El Pollo Loco ended 2008 with systemwide same-store sales up 0.2 percent, leading the 417-unit grilled chicken chain to believe it had dodged the recession’s bullet. But softer sales in early 2009 proved otherwise.
Like other foodservice companies, early in the year El Pollo Loco was forced to lay off about 20 percent of the chain’s support-center employees and cut back staffing hours at the unit level.
Now, for the Costa Mesa, Calif.-based chain and others, the worst of the job cuts appear to be over, but most say they believe that slowed unit growth and continuing soft sales mean it will be awhile before they reach previous hiring levels.
El Pollo Loco is expecting only moderate unit growth in 2010, which means hiring will continue to be slow, says Steve Carley, El Pollo Loco’s chief executive.
On the plus side, he notes, the quick-service chain has seen steep reductions in turnover, both at the managerial and hourly levels, and, as a result, hiring and training costs are way down.
When El Pollo Loco and other operators are ready to add jobs again, there will be plenty of applicants from which to choose.
Because unemployment nationally was 9.7 percent in August—and economists are projecting it will hit 11 percent before the end of the year—the restaurant industry has at its disposal a surplus of available and mostly well-educated and experienced workers, according to the People Report, a Dallas-based research firm with its finger on the pulse of the labor outlook for the industry.
After a year of cutbacks, layoffs and hiring freezes, there is evidence that the restaurant industry is beginning to hire again, according to People Report’s most recent quarterly Workforce Index, a measure of operators’ personnel expectations.
After reporting job losses of about 22,000 during the first three months of the year, the industry added 21,000 jobs during the second quarter.
For the third quarter, the “employment expectation” rating, or the expectation of an increase in the current head count of both management and hourly workers, was up for the second consecutive quarter to 58.3, the highest it has been in 12 months and an indicator that payrolls will be increasing in the weeks and months ahead.
Joni Doolin, People Report founder and chief executive, estimates the restaurant industry labor market will be relatively full for the next eight to 18 months, but then, she says, “Things are going to start to move, and they’ll move very fast.”
According to U.S. Bureau of Labor Statistics, employment in the foodservice industry will grow by 16 percent—roughly 2 million jobs—over the next 10 years, while job growth for the United States overall is estimated at 9 percent for the same period.
At the same time, however, the labor pool is changing in a way that is likely to put more pressure on recruitment.
The number of teenage workers, those ages 16 to 24—which accounts for about half of restaurant industry workers, particularly in the quick-service segment—is expected to decline by 7 percent over the next decade.
In addition, the number of Gen Xers, or workers in their mid-30s to mid-40s who make up about 69 percent of the industry’s manager pool, has also flattened since the early 1990s, according to People Report.
And tougher immigration policies in 2008 resulted in a 4-percent decline in the number of foreign-born workers that in recent years have filled many entry-level jobs.
This all means the labor glut will come to an end, Doolin predicts. Operators will soon find themselves competing for the best and brightest—and competing not only with others in the industry, but also with employers in the health care, education and retail sectors, who tend to look to the same demographics for hiring.
Despite the changing makeup of available workers, however, the restaurant industry has done little to change its thinking about hiring, contends Doolin.
The typical new hire for a manager position is still a 34-year-old white male, she notes.
“There may be nontraditional labor available, but no one is taking risks and talking to these people,” Doolin says.
A recent look at the incumbent workforce by People Report found that currently about 47 percent of the industry’s hourly workforce is ethnically diverse, but only 34 percent of managers are.
Among hourly workers, 70 percent of front-of-the-house workers are white, while only 13 percent are Hispanic. Meanwhile, 59 percent of back-of-the-house staffers are Hispanic, while only 24 percent are white.
And the number of African-Americans is low in both work areas, with blacks making up 9 percent of front-of-the-house workers and 13 percent in the back of the house.
Women are also underrepresented in the kitchen. In the front-of-the-house, 64 percent of workers are female, while only 18 percent of back-of-the-house staffers are women.
The gap becomes even more apparent at the corporate executive level, where 75 percent of executives are men and only 25 percent are women.
Savvy companies should be taking a closer look at potential employees who may not fit the mold, Doolin says.
“If we’re not changing our own pipeline at a time when there are applicants to be had, then we’re missing an opportunity,” she says.— [email protected]