A recent report by TDn2K, a research organization that specializes in human resources, states that food service operators are having more trouble than ever with both management and part time employment retention. While restaurant sales have accelerated YoY and employment has grown to match, restaurant turnover still seams to be a pain point. Pushing this turnover trend is oversupply of jobs: In October 2018 Unemployment was at a 49-year-low of 3.7%, what most economists agree is nearing full employment. While high employment means a stronger economy, the chief driver strong restaurant sales, the oversupply in the labor market increases mobility of jobs for workers in search of higher wages.
US Unemployment Rate
There are a couple ways to interpret this news: stronger sales are positive for the industry, but are coupled with lower restaurant traffic. The staffing issues that the industry faces fall to the back burner as long as sales continue to grow. However, the combination of these two factors create a highly economy dependent cocktail. Consumers are visiting restaurants less but spending more because they have more free income to spend. However, as soon as the economic outlook shifts, consumers will be visiting stores less and spending less. When coupled with employee retention issues, we expect to see some turmoil from the industry in this case. We believe that as long as the economy chugs along at it’s current rate, we will see food operators enjoy healthy employment and prosperity, but as soon as the economy gets a sniff of bad news or downturn, we look for these macrotrends to take over.