Restaurant operators are slowing their hiring, at least based on recent jobs numbers, suggesting the industry is putting some breaks on unit expansion amid an unprecedented shortage of workers.
Food services and drinking places added 11,900 jobs in August, according to newly released federal data. That is considerably slower than the average number of jobs restaurants added per month over the past seven years.
The industry has added an average of 16,840 jobs per month this year, down from the average of nearly 27,000 monthly jobs the previous six years.
The slower pace is even starker when you concentrate on more recent months. Since May, restaurants have added an average of just 7,600 monthly jobs.
That said, the slower pace of hiring fits with the slower pace of hiring overall. The economy added 130,000 jobs in the month, according to Labor Department data, which was lower than expected.
Restaurants in fact added jobs at a slightly higher rate for the month. They’ve also added jobs at a higher-than-average rate for the past year: 2% for restaurants versus 1.4% for the economy as a whole.
Still, a slower pace of foodservice hiring is likely welcome news, at least to some extent, for an industry that has struggled with a lack of available employees. Restaurants have increased employment by 20% since January 2013.
That has fueled a huge shortage of labor. Restaurants have had to increase pay rates to attract good workers. And sometimes that doesn’t help—locations across the country have had to close at times because of a lack of available employees.
It’s possible that the slower pace of growth is an outgrowth of the inability to find workers. Restaurants won’t expand if they can’t even staff existing units, after all. And the economy has been at full employment for some time.
At the same time, the industry overall has clearly slowed its pace of growth while getting more aggressive on culling locations.
Casual-dining restaurants in the Technomic Top 500 Chain Restaurant Report have closed more locations than they’ve opened in each of the past two years, for instance, and seem likely to do so again this year.
Chains such as Restaurants Unlimited, Perkins & Marie Callender’s and Kona Grill have filed for bankruptcy protection this year. Such filings have all come with unit closures.
Even chains that haven’t filed have closed locations: Boston Market, Steak ‘n Shake and Ruby Tuesday, among others.
All that said, economic growth doesn’t continue forever. And restaurants weren’t going to continue hiring at the pace they were forever, either.
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