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Financing

Restaurants rehired nearly 1.4M workers last month

Federal stimulus dollars and unexpected sales gains helped the industry bring back laid off workers.
Photograph by Jonathan Maze

The restaurant industry brought back 1.37 million workers in May, according to newly released federal employment data, as consumers began eating out again and operators rehired workers furloughed in March and April to comply with federal stimulus loan requirements.

Yet the industry remains far below employment levels from before the coronavirus pandemic, suggesting that it could be years before the number of workers lost over that six-week period are fully regained.

The restaurant industry employed 7.6 million workers in May, up 22% from April’s decades-long low of 6.3 million. It is still 37% below February levels, or about 4.4 million employees.

The return of hiring in the restaurant industry, in particular, helped the overall economy add 2.5 million jobs in May.

The unemployment rate remains historically high at 13.3%, but the overall numbers suggest that federal relief efforts, in particular Paycheck Protection Program loans specifically designed to get companies hiring again, have been doing their jobs.

The restaurant industry was a significant recipient of PPP funds, which can be forgiven if employers spend a certain percentage of those funds on payroll costs. In May, businesses could get their loans forgiven if 75% of the funding was spent on labor, though recent changes in the program allow companies to use up to 40% on rent and other operating costs.

More restaurants, and particularly large chain restaurants, have seen a resurgence in sales in recent weeks as operators readjusted models to focus more on takeout and consumers looked for opportunities to get out of the house.

Many states also reopened their dining rooms last month, prompting more restaurants to bring back workers to get back operating again.

Despite the unemployment rate, consumers have also been flush with cash, thanks to federal stimulus dollars sent to households along with extra payments to people out of work.

With sales picking up, operators have been trying to lure workers. Many now say they struggle to find employees willing to give up extra unemployment insurance cash.

That said, many independent restaurants remain closed even as states begin to reopen their dining rooms. Estimates have suggested that 10% of the industry’s restaurants, particularly independents and casual dining concepts, could be permanently closed because of the pandemic shutdown.

The Independent Restaurant Coalition, a group of local operators and chefs, noted that the industry remains well below pre-shutdown levels and continued to push Congress for more targeted assistance.

“Restaurant workers continue to make up the largest share of America’s jobless yet,” the coalition said in a statement. “Congress needs to pass a relief package specifically designed to protect our industry. Some independent restaurants are able to reopen, but the odds of staying open have grown nearly insurmountable.”

In a statement on Friday, National Restaurant Association CEO Tom Bené called the jobs numbers “encouraging.”

“While there is still a very long road to recovery for the restaurant industry, today’s jobs report is encouraging for the nearly 8 million industry employees laid off during the shutdown,” he said. “As the economy begins to recover, restaurants are reopening and employees are being rehired. The 1.4 million restaurant jobs added in May is nearly three times more job gains than the next closest industry.”

UPDATE: This story has been updated to include a statement from the Independent Restaurant Coalition and the National Restaurant Association.

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