Restaurants continue to chip away at labor shortages

Though layoffs have impacted industries from tech to retail to media in recent weeks, the April jobs report appears to be relatively unshaken. According to the Bureau of Labor Statistics report, released Friday morning, the unemployment rate was 3.4% in April, versus 3.5% in March, as U.S. employers added 253,000 jobs during the month – far outpacing the expected 185,000.

Employment in leisure and hospitality continued to trend up in April, with 31,000 jobs added, most of which came from foodservices and drinking establishments, with 25,000 added. April marked the 28^th consecutive month of employment gains in the restaurant industry.

Still, the sector’s growth has slowed compared to recent months. The leisure and hospitality sector had added an average of 73,000 jobs per month over the prior six months, for instance. In March, foodservices and drinking places gained 50,000 employees. In February, the industry experienced a 70,000-employee increase and, in January, 99,000 jobs were added in the industry.

Industry employment remains below its pre-pandemic February 2020 level by 402,000 jobs, or 2.4%.

That said, data from the National Restaurant Association shows that the industry’s workforce remains on track to grow by 500,000 jobs this year, which would bring the total industry employment to 15.5 million by the end of 2023.

Several chains have attributed stronger labor pools for Q1 sales and traffic momentum. Chipotle, for instance, credited more, and more experienced, employees for its operational improvements on the quarter. McDonald’s CEO Chris Kempczinski also said his company has experienced operational improvement because of progress made on restaurant staffing. Greg Levin, BJ’s Restaurants CEO, said the chain has been more efficient and effective in taking care of its guests “because of the maturity of our team members and being staffed up.”

And, Texas Roadhouse CEO Jerry Morgan, attributed his chain’s record-breaking traffic numbers to beefed up staffing levels.

“We’re looking at every component as to how to become more efficient,” Morgan said. “The number one thing is to be fully staffed. The more experience they get, the more efficient and productive they are, and we should see that continue to pay dividends for us, as we’ve invested heavily the last few years to get to that level. [Labor] is driving our topline mentality and the way we’ve been able to conduct business.”

These staffing improvements aren’t without their own pressures, however. In April, average hourly earnings continued to rise and were up 16 cents, or 0.5%. Over the past 12 months, average hourly earnings have increased by 4.4%. During Texas Roadhouse’s Q1 call Thursday after market close, however, executives said they expect these inflationary pressures to “settle” in the back half of the year.

Contact Alicia Kelso at [email protected]