The tight credit market and high labor and food costs are putting a severe squeeze on middle-level management positions in the restaurant industry, both in corporate headquarters and in the field, according to recruiters and operators.
After a month of searching, Pepe landed a job as a managing partner of a Granite City Food & Brewery  in South Bend, Ind., and he considered himself one of the fortunate ones, even though he took a pay cut and his family remains in Cleveland because they have not been able to sell their house. Pepe rents an apartment in South Bend and makes the three-and-a-half-hour drive home on his days off.
In these tight economic times, some restaurant companies have been eliminating middle managers and cutting back on the number of multiunit or area directors and managers while trying to do more with less, experts indicate. While such moves can save labor costs, they also have changed the dynamics of supply and demand in foodservice management.
Restaurants used to hunt for high-quality managers, but now some of those same candidates say they face stiff competition for jobs and lower salary offers.
There were nearly 100 layoff actions in the hospitality industry in September, up from 37 in the same month last year, according the U.S. Bureau of Labor Statistics. The bureau reported 7,552 claims for unemployment insurance last month by personnel from the accommodations and foodservice industries, up from 2,681 a year ago.
Restaurant recruiters have observed an uptick in the number of middle-level managers looking for work. At the same time, operators are putting holds on hiring or focusing more on promoting from within.
“We are, in fact, seeing an influx of first-and second-line multiunit leaders: district managers, area directors,” said David Rose, vice president of Yellow Dog Recruiting. “Many companies are tightening their talent acquisitions functions, choosing only to seek talent internally.”
Rob Gage turned to consulting when his job as vice president of training at Pacific Coast Restaurants Inc.  in Portland, Ore., was eliminated last year after Seattle-based Restaurants Unlimited  bought out the company. He had been with Pacific Coast, a multiconcept chain that operates such brands as Stanford’s and Newport Bay, for 19 years.
Then, with the consulting businesses drying up as companies cut back on expenditures, Gage began looking for full-time management positions both in and out of the foodservice industry. He’s been interviewing not only with other restaurant operations, but also with telecom and other kinds of businesses. He’s responded to 70 or 80 postings since July and recently competed with nearly 20 people for one restaurant executive position.
“My thought is the search is going slower than I expected, although I’ve been told to plan for four to six months of searching,” Gage said. “Every organization in every industry has training, so I’m trying not to limit myself.”
Kurtis Montgomery, a former regional vice president for Thomas & King, the Lexington, Ky.-based franchisee of about 90 Applebee’s  Neighborhood Bar & Grill outlets, also was still looking for a job recently after resigning in July to be able to spend more time with his 9-year-old son.
Montgomery spent 19 and a half years with Thomas & King. He took over its Arizona region in 1993, helping grow its average weekly sales from $28,000 to $62,000.
“If the economy wasn’t where it is today, I’m sure I would have been able to find a job within a week with my qualifications and what people are telling me,” Montgomery said. “But a lot of companies are downsizing. They are getting rid of district, area positions.”
Nowadays, he said, “area directors go from managing four to seven to 10 restaurants.”
The problem for multiunit and corporate-level employees is they don’t bring in money the way restaurant-level employees do, said Granite City’s Pepe.
“Who do you get rid of first? The top line,” he said. “You put more pressure on everyone else to take on more stores and get more production out of them. Let go of two [field managers], and give two more stores to everyone else, and try to make it through this economy.”
When he began searching, Pepe mostly was offered general-manager positions, but he was reluctant to take a step down in title, mostly for financial reasons. The Granite City offer, however, involved a managing-partner position, and even though he is running just one restaurant, he sees potential with the casual-dining brewpub chain, which continues to expand.
Some operators are reluctant to hire from outside when it comes to multiunit and area director positions.
Granite City Food & Brewery, which has been growing at an annual rate of 30 percent to 40 percent, is up to 25 stores and plans to open three to five more in 2009, said Liz Severance, director of human resources for the St. Louis Park, Minn.-based chain.
“We have six area directors,” Severance said. “We’ve never hired [for that position] externally. You need 12 to 18 months to acclimate to our culture before we can make you an area director.”
Operators such as Granite City and others, however, are taking advantage of the growing supply of qualified midlevel job seekers, said Rose of Yellow Dog Recruiting, which helped Pepe find his new job.
“The smarter companies recognize the leverage has shifted,” Rose said. “The great news is that there are tremendously talented candidates exploring new opportunities. Dynamic companies are seizing this time to focus on identifying and establishing relationships with candidates they see as best-fit.”
Cracker Barrel  Old Country Store, the 580-unit family-dining chain based in Lebanon, Tenn., has had good success with its policy of hiring a percentage of its district managers and regional vice presidents from the outside, said Rob Harig, senior vice president of human resources. Outsiders can bring a fresh perspective, and internal candidates understand the culture.
“We have a good balance of promoting from within and out when we can find depth from outside candidates,” Harig said. “We’re not going to change because of these outside [economic] issues or circumstances.”