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Restaurant hiring plans slow in 4Q

People Report: Employers more cautious amid economic uncertainty

Restaurant operators are still planning to add jobs in the fourth quarter, although not at the same pace as they did earlier this year, according to the latest People Report Workforce Index.

Economic uncertainty and shaky consumer confidence are reflected in restaurants' hiring plans, said Michael Harms, senior business analyst for People Report, the Dallas-based firm that tracks human resources metrics for more than 100 restaurant chains.

“Employers are being cautious,” he said. “They are adding staff but cautiously. The index is mirroring what we’re seeing for the economy as a whole. There was a bump in 2010 and then a slowdown in the second half.”

The foodservice industry has added 104,000 jobs in the first nine months of this year, including 44,000 in the third quarter, according to the recently released PRWI. Among the more than 70 restaurant companies that were surveyed for the index, 43 percent plan to add hourly staff in the fourth quarter and only 10 percent planned to reduce staff. At the management level, 35 percent of companies plan to hire more supervisors, while 62 percent plan to hold management staff levels steady through the end of the year.

The quarterly index measures five workforce components: employment level, which is the actual increase or decrease in employee headcount; employment expectation, or the expected increase or decrease in number of jobs; recruiting difficulty; job vacancies; and turnover. A rating of 50 or higher indicates operators expect some difficulty in managing any of the five components. A less than 50 rating indicates they expect less difficulty.

People Report Workforce Index, overall outlook for fourth quarter:

* Turnover calculations for the third quarter were not available.

After registering 70.5, its highest reading in three years, the employment level component dropped to 53.1 for the fourth quarter as fewer companies added to their payrolls, according to the index report.

“There is a lingering concern and it’s reflected in consumer sentiment and sales and hiring trends,” Harms said.

Although total sales for the industry have risen 4 percent since the beginning of the year, consumer sentiment has dropped to levels not seen since the spring of 2009 because of continued high unemployment and economic uncertainty. As a result, most companies continue to report tepid same-store sales growth, a trend expected to continue to the end of 2010, according to the index report.

The rating for employment expectations dropped to 66.3 points in the fourth quarter from 69.8 in the third quarter. While still a decline, the over 50 ranking means operators still expect some pressure to add more jobs before year’s end.

Turnover also is expected to become more of an issue in the fourth quarter, after rating less than 21 points in the third and second quarters and 23 points in the first quarter. A 50-point rating may indicate turnover rates may have bottomed out, Harms said.

“The big drops are over and most movement is upward, slightly,” he said. “Restaurants are hiring and turnover is starting to move up, slowly. Turnover, though, is a lagging (economic) indicator. We are seeing relatively small minor upticks in the number of vacancies and recruiting difficulties in the last six months, which we have not seen in a long time.”

The surveyed companies were divided evenly among four industry segments: quick service; fast casual, limited service and family dining; casual dining; and fine dining/high volume upscale. While most segments planned to add jobs, only fine dining/high volume operators were not planning to make any cuts in the fourth quarter.

In quick service, 47 percent of companies said they planned to add hourly workers and none expected to reduce hourly staff. Up to 53 percent plan to keep staffing levels the same. However, 6 percent of companies said they expected to management staff. Another 29 percent plan to add management staff, and 65 percent will keep the managers they have.

In the fast casual/limited service segment, 6 percent planned to cut hourly jobs, 41 percent plan to add hourly positions and 53 percent expect to keep staff levels steady. Only 35 percent plan to add managers, down from 70 percent in the third quarter. The rest plan to keep management staff levels the same.

Half of casual-dining operators surveyed said they planned to add hourly workers in the fourth quarter, but 17 percent said they expected to reduce staff. At the management level, 39 percent plan to add staff, 56 percent to keep the level the same and 6 percent planned to reduce their number of managers.

In fine dining/high volume, 44 percent of companies surveyed said they planned to increase the number of hourly workers while 39 percent planned no changes. For managers, 41 percent plan to add more staff, while 59 percent plan to keep the management level the same through the end of the year.

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