which the reading was higher than 70. Turnover expectations continued to increase, and recruiting difficulty remained high, posting a 84.4 score.

The Workforce Index is produced by Dallas-based People Report, a division of TDn2K, and is based on surveys of human resources departments and recruiters in the restaurant industry. The index has a baseline value of 50, with results over that level indicating increased pressures on five components: employment levels, recruiting difficulty, vacancies, employment expectations and turnover. Results are based on expectations for the quarter underway.

“In general, the labor market is responsive to economic activity,” said Michael Harms, executive director of operations at TDn2K. “Even though there is a lot of uncertainty surrounding the general economy, that pressure isn’t abating in the labor market.”

The Workforce Index survey found that 65 percent of restaurant companies added staff at the hourly level in the fourth quarter, an increase from 43 percent in the third quarter. In recruiting difficulty, 70 percent of respondents reported increased pressure at the hourly level, and 76 percent noted an increase at the management level.

“You are seeing a lot more ‘Help Wanted’ signs,” Harms said. “And it’s been a while since you’ve seen so many out there, but they are becoming more and more common.”

Vacancies continued to be high in the first-quarter report, Harms said. “Quick service in particular had a value over 90 for vacancies,” he noted. “When we see values over 90, it’s very rare, and obviously a huge pressure.”

Recruiting difficulty also remains at lofty levels, he said. “Every company seems to be having trouble recruiting, both at the hourly and the management level,” Harms said. “Those tend to be more acute at the quick-service and fast-casual levels, where the workforce tends to be a little more transient.”

Compared to two years ago, companies are reporting turnover rates of about 20 percentage points higher at the hourly level and seven percentage points higher at the management level, Harms said. “It doesn’t seem to be going away anytime soon,” he added. “It can be expected to continue until there is a marked change in the economy.”

The unemployment rate slipped to 4.9 percent in January, with the economy adding 151,000 non-farm jobs in the first month of the year, according to a U.S. Bureau of Labor Statistics report on Feb. 5. The jobless rate has fallen steadily from 10 percent in 2009.

The People Report’s overall Workforce Index rankings by industry category for the first-quarter report were mixed when compared with the fourth quarter:

• Quick service fell to 73.2, from 76.6.
• Limited service/fast casual/family dining rose to 71.9, from 70.5.
• Casual dining increased to 79.4, from 66.3.
• Fine dining/high volume rose to 79.8, from 70.7.

“We’re now seeing table-service restaurants — the casual-dining chains, the fine dining — starting to see some of these staffing pressures as well,” Harms said. “They may have been insulated a little bit, and it may have been a little slow to affect them. Some of those jobs are a little more permanent for the worker. But it has trickled into that part of the industry as well, and they are having trouble staffing, seeing increased vacancies and turnover issues.”

Harms said the People Report survey companies don’t see the pressures going away anytime soon, “barring some sort of economic calamity.”

Contact Ron Ruggless at
Follow him on Twitter: @RonRuggless