Restaurant employment pressure nears pre-recession levels in 3Q

The People Report Workforce Index, which measures expected market pressures on restaurant employment, rose nearly four points in the third quarter and neared pre-recession levels.

The third-quarter index registered 69.9, up from 66 in the second quarter, and indicated restaurant operators will continue to face recruitment and retention challenges for the next three months. The index also reached its highest point since the fourth quarter of 2006, when it registered 70.6 and then began falling as the recession took hold.

The Workforce Index is produced by Dallas-based People Report and is based on surveys of human resources departments and recruiters in the restaurant industry. It measures from a baseline value of 50, with any 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.

“The recruiting difficulty continues to go up,” said Michael Harms, executive director of operations for the People Report and sister company Black Box Intelligence. “That’s just a clear trend line. It’s getting harder and harder to find qualified employees.”

The biggest issue, Harms said, is at the management level, where 46 percent of companies reported increased difficulty in hiring and five percent reported a decrease in difficulty. “That’s almost half of companies saying that it’s getting noticeably harder to find those management employees,” he noted.

Expectations for third-quarter employment remain strong, the index survey found, with the majority of companies looking to add staff at both the hourly and management levels for the second consecutive quarter.

“In diving into the macro-economic data,” Harms said, “it was interesting to see just how much job growth we have been seeing in the industry. Over the first half of the year was some of the best growth we’ve seen in quite some time.”

The U.S. economy added 589,000 jobs during the second quarter compared to 324,000 in the same quarter last year.

Job growth in foodservice has been robust, the Workforce Index noted. The industry added 151,400 jobs in the second quarter, more than triple the 48,300 created in the same period of 2012.

In four of the first six months of this year, foodservice industry job growth has eclipsed 40,000. The Workforce Index report noted that, by comparison, the industry posted single-month job gains of 40,000 or more just four times in the period from 2007 and 2012.

While the index survey found more workers being hired, Harms said the index does not distinguish whether those were full- or part-time positions.

He added that the increased growth could be because of increased sales or new-unit openings or “the reshuffling of deck chairs” between full- and part-time positions as companies deal with expected provisions of the Patient Protection and Affordable Care Act.

By segment, casual dining and fine dining are expected to have increased hiring pressures in the third-quarter than in the second, the index survey found. Workforce Index rankings by industry category for the third quarter include:

• Quick service dipped to 66.8 from 70.8 in the second quarter.
• Fast casual/family dining decreased to 66.8 from 70.1.
• Casual dining rose to 75.6 from to 62.9.
• Fine dining/high volume increased to 66.2 from 64.7.

Harms said his advice for foodservice hiring professionals is, “You have to keep that eye on turnover and just retaining your key employees. There is more opportunity out there for them,” he said. “Holding on to the good employees you have is just as important as finding new good employees.”

Contact Ron Ruggless at [email protected].
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