Labor forecast paints a grim picture for independent restaurants this holiday season

The restaurant industry remains about 500,000 employees short of pre-pandemic numbers. A new report from Alignable indicates that this labor picture will be even more challenged for small business owners as they head into the holiday season.

According to Alignable’s Holiday Hiring Report, just 7% of small business owners across all industries are recruiting help for Q4, which is down from last year’s seasonal hiring rate of 36%. The restaurant industry’s hiring forecast is a bit higher than that overall average – at 17% – but is particularly grim with added context. At the beginning of Q4 2021, for instance, 56% of restaurant owners said they planned to staff up significantly. In other words, the restaurant industry is hiring 39% less staff this holiday season versus last. Further, 48% of all restaurant owners said they’re not hiring anyone, including seasonal or permanent employees, because their revenues won’t support it, while 8% of restaurants are laying people off headed into Q4.

Not being able to fully staff restaurants has been an industry-wide issue for over two years, and has forced some operators to trim hours or leave orders unfulfilled – not exactly ideal as pandemic recovery continues. Lingering inflationary pressures have also hindered recovery for many small restaurant owners, and this is illustrated by several recent reports. According to a new survey commissioned by Bank of America, 88% of small business owners say inflation is currently impacting their business, and 75% say inflation and commodity pricing is their primary concern. Alignable finds that 43% of restaurant owners have reduced their inventory and supplies ahead of the holiday season to navigate these continued challenges. As a result, optimism is low, with 54% of operators expecting to earn less this year than last year.

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Consumers are also feeling the squeeze and therefore demand is also expected to be lower this year versus last year. Retail sales this holiday season are expected to increase just 4% to 6%, compared to 15.1% last year. New data from Bluedot shows that nearly 30% of consumers plan to eat out less often to manage higher costs through the holidays.

Still, despite this current and very gloomy environment, most small business owners do see a light at the end of the tunnel. The Bank of America report, for example, finds that 66% of small business owners expect an increase in revenue in 2023, while 77% believe they’re equipped to handle a recession should one manifest. The National Federation of Independent Businesses optimism index also shows a recent uptick, despite stubborn inflation. In fact, the index has increased for the past three months. That said, this positive trend is against the backdrop of historically low metrics for the index, so the road to recovery remains long and bumpy.

Contact Alicia Kelso at [email protected]