Quick-service restaurants continued to experience increased challenges in staffing in the third quarter as other segments reported staffing pressures leveling off, the latest People Report Workforce Index found.
“We’ve really seen pressure on the kind of the end of the scale with the lower check averages, such as quick service and fast casual,” said Michael Harms, executive director of operations at Dallas-based People Report, told NRN on Monday.
“They seem to be really struggling to staff,” Harms added. "Granted, they do have higher turnover rates. They often hire those who are younger and more transient in their career paths.”
The People Report Workforce Index measures expected market pressure on restaurant employment, and is based on surveys of restaurant industry human resources departments and recruiters.
The Workforce Index, which started in 2006, and is now a division of analytics company TDn2K, has a baseline value of 50, with results above that level indicating increased pressure on five components: employment levels, recruiting difficulty, vacancies, employment expectations and turnover. Results are based on expectations for the quarter underway.
The third-quarter overall index fell to 71.3, down from 75.9 in the second quarter. The result marked the ninth consecutive three-month period in which the reading was higher than 70, a level that represents significant recruiting and retention challenges.
The U.S. unemployment rate stayed at 4.9 percent in the second quarter, the report noted, which was down from 5.4 percent in the same period last year. Foodservice added 41,600 jobs in the second quarter, the lowest three-month total in four years.
“We continued to see a continuation of some of the themes we’ve seen in previous quarters,” Harms said of the third-quarter Workforce Index. “The recruiting difficulty remains a very big challenge, as well as the vacancies. Companies are struggling to fill the positions they already had open. What’s compounding that is continued job growth.
“The economy has been a little shaky so far this year,” he added, “but you see some cautious optimism in the expectations component, where restaurants continue to think they will be hiring people, but maybe at a bit more conservative rate.”
Retention remains a challenge in the third quarter, especially at the hourly level, the Workforce Index report noted. About 51 percent of companies reported rising turnover rates at the hourly level in the most recent quarter and only 25 percent reported decreases. Among management workers, 40 percent of companies said they were seeing higher turnover rates.
For the current third quarter, companies said employment expectations were for solid job growth. At the hourly level, 55 percent of companies expected to add staff in this quarter, down from 66 percent in the second quarter, and only 5 percent planned to reduce staff. At the management level in the third quarter, 49 percent of companies expect to add staff, down from 61 percent in the second quarter, and 5 percent plan reductions.
The People Report’s overall Workforce Index rankings by industry category for the third-quarter report were mixed when compared with the second quarter:
• Quick service rose to 81.6, from 79;
• Limited service/fast casual/family dining fell to 68.8, from 75.6;
• Casual dining dipped to 70.4, from 71.4; and
• Fine dining/high volume fell to 60, from 80.1.
The declines in the three segments outside of quick service came after a string of quarterly increases.
“If the numbers get compounded quarter after quarter and month after month,” Harms explained, “there comes a point where it just tapers. You can only inflate the tires so much. We might be seeing a little bit of that as well.”