Studies show restaurants cutting jobs, salaries

Even as the recession continues to force restaurant operators to close units, cut jobs and reduce salaries, there are signs that the shedding is slowing, according to a survey released Thursday.

Seventy-one percent of the 111 restaurant companies that participated in an online study by Dallas-based People Report said they were closing units or reducing the number of new openings, but they noted that most of the downsizing has already occurred.

“We interpret the results of this survey to indicate that a lot of the worst misery could be behind us,” said People Report senior analyst Victor Fernandez. “While there are not a lot of operating executives willing to promise any employee that they are not going to lose their jobs in 2009, there is still a note of cautious optimism in these results.”

People Report tracks human resources practices for 120 member companies. Its recent survey also found that 69 percent of companies participating in the online survey reported reducing their staff levels either by cutting back on the number of managers or hourly employees per restaurant, or reducing employees’ work hours.

 

People Report also found that 43 percent of the participating restaurant chains planned to adjust compensation either by freezing salaries for unit-level employees or eliminating bonuses.

Cuts were more dramatic at the corporate level, with 54 percent of companies laying off staff and 46 percent introducing a hiring freeze for all corporate positions.

Plans to cut and/or freeze salaries and positions were also reported by the Chain Restaurant Compensation Association, an organization of more than 100 restaurant companies that strives to improve compensation practices by pooling data.

The study, conducted by the Hay Group and released Thursday, found that 50 percent of survey participants expected to offer smaller salaries than initially planned and 25 percent were going to freeze salaries or consider freezing salaries.

The average pay increase this year is expected to be only between 1 percent and 2 percent — if at all, said Tom McMullen, vice president and head of the Hay Group’s U.S. Reward Practice in Chicago.

Eighteen CRCA members participated in the global study of 2,589 companies in 91 countries. In the study, 36 percent of the CRCA participants indicated they were considering layoffs, compared to 19 percent of U.S. participants across all industry sectors.

“The economic downturn is a major challenge for the restaurant industry as decreased spending and tightened credit markets are forcing restaurants to fight a lot harder to get customers in the door,” McMullen said.

Contact Dina Berta at [email protected] [3].