Restaurant workforce demographics are shifting

The teen labor force participation rate declined sharply in recent years, a development that directly impacted the restaurant workforce.  Although restaurants are still the economy’s largest employer of teenagers, the shrinking teen labor pool has led many restaurant operators to look to alternative age cohorts to fill their staffing needs, according to the NRA’s chief economist Bruce Grindy.  His Economist’s Notebook commentary and analysis appears regularly on Restaurant.org and Restaurant TrendMapper.

The Great Recession and its aftermath had a significant impact on the U.S. labor force. The labor force participation rate fell to a 37-year low, with many people who lost jobs deciding not to return to the workforce. Contributing to this decline was the retirement of baby boomers, as well as a growing proportion of teenagers choosing to remain on the sidelines.

As the nation’s second largest private sector employer, the restaurant industry was directly impacted by these shifting labor demographics in recent years. Of significant note for the restaurant industry was the sharp decline in the teenage labor pool.

At its peak in the late 1970s, roughly 58 percent of 16-to-19-year-olds were in the labor force. This participation rate remained above 50 percent until 2001, when it started trending downward. The Great Recession exacerbated this decline, with the teen labor force participation rate plunging from 41.3 percent in 2007 to just 34.0 percent in 2014 – a record low.

The net effect was a decline of 1.4 million teenagers in the labor force between 2007 and 2014, a development that was reflected in the restaurant workforce. In 2007, 16-to-19-year-olds represented 20.9 percent of the restaurant workforce. By 2014, these teens made up only 16.6 percent of restaurant employees. 

To be sure, the restaurant industry is still the economy’s largest employer of teenagers, providing jobs for 1.5 million individuals between the ages of 16 and 19. Put another way, one-third of all working teenagers in the U.S. are employed in a restaurant. However, the shrinking teen labor pool has led many restaurant operators to look to alternative age cohorts to fill their staffing needs.

With teen representation in the restaurant workforce declining, a majority of the new restaurant jobs went to millennials in recent years. The share of restaurant jobs held by 20-to-24-year-olds rose from 21.4 percent in 2007 to 24.2 percent in 2014, while 25-to-34-year-olds also took on a larger role in the restaurant workforce.

Although older adults still make up a relatively small proportion of the restaurant workforce, they were the fastest growing demographic group in recent years. In fact, the number of adults aged 55 or older working in the restaurant industry jumped 38 percent between 2007 and 2014, an increase of 218,000 individuals. This trend is expected to continue in the years ahead, as older adults make up a larger share of the U.S. labor force.

State of the American Consumer: Caution remains, but signs point toward improvement

A majority of American consumers remain uncertain about the economy and cautious in their spending habits, based on the results of a new NRA survey.  On the positive side, the survey suggests that this recession mindset is not a permanent state for consumers, and they will continue to come out of their shell as their personal finances improve, according to the NRA’s chief economist Bruce Grindy. His Economist’s Notebook commentary and analysis appears regularly on Restaurant.org and Restaurant TrendMapper.

Although the official trough of the Great Recession was more than five years ago, many American consumers have yet to climb out of the rut, according to a new survey* commissioned by the National Restaurant Association.  When asked earlier this month to rate the current state of their own personal finances, a majority of adults described them as either fair (36 percent) or poor (18 percent). Less than one in 10 adults say their personal finances are in excellent condition.

Flash back to 2010 when the economy was just beginning to add back some of the nearly 9 million jobs that were lost during the recession, and the responses to the same question were almost identical. Nearly six in 10 adults said their personal finances were in fair (41 percent) or poor (18 percent) condition, while only seven percent described them as excellent. 

 

With the personal economies of many consumers trending sideways, it’s not surprising that this persistent recession mindset is negatively impacting spending. Consumer spending, which generally helps propel the economy out of a recession, has been lackluster during the current recovery. 

In the 21 quarters since the official end of the recession, total personal consumption expenditures rose just 11.8 percent in inflation-adjusted terms, according to the Bureau of Economic Analysis. During the same period following the previous three recessions, consumer spending increased by an average of 21.8 percent. 

Post-recession spending has been even more sluggish for the Services category, which includes many discretionary sectors like restaurants. Real spending on services rose just 8.5 percent during the last 21 quarters, or less than half of the average 19.6 percent gain that followed the previous three downturns. 

Even now, a solid majority of American consumers remain reticent to spend. When asked to describe their personal spending behavior right now, seven in 10 adults say they are holding back on spending in some fashion. 

Twenty-seven percent of adults say they “are very concerned about the economy and are holding back significantly on spending,” while 42 percent say they “are taking the wait and see approach and are holding back somewhat on spending until the economy improves.” Only three in 10 adults (29 percent) say they “are confident in their financial situation and are not holding back on spending.”

While it’s not surprising that lower income households are more likely to be curtailing spending right now, it is somewhat unexpected that a majority of higher income households are also cutting back. Among individuals in households with income of $100,000 more, one in five say they are holding back significantly on spending, while 35 percent are holding back somewhat. 

Restaurant labor indicators a mixed bag

Restaurant industry job growth remained robust in October, adding jobs at its strongest rate in more than a year. Despite the continued payroll expansion, the average employee workweek was flat to somewhat lower for the major segments, according to the NRA’s Chief Economist Bruce Grindy. His Economist’s Notebook commentary and analysis appears regularly on Restaurant.org and Restaurant TrendMapper.

The restaurant industry continued to add jobs at a robust pace in October, according to preliminary figures from the Bureau of Labor Statistics (BLS). Eating and drinking places added a net 41,800 jobs in October on a seasonally-adjusted basis, their 56th consecutive monthly increase and strongest gain since May 2013.

Overall, the restaurant industry remains on pace to post job growth of at least 3 percent for the third consecutive year, which would mark the first such occurrence since the 1993 – 1995 period.

Within the restaurant industry, the snack and nonalcoholic beverage bar segment is leading the way in job growth. This segment – which includes concepts such as coffee, donut and ice cream shops – added jobs at a strong 5.5 percent rate on a year-to-date basis through September 2014. If this trend continues, it would represent the segment’s third consecutive year with employment gains above 5 percent.

The quickservice segment is also posting solid growth, adding jobs at a 3.6 percent rate during the first nine months of 2014. This puts the quickservice segment on pace to post job growth of at least 3.5 percent for the third consecutive year.

The fullservice segment added jobs at a 2.7 percent rate through the first nine months of 2014. While this is down somewhat from the consecutive 3.4 percent gains registered in 2012 and 2013, fullservice employment gains remain nearly a full percentage-point above job growth in the overall economy.  

While the industry continues to expand payrolls at a solid rate, the average workweek of employees is flat to somewhat lower for the major segments. According to BLS, the average weekly hours worked by non-supervisory employees in the snack and nonalcoholic beverage segment declined 1.0 percent on a year-to-date basis through September 2014.   

Meanwhile, the average workweek of quickservice restaurant employees declined 0.4 percent through September, while the average employee workweek in the fullservice segment was essentially flat. 

In contrast, average hours worked by food service contractor employees increased 9.0 percent in the first nine months of the year, while average weekly hours of employees in the catering and mobile foodservice segment rose 8.6 percent.

Restaurants are benefiting from falling gas prices

The restaurant industry appears to be reaping the benefits of falling gas prices, as sales continued to trend higher in September. This boost in cash on hand, along with consumers’ elevated pent-up demand for restaurants, suggests that the business environment for restaurants should continue to improve in the months ahead, according to the NRA’s chief economist Bruce Grindy. His Economist’s Notebook commentary and analysis appears regularly on Restaurant.org and Restaurant TrendMapper.

Gas prices continue to trend steadily lower, and the restaurant industry appears to be among the sectors reaping the benefits. According to preliminary figures from the U.S. Census Bureau, eating and drinking place sales totaled $48.1 billion on a seasonally-adjusted basis in September, up 0.6 percent from August and the strongest monthly volume on record.  

The September performance represented the seventh increase the last eight months, and each of the monthly gains were at least 0.4 percent. The most recent growth mirrored a downward trend in gas prices, which fell $0.50 since the end of June. This boost in consumers’ disposable income typically benefits discretionary sectors like restaurants, in which a large proportion of the growth is driven by cash on hand.  

Despite the recent upward trajectory in sales, consumers’ unfulfilled demand for restaurants still remains elevated in historical terms, according to new National Restaurant Association research.  

In a national survey of 1,000 adults conducted October 2-5 for the NRA by ORC International, consumers were asked if they are using restaurants as often as they would like. The answer was an emphatic no, with 42 percent of adults reporting they are not eating on the premises of restaurants or using takeout or delivery as frequently as they would like.  

Putting these results in a recent historical context, consumers’ pent-up demand has eased somewhat from a year ago at this time. In an identical survey fielded in September 2013, 47 percent of adults said they are not eating on the premises of restaurants as frequently as they would like, while 49 percent said they would like to utilize take-out and delivery more often.

However, unfulfilled demand still remains well above pre-recession levels. On a consistent basis during the stronger economic environment of the mid-2000s, typically only one-quarter of adults said they were not patronizing restaurants as often as they would like.

Consumers’ elevated pent-up demand for restaurants, combined with the economic boost that they will get from a stronger job market and falling gas prices, suggests that the business environment for restaurants should continue to improve in the months ahead.  

More higher-income households good news for restaurants

Household income remained stagnant in 2013, as the real median household income of $51,939 was essentially unchanged from its 2011 and 2012 levels. However, growth in the number of higher-income households may be a positive sign for the restaurant industry, according to the NRA’s Chief Economist Bruce Grindy. His Economist’s Notebook commentary and analysis appears regularly on Restaurant.org and Restaurant TrendMapper.

Household income remained stagnant in 2013, according to the latest figures from the U.S. Census Bureau. Real median household income was $51,939 in 2013, essentially unchanged from its 2011 and 2012 levels.  In addition, 2013 median household income stood 8 percent below its recent cyclical high of $56,436 in 2007. 

But looking inside the numbers, there are some positive signs for the restaurant industry, as the number of higher-income households rose for the second consecutive year. The number of households with annual income above $75,000 numbered 42.3 million in 2013 – up 3.7 percent from a total of 40.8 million in 2011. In other words, there were 1.5 million more households with income above $75,000 in 2013 than there were in 2011, after adjusting for inflation.   

The growth of the last two years came on the heels of a sharp decline in higher-income households during the Great Recession. Between 2007 and 2011, the number of households with annual income above $75,000 plunged 5.1 percent, or 2.2 million households. 

At the same time, the number of households with annual income below $25,000 soared 14 percent, or more than 3.7 million households. In addition, the number of households in the $25,000-to-$49,999 income category jumped 9 percent between 2007 and 2011.

As the economy improved during the last two years, the number of households with income below $25,000 remained steady, while households in the $25,000-to-$49,999 income bracket declined 1 percent. With growth being realized in the upper brackets, this suggests that households are moving up the income ladder as the recovery continues to firm. 

While the recent growth is a move in the right direction, the number of higher-income households still remained 700,000 below the record high reached in 2007, when there were 43.0 million households with income above $75,000.

The potential implications for the restaurant industry are significant, as higher-income households represent the majority of spending in the industry. According to data from the Bureau of Labor Statistics, households with incomes of $100,000 or higher are responsible for 36 percent of the total spending on food away from home, while households with incomes between $70,000 and $99,999 account for 18 percent of industry spending.

Consumer mindset may be improving

In a sign that consumers may finally be shaking off their recession mindset, retail sales trended steadily upward in recent months.  Eating and drinking places were among the sectors posting the strongest gains, and the outlook remains positive for the months ahead, according to the National Restaurant Association’s chief economist Bruce Grindy.

In a sign that consumers may finally be shaking off their recession mindset, retail sales trended steadily upward in recent months.  According to preliminary figures from the U.S. Census Bureau, total retail and foodservice sales rose 0.6 percent in August on a seasonally-adjusted basis, their seventh consecutive monthly gain. 

Overall, August retail sales stood 5 percent above year-ago levels, which represented the strongest 12-month gain in more than a year.

Eating and drinking places were among the sectors posting the strongest gains in recent months.  Restaurant sales totaled $47.7 billion on a seasonally-adjusted basis in August, up 0.6 percent from July and the strongest monthly volume on record. 

The August performance also represented the sixth increase the last seven months, and each of the monthly gains were at least 0.4 percent.  Overall, eating and drinking place sales were up 7.1 percent in the 12 months ending August 2014, their strongest 12-month gain in more than two years. 

Elsewhere, auto dealers (+9.5 percent), non-store retailers (+7.1 percent), drug stores (+8.1 percent), building supply stores (+6.7 percent), and sporting goods and hobby stores (+4.8 percent) all registered positive year-over-year sales growth, which suggests that consumers may finally be coming out of their shell. 

Looking forward, the positive underlying fundamentals suggest that we will see continued sales growth in the months ahead.  Despite the speed bump in August [please link to 9/5 notebook], national job growth is on a positive trajectory, and consumer confidence is at a seven-year high. 

In addition, gas prices are down $0.25 since the end of June, which puts additional disposable income in the pockets of consumers.  This typically benefits discretionary sectors like restaurants, in which a large proportion of the growth is driven by cash on hand. 

Read more from the Economist’s Notebook and get additional analysis of restaurant industry trends on the newly revamped Restaurant TrendMapper (subscription required).

Restaurant indicators a mixed bag in 2014

The National Restaurant Association’s (NRA) Chief Economist Bruce Grindy looks back at trends in key indicators during the first half of 2014. Although overall sales are trending in a positive direction, rising food costs continue to pose challenges for restaurant operators.

Below is a breakdown of the trends in key indicators during the first half of the year, and what it all means for the restaurant industry in the months ahead.

Sales and Traffic
The NRA’s Restaurant Performance Index (RPI) stood above 100 during each of the first six months of the year, which represents expansion in the composite index of industry indicators.  Looking inside the RPI, the Current Situation indicators had a sluggish start to the year, which was due in large part to challenging weather conditions. 

As a result of soft same-store sales and customer traffic levels, the Current Situation component of the RPI fell below 100 in January and February, which signifies contraction.  However, sales and traffic results improved during the March – June period, and the Current Situation Index rose above 100 and into the expansion zone. 

Overall, restaurant industry sales trended in a generally positive direction during the first half of 2014.  Total eating and drinking place sales – which takes into account same-store sales as well as unit growth – reached a record high of $47.3 billion in July on a seasonally-adjusted basis, according to U.S. Census Bureau data.  Eating and drinking place sales were up 4.5 percent on a year-to-date basis through July, which is more than double the 2.2 percent increase in grocery store sales during the same period. 

Jobs
Along with an improving sales environment, the restaurant industry continued to add jobs at a steady pace in recent months.  Eating and drinking places added more than 187,000 jobs during the first seven months of 2014, which brings their post-recession growth to a total of nearly 1.4 million jobs. 

Overall, eating and drinking places added jobs at a 3.1 percent rate on a year-to-date basis through July, which is more than a full percentage-point above the 1.8 percent gain in total U.S. employment during the same period.  In addition, it puts the restaurant industry on pace to post job growth above three percent for the third consecutive year, which would represent the first such occurrence since the 1993 – 1995 period.

Food Costs
Meanwhile, the restaurant industry continues to be challenged by soaring food costs.  Average wholesale food prices registered sharp gains in six of the first seven months of 2014, according to the Bureau of Labor Statistics.  As a result, wholesale food prices were up 7.1 percent in the 12 months ending July 2014, which represented the strongest 12-month gain in nearly three years.  Overall, wholesale food prices are on pace to post their strongest annual increase in three years, and fifth consecutive annual gain overall. 

Menu Prices
While food costs have trended sharply higher, menu price gains have remained relatively tame.  According to the Bureau of Labor Statistics, menu prices rose 2.4 percent in the 12 months ending July 2014.  This was slightly below the 2.7 percent increase in grocery store prices during the same 12-month period, but above the 2.0 percent gain in overall consumer prices. 

If the trend holds, 2014 will mark the continuation of an extended period of relatively modest growth in menu prices.  Between 2009 and 2014, menu prices increased at an average annual rate of just 2.2 percent, well below the 3.6 percent average annual gain registered during the previous five-year period (2004 – 2009).  Moreover, average wholesale food prices increased at a 4.4 percent average annual rate between 2009 and 2014, which put considerable pressure on bottom lines during a challenging economic environment. 

Outlook
Despite the challenges, the underlying fundamentals point toward an improving business environment in the months ahead.  The national economy added more than 200,000 jobs in each of the last six months, which is a streak that last happened in 1997. 

In addition, real disposable personal income grew at annualized rates above 3 percent during the first two quarters of 2014.  We have to go back more than eight years to find consecutive quarters with income growth above the 3 percent level. 

An improving economy will help consumers become more confident in their personal financial situation, and put them in a better position to burn off their elevated pent-up demand for restaurants. 

For their part, restaurant operators are generally on board with an improving economic environment.  The RPI’s Expectations component, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood above 100 during each of the first six months of 2014.  This signifies that restaurant operators are generally optimistic about business conditions in the months ahead.

Read more from the Economist’s Notebook and get additional analysis of restaurant industry trends on the newly revamped Restaurant TrendMapper (subscription required)

Economist's Notebook: Louisiana adds nearly 100 new locations in 2013

The National Restaurant Association's Chief Economist Bruce Grindy analyzes trends in restaurant unit growth on the state level.  California led the nation in restaurant establishment growth in 2013, followed closely by New York.  In percentage terms, Kentucky set the pace with a solid 5.1 percent gain in restaurant locations.

Nationally, the restaurant industry added a net 8,362 eating and drinking place establishments* in 2013, according to newly-released data from the Bureau of Labor Statistics.  The 2013 expansion followed stronger gains of 9,944 locations in 2011 and 11,649 locations in 2012.

On the state level, trends were generally positive in 2013.  Forty states added eating and drinking place locations in 2013, while only 11 states (including the District of Columbia) experienced a decline in units. 

Like the recent national trends, growth was somewhat less widespread on the state level in 2013, relative to the two previous years.  Forty-two states added locations in 2011, while 44 states saw unit growth in 2012. 

California led the nation by adding a net 1,368 eating and drinking place locations in 2013, followed closely by New York with a net increase of 1,237 units.  Texas added a net 986 restaurant establishments in 2013, which represented the first time in four years that the Lone Star State didn’t add at least 1,000 units. 

Florida, after leading the nation in 2012 by adding 1,714 units, expanded its restaurant industry by 818 locations in 2013.

In percentage terms, Kentucky led the way with a solid 5.1 increase in eating and drinking place establishments in 2013.  South Carolina saw its restaurant industry expand by 3.8 percent in 2013, while Iowa added locations at a 3.6 percent rate. 

Louisiana saw a modest increase of 1.2 percent new restaurant locations in 2013, up 99 locations over the previous year’s 8,307.

In contrast, Minnesota lost a net 126 eating and drinking place locations in 2013, a 1.3 percent drop from its 2012 level.  North Carolina lost a net 84 eating and drinking place establishments in 2013, while the District of Columbia’s eating and drinking place sector shrunk by a net 68 locations. 

Read more from the Economist’s Notebook and get additional analysis of restaurant industry trends on Restaurant TrendMapper (subscription required).

*The establishment figures, which are based on unemployment insurance filings of businesses that have wage and salary employees, represent the most comprehensive census of establishments with payroll employees on the national, state and local levels.

NRA launches improved Restaurant TrendMapper

The National Restaurant Association has launched a new and improved version of its Restaurant TrendMapper online subscription service that will help industry professionals improve their business performances.

The service will help restaurateurs, analysts and allied industry professionals:

Keep up-to-date with the latest economic indicators and trends that affect their business environment

• Stay current with trends through the NRA’s Restaurant Performance Index
• Data on sales, employment, capital expenditures, and wholesale food and menu price inflation 

“Restaurant TrendMapper is a unique resource of industry data and analysis in easy-reference form, which eliminates the need to constantly dig through complicated data files to get a snapshot of what’s going on in the industry,” said Bruce Grindy, the NRA’s chief economist and author of Restaurant TrendMapper. “The service provides running analysis of key industry indicators that are crucial for tracking trends and planning strategically for the future.”

Grindy also said the new and improved site would allow operators to “keep an eye on food and commodity prices is helpful for menu planning; if beef is becoming more expensive, the operator might temporarily cut back and promote other proteins until price pressures ease.”

“Restaurant TrendMapper also contains useful data and analysis for suppliers to the restaurant industry.  Our monthly tracking breaks down capital expenditure plans by industry segment, which can help allied professionals anticipate their own business conditions in the months ahead,” he added.

Restaurant TrendMapper also features: 

• Continually updated NRA research and forecasting
• Analysis of the latest data from government sources, such as the Bureau of Labor Statistics and U.S. Census Bureau
• Downloadable data files for use outside of the online platform in both text and chart formats 

In addition, industry professionals also can track topics, such as:

• Wage and hour trends
• Tourism
• Restaurant locations
• Macro-economic indicators, and select state and regional data 

NRA members interested in receiving Restaurant TrendMapper are eligible for exclusive pricing on it and all other research publications.

Restaurateurs across the country call on Congress to end government shutdown, raise debt ceiling

The National Restaurant Association announced the launch of a broad-based grassroots effort among its members, urging Congress to end the government shutdown and raise the debt ceiling in order to maintain economic confidence.

“The restaurant industry provides opportunities to over 13 million Americans, and the ability to sustain business while maintaining consumer confidence is greatly impacted by our nation’s economic health,” said Scott Defife, Executive Vice President of Policy and Government Affairs, the National Restaurant Association. “The debate over government funding and the debt ceiling, while important, is cutting into restaurant operators’ bottom-line every day the government remains closed. The shutdown is negatively impacting the livelihood of our restaurant customers and our workers. Congress must act now to end the government shutdown and restore economic certainty.”

The NRA is directing its members to  America’s Restaurant Advocates initiative, an industry-wide, national grassroots advocacy program that connects restaurateurs with elected officials on issues critical to the industry. The Association is encouraging restaurant operators to sign a letter and share their personal stories with their elected officials.

Ahead of the Oct. 1 shutdown, the NRA, along with more 250 other organizations, called on Congress to pass a continuing resolution to fund the federal government into the next fiscal year, raise the debt limit, reform entitlement programs, and tackle tax reform. In a joint letter, the groups said that government shutdowns can cause even more uncertainty in a fragile economy.

In his recent Economist Notebook, the NRA’s Chief Economist Bruce Grindy noted that both consumers and restaurant operators already had low expectations for the economy, and the shutdown will only add to the uncertainty in the months ahead.

Only 23 percent of restaurant operators said they expected the economy to improve in six months, according to the NRA’s September 2013 Restaurant Industry Tracking Survey. Another NRA survey found that only 21 percent of consumers said they expected the nation’s economy to be better in the next six months. 

Operators’ confidence in the economy is tenuous

In his latest commentary, the National Restaurant Association's Chief Economist Bruce Grindy breaks down the latest labor indicators.  Both the restaurant industry and overall economy added jobs in March at their slowest pace since mid-2012.  While the business environment remains generally positive for restaurants, operators’ confidence that it will remain that way is tenuous.

Due largely to softer sales as a result of the payroll tax hike, job growth in the restaurant industry slowed in recent months.  Eating and drinking places added a net 13,000 jobs in March on a seasonally-adjusted basis, the smallest gain since May 2012 (12,000 jobs), according to data from the Bureau of Labor Statistics. 

The March slowdown was even more pronounced in the broader economy.  The overall economy only added a net 88,000 jobs in March, down from a gain of 268,000 jobs in February and the weakest growth since June 2012. 

Looking beyond the March numbers, restaurant industry job growth outpaced the overall economy in recent months.  Between the first quarters of 2012 and 2013, eating and drinking places added jobs at a strong 3.1 percent rate, nearly double the 1.6 percent gain in total non-farm payrolls during the same period.

The National Restaurant Association expects restaurant job growth to outpace the overall economy by a full percentage-point in 2013, and the first quarter results indicate that there is substantial upside to this outlook. 

Overall, the restaurant industry has been one of the top job creators since the end of the recession.  In the three years since the beginning of the jobs recovery in March 2010, eating and drinking places added a net 856,000 jobs, ranking only behind the professional-and-business services (nearly 1.8 million jobs) and health care and social assistance (949,000 jobs) sectors. 

While job growth in the restaurant industry slowed in the first quarter, average weekly hours of restaurant employees remained on par with 2012 levels, which suggests that the full-time/part-time mix of the industry workforce hasn’t changed to this point.  Non-supervisory employees at restaurants worked an average of 24.2 hours in February, unchanged from the February 2012 level.  (Note that industry-level wage and hour data are one month lagged from the employment data.)

Although the economic environment remains generally positive overall, restaurant operators’ confidence that it will stay that way is tenuous.  In the Association’s March 2013 Restaurant Industry Tracking Survey, only 25 percent of restaurant operators said they expect economic conditions to improve in the next six months.  Twenty percent of operators expect economic conditions will worsen, while 55 percent think conditions will remain about the same.  However, this is still an improvement over their outlook in late-2012, when confidence was decidedly pessimistic due to the uncertainty surrounding the fiscal cliff.

Restaurant job growth hit 17-year high in 2012

In his latest commentary, the National Restaurant Association's Chief Economist Bruce Grindy looks back at 2012 jobs growth and offers projections for 2013. Restaurants added jobs at a strong 3.4 percent rate in 2012, the strongest increase in 17 years. Looking ahead to 2013, job growth in the restaurant industry is projected to outpace the overall economy by a full percentage-point.

The restaurant industry was an engine of growth for the nation’s employment recovery in 2012, and the trend is expected to continue in 2013. Eating and drinking places – the primary component of the restaurant industry which accounts for roughly three-fourths of the total restaurant and foodservice workforce – added jobs at a strong 3.4 percent rate in 2012, according to figures from the Bureau of Labor Statistics (BLS).

The robust restaurant industry job growth doubled the 1.7 percent gain in total U.S. employment in 2012, and represented the strongest increase since a 3.9 percent gain in 1995.

This disparity marked the continuation of a long-term trend, with 2012 representing the 13th consecutive year in which restaurant job growth outpaced the overall economy. In fact, during the last 13 years, the number of eating-and-drinking-place jobs jumped 25 percent, while total U.S. employment rose by only 4 percent.

Job growth within the restaurant industry was broad-based on 2012, with several of the major segments registering strong gains. Snack and nonalcoholic beverage bars – including coffee, donut and ice cream shops – set the pace with a robust 4.9 percent employment gain. Foodservice contactors (4.8 percent), quickservice restaurants (4.1 percent) and fullservice restaurants (3.0 percent) also added jobs at rates well above the overall economy in 2012. 

Looking ahead to 2013, job growth in the restaurant industry is projected to remain solid, albeit somewhat slower than the torrid pace registered in 2012. The National Restaurant Association expects restaurants to add jobs at a 2.7 percent rate in 2013, a full percentage-point above the projected 1.7 percent gain in total U.S. employment.

The projected 2013 gain will represent the 14th consecutive year in which restaurant industry job growth outpaces the overall economy, and the third consecutive year in which the industry registered job growth in excess of 2.5 percent. In comparison, the overall economy hasn’t posted job growth above 2.5 percent since 1998.

With the release of the February 1 jobs report, BLS included revisions that gave a clearer picture of employment trends during and after the recession. Restaurant employment fell 3.9 percent during the recession, while the overall economy lost 6.3 percent of its employment base.

The restaurant industry was certainly not immune from the effects of the Great Recession, with job losses in 2009 and 2010 representing just the second and third years on record that the industry cut staffing levels.

However, the restaurant industry bounced back quickly after the recession, with January’s employment level up 8.8 percent from the bottom of the cycle. In comparison, total U.S. employment is only up 4.3 percent from the recession trough. 

Overall, restaurant employment currently stands 441,000 jobs above its high-point before the recession, while the overall economy is still down 3.2 million jobs from the pre-recession peak.