This post is part of the On the Margin blog.
The restaurant industry added 9,200 jobs in August, according to federal data released on Friday.
It was the lowest monthly job growth for the expanding industry since February 2014 — three and a half years ago.
But it's likely a one-time blip. Restaurants hired 53,000 people in July, the highest number in over three years. Average the two numbers out, and you’re far closer to the 27,200-per-month since the end of the recession.
It’s a good time to look at industry job growth, which has been extraordinary in recent years.
The industry had been in expansion mode until January 2008, when the number of employees declined by 11,000. That coincided with the start of the recession.
Restaurants filed for bankruptcy, culled staff and closed locations as sales plunged. By the time job losses ended, in March 2010, the industry had lost 378,000 jobs, or about 4 percent of its total workforce.
But restaurants began hiring again in March 2010, and have been adding workers ever since. Restaurants have added 2.5 million workers since that month. Put another way, the industry grew its workforce by 26.5 percent over the past seven-plus years.
Restaurants have been growing for a variety of reasons. Investors have poured money into the industry, fueling the growth of fast-casual chains and large, destination concepts that have replaced retailers as shopping mall anchors.
Executives, pressured by their investor bases, have focused heavily on unit growth.
Perpetually low interest rates have made financing advantageous, which means executives and investors can generate returns on their new units — even when said new units hurt traffic at existing locations.
Traffic is weak, and has been weak for at least four years. According to MillerPulse, restaurant same-store traffic has averaged a decline of 0.9 percent since the last time job growth was lower than it was in August. Rising supply is probably the biggest factor in that weakness.
That’s in addition to the impact all of this hiring has had on wages and overall labor costs.
Still, the industry continues to expand, even if it has taken a one-month break. And the job growth is far better than the alternative.
Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company.
Contact Jonathan Maze at [email protected]
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