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Casual dining shows signs of a turnaround

Casual dining shows signs of a turnaround

HOUSTON Joe’s Crab Shack plans to open several new stores in the coming months, breaking ranks with many other operators in the beleaguered casual-dining segment.

“We are very optimistic,” said Kevin Cottingim, senior vice president of human resources for the 113-unit, Houston-based chain. “We had a pretty good year compared to the industry.”

With operators such as Joe’s Crab Shack gearing up for more stores and raising their employment expectations, casual dining is beginning to show signs of a turnaround, according to third-quarter data from the People Report Workforce Index.

The Workforce Index measures operators’ personnel expectations in five areas: employment levels, recruiting difficulty, job vacancies, turnover and employment expectations, or expected increase or decrease in head count for hourly and salaried workers. A reading of 50 or more indicates strong growth or pressure to fill vacancies, recruit and increase staff. A reading below 50 means a decrease in growth.

After trending downward for 10 quarters, the overall index reading for casual dining has risen in the past two quarters, reaching 51.1 in the third quarter. And after experiencing declining payrolls in each of the past three quarters, the casual-dining category posted an employment level reading of 59.1, the highest reading among all segments in that area in the third quarter.

People Report, a Dallas-based firm that tracks human resources metrics for more than 100 member companies, surveyed 70 companies for the Workforce Index. Information was also grouped into four segments: fine dining and upscale casual, fast casual/family dining, and casual dining.

Casual-dining trends were the big news for the quarter, said Michael Harms, a senior analyst at People Report.

“Casual dining was struggling long before anyone else, and maybe they will lead us out [of the recession],” Harms said.

Among casual-dining operators, 38 percent reported adding hourly workers, up from 14 percent in second quarter, and only 15 percent reported holding staffing levels steady. For management positions, 31 percent of casual-dining operators reported adding jobs, and 42 percent said they were maintaining current levels.

Nineteen percent of casual-dining chains plan to add hourly workers in the third quarter while only 12 percent were planning staff reduction. Also, 24 percent of companies planned to add management hires and just 4 percent were preparing for layoffs.

Joe’s Crab Shack is currently recruiting managers for new stores, including store opening managers for Joe’s and its new sister concept, Brick House Tavern. Two taverns opened last year in Chicago and Houston, and a third debuted last month in St. Louis. Both concepts are owned by privately held JCS Holdings LLC. JCS Holdings purchased 120 Joe’s Crab Shacks from Landry’s Restaurants Inc in 2006. After closing underperforming stores, the chain is preparing to expand the seafood concept, Cottingim said.

The current economy is proving to be a good time for expansion with better real estate deals available and a deep labor pool to draw from, he said.

“We’re inundated with applications,” Cottingim said. “There are a lot of candidates out there, both employed and unemployed. Historically you would want someone who already has a job. But with all the closings that are happening, we’re not limiting ourselves to that. We’re looking as carefully at unemployed as well as employed candidates.”

Contact Dina Berta at [email protected].

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