Stock waitress

Restaurant job growth expected in 4Q

People Report Workforce Index shows improvement, but continued recruiting difficulties

The latest People Report Workforce Index, a barometer of market pressures on restaurant employment, dipped in its fourth-quarter report and continued to indicate restaurant operators are seeing challenges for recruitment and retention.

Looking at third-quarter staffing levels and expectations for the rest of the year, surveyed operators showed turnover was relatively flat, but that expectations for job vacancies and recruiting difficulty increased.

The overall People Report Workforce Index reading for what restaurants expect in the fourth quarter, based on surveys of restaurant human resources departments and recruiters, stood at 59.8. The Workforce Index measures from a baseline value of 50, with results over that level indicating increased pressures on the five components: employment levels, recruiting difficulty, vacancies, employment expectations and turnover.

That overall reading was an eight-point decrease from the third quarter [3] and a five-point decrease from the overall index reading a year ago, meaning less pressures were felt and are expected to be felt.

“The overall index is pretty much exactly where we were at the beginning of the year,” said Joni Doolin, founder of the Dallas-based People Report. “But the employment expectations are still strong.”

But employment expectations in the fine-dining and high-volume participants in the survey showed exceptional strength, rising to 70.5. Other segment results — quick-service, casual-dining and fast-casual — each showed high employment expectations as well, typically totaling the highest of the five index components.

“Even though we are seeing economic turmoil and some bad news, I think there is optimism despite that,” Michael Harms, senior business analyst with the People Report, said. “And that’s what’s showing up in the expectations component.”

Harms and Doolin said expectations for hiring during the holidays play a part in those expectations. Morton’s The Steakhouse, for example, last week said it was bullish on spending among its business customers, and has already seen a year-over-year increase in holiday party bookings [4].

When it comes to recruiting for those expected jobs, the gaps between top-tier restaurant operators, meaning those with lower turnover, and others, are widening, Harms and Doolin said.

“In 2009, the gap between the top 25 percent of companies and the bottom 75 percent for management turnover was 9 percent,” Harms said. “By 2011, it has widened to 18 percent. At the hourly level, the gap in 2009 was 33 percent. By 2011, it was 53 percent.

“In other words, the gap between those winning the talent war and those losing has widened as the labor market has begun to heat up a bit,” he said.

The differences are especially noticeable at the management level, Harms added.

“Over the past two years, that top quartile of companies has not seen a change in management turnover,” he said. “Meanwhile, the rest of the group has seen a large increase. [Top companies] somehow have managed to bottle lightning for their employees, and they are not leaving.”

But the bottom three-quarters of companies, based on turnover, are seeing management churn.

“The gap between top performers and bottom performers and even the gap between top performers and the middle just continues to get bigger,” said Harms. “You are seeing a real separation in terms of high-performing companies.”

The People Report Best Practices Conference begins Tuesday at the Marriott Quorum in Dallas and continues through Friday. Nation’s Restaurant News is a sponsor.

Contact Ron Ruggless at [email protected] [5].
Follow him on Twitter: @RonRuggless [6]