A Third Quarter Review of Job Growth, Employment, and Inflation in the Restaurant Industry
Fall is finally here! Restaurants will soon shift from patio season straight into the holidays (unless you weatherized your patio during the pandemic, in which case it’s a patio holiday season for you!).
While our industry is on a solid path toward normalizing after a couple of chaotic years, we’re still dealing with the effects of a global pandemic, supply chain shortages, and the war in Ukraine.
With employment and job growth below pre-pandemic levels and inflation taking its toll on menu prices and sales, restaurants are still rolling with the punches.
But honestly, what’s new? Running a restaurant has never been for the faint of heart—so let’s review what the third quarter of the fiscal year showed for our industry.
Restaurant Job Growth and Employment
Surprise, surprise—the Bureau of Labor Statistics Employment Situation report noted significant job gains in leisure and hospitality, which has been the case for the last year.
With 83,000 jobs gained in September, Leisure and Hospitality maintained a monthly average seen over the last eight months. While these job gains suggest a strong recovery, we’re still below the pre-pandemic numbers by 6.7%.
Unemployment has returned to the pre-pandemic level, reaching 3.5% in the third quarter, but hiring in hospitality is still a struggle.
According to an article by the Nation’s Restaurant News, Black Box Workforce Intelligence data showed that full-service restaurants are still running with four fewer FOH employees and one less BOH employee compared to 2019.
The same report showed that 73% of employers claimed to be somewhat understaffed, 23% were very understaffed, and only 5% were fully staffed. So while we’re still seeing off-site dining and contactless technology prevail, they’re not necessarily helping restaurants with the continued staffing issues.
With continuous job gains in a competitive hiring market, employers must focus on their hiring process and budgets. Our newest solution, Poached Shifts, is an affordable and flexible hiring tool for employers to book workers when short-staffed and meet candidates for their open roles.
Inflation, Sales & Menu Prices
With inflation reaching 9.1%, gas prices soaring, and the US Federal Reserve raising interest rates at the end of Q2, the beginning of the third quarter was rocky.
Luckily, against the economic outlook at the start of the quarter, there was a slight decrease in gas prices and a very slight dip in inflation, raising consumer confidence.
This helped restaurant sales carry on an upward trend, registering $86.8 billion in August and $87.3 billion in September. That marks a consecutive two-month increase in nominal sales.
While the numbers suggest all was well, consumer traffic was actually on a downward trend during both the second and third quarters. When adjusting for menu price inflation, average monthly sales declined over the last three months, coming in $1 billion short of the second quarter.
With inflation impacting all parts of a restaurant business, it makes sense to raise menu prices. Just don’t let a bump in numbers fool you, as actual sales could be lower. Keeping food costs manageable and recognizing consumer confidence is still shaky will be imperative moving into the fourth quarter through the end of the year.
In wrapping up the third quarter insights—the last three months weren’t as bad as they could have been, but things are still uncertain.
With job growth continuing upward but consumer traffic declining, making smart hires is vital. Who you have on your team directly affects your customer base and revenue. If consumer confidence is lacking, you want to ensure your service is on point to encourage them to keep coming back.
During the fourth quarter, employers should focus on their hiring processes and budgets—but keep room for flexibility. The holidays may bring in more business, but keep an eye on the post-holiday lull typical in our industry.
Our team at Poached is always here to help and can be an excellent resource for all your hiring needs. Whether bringing in some extra hands for the holiday season or hiring full-time positions, we have the tools to help your business succeed through this phase of economic uncertainty and beyond.