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Fewer operators planning layoffs, pay freezes

The labor outlook for the restaurant industry is showing additional signs of recovery, according to a recently released survey by People Report, a company that tracks personnel trends in the industry.

Fewer operators than last year plan to cut staff, reduce employee hours and freeze salaries, according to the 2010 Economic Conditions report.

"You see some companies still making cuts, still closing units, but conditions seem to be improving for the majority," said Michael Harms, senior business analyst for Dallas-based People Report.

Sixty companies responded to the online survey in March. The respondents were distributed among all industry segments, including quick service, fast casual, family dining, casual dining, and upscale casual or fine dining. Operators answered several questions about their expectations this year surrounding unit growth, staffing levels, compensation and operational and financial initiatives for 2010.

A sample of survey results:

Closing units

- Less than a quarter of respondents plan to shutter stores this year, compared with 43 percent who planned to close stores last year.

- Only 15 percent plan to eliminate new store openings while last year 32 percent did not open new stores.

Staffing at the unit level

- Just 12 percent plan to reduce the number of managers per store, while last year 35 percent cut management.

- A mere 8 percent planned to reduce the number of hourly employees per store. Last year 32 percent cut the number of hourly employees.

- A little more than 10 percent plan to reduce employees' hours this year. Last year 37 percent reduced staff hours.

Staffing at the corporate level

- Very few, about 3 percent, plan to cut corporate staff, whereas last year almost 50 percent reduced corporate numbers.

- Only 13 percent expect to have a hiring freeze in 2010. About a quarter froze positions last year.

Compensation at the unit level

- Ten percent plan to freeze base salaries this year. Last year 45 percent put a freeze on pay.

- Just 2 percent of respondents plan to not pay bonuses this year. Very few also plan to substitute employee perks for raises or bonuses, while last year 5 percent found other ways to reward employees besides bonuses and raises.

One area of the study that found less dramatic change between this year and last year was operational and financial initiatives.

For 2010, half of the respondents said they plan to undertake initiatives to reduce food costs. Last year 62 percent established measures to reduce food cost.

Results were similar in creating initiatives to lower labor costs as well. About 42 percent plan to make some changes this year, while last year, 50 percent took steps to lower labor costs.

Food and labor costs gained a lot of attention the recession and operators who found ways to save in those areas are not likely to make any changes, Harms said.

"A lot of prying eyes are on these categories and they are going to continue to watch them like a hawk," he said.

One of those labor costs savings has been low employee turnover, said Joni Thomas Doolin, founder and chief executive of People Report. Employees do not change jobs as quickly and often in a recession.

"In terms of effectively staffing a restaurant, we're not going to see that trend go backward," Doolin said.

People Report is sponsoring a workforce symposium for human resource executives next month. The three-day event will focus on brand positing "in a post recession" marketplace. The People Report Summer Camp will be held at the Embassy Suites in Dallas, June 8-10.

Dina Berta is a contributor to NRN. Contact editor Sarah Lockyer at [email protected].

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