Restaurant employment picture shapes up

People Report Workforce Index says 42% of respondents expect to add workers

Employment expectations from restaurant operators are up in the third quarter this year, to nearly the same level they hit before the recession led to hiring freezes and layoffs, according to the latest People Report Workforce Index.

Forty-two percent of surveyed operators said they expected to add hourly workers in the third quarter while just 5 percent plan to cut staff. Nearly half of the respondents plan to hire more managers and none planed to reduce their management workforce.

“There may be a glimpse of optimism here for the industry,” said Michael Harms, senior business analyst for People Report, a Dallas-based firm that tracks human resource trends among more than 100 restaurant companies.

The quarterly index measures five employment components: actual job growth, expectation for job growth, recruiting difficulty, the increase or decrease in vacancies, and turnover. The numbers corresponding to each component are in a range of value from a low of 0 to a high of 100. Ratings lower than 50 indicate less difficulty in managing workforce issues; scores higher than 50 mean greater difficulty.

Operators reported higher employment levels, greater recruiting difficulty, more vacancies and higher expectations for job growth. Turnover remained relative the same from the second quarter.

The overall index showed a rating of 61.8 in the third quarter, the highest it’s been this year. Employment levels, or headcount, were also up to 70.5, matching the rating of the third quarter of 2007.

Restaurants hired 64,000 jobs in the first half of 2010. Fifty-one percent reported hiring more hourly workers in the previous three months and just 5 percent said they laid off employees. Nearly 40 percent added more management staff while just 11 percent reduced their management ranks.

Six months ago, only a quarter of surveyed companies said they hired more hourly workers and managers.

“The trend over the past seven quarters is definitely up from where it bottomed out in 2009,” Harms said. “Even though traffic and sales are still underwater, we’re getting back to where we’re trading in positive territory. It’s not great but it’s better than what we’ve seen in the past 12 to 18 months.”

The People Report Workforce Index report noted that many economists are predicting economic activity to slow in the second half of this year as consumers continue to spend conservatively and the unemployment rate remains greater than 9 percent. Headed into the third quarter, the majority of operators surveyed in the index expected to do more hiring, particularly in quick service and fast casual.

About 50 restaurant companies participated in the survey and they were fairly evenly divided among four segments — quick service, fast casual or limited service, casual and fine dining/upscale casual.

Operators in the casual dining segment, which had been particularly hard hit by the recession, have reported higher employment expectations for two consecutive quarters. The segment’s third quarter job growth expectation rated 66.5, matching levels not seen since 2006 and 2007.

Turnover has remained fairly flat as the nation’s unemployment remains high, but as the economy improves, employee churn could again become a problem for operators, said Joni Thomas Doolin, chief executive and founder of People Report.

“What has really been holding (the index) down has been turnover,” she said. “If turnover does increase significantly, they are gong to have their hands full.”

For more information, go to www.peoplereport.com.

Dina Berta is a contributor to NRN. Contact editor Sarah Lockyer at [email protected]