Data Reveals Slow Job Growth in Restaurant Industry
TDn2K™ recently hosted its Q4 Restaurant Industry Update Webinar covering issues facing the restaurant industry, key among them: a lackluster sales environment and tightening labor market. The webinar featured Joel Naroff, President of Naroff Economic Advisors and TDn2K economist; Victor Fernandez, Executive Director of Insights and Knowledge at TDn2K; and Bob Rycroft, Managing Director at TDn2K.
Naroff examined the various economic trends that will be affecting restaurant growth over the next few years: unemployment rates, income growth and consumer confidence. He detailed that operators can expect that “tightening labor markets leading to better income and spending growth, but buying patterns are changing as well.” Restaurant sales will continue at trend rates but will not be distributed evenly, so restaurants must be able to adapt to the changing tastes and preferences of their consumers.
Although slowing, growth in the workforce is still solid enough to reduce the unemployment rate, which contributes to the challenge of finding qualified workers. Naroff expects this problem to worsen through the end of the year. People Report™ data has revealed that job growth in the restaurant industry also slowed during the third quarter of 2016.
On the other hand, low unemployment rates are contributing to a boost in income growth and consumer confidence. Naroff expects consumer spending to accelerate through the final quarter of 2016. This doesn’t necessarily translate to spending in restaurants, though. The perception of eating out in restaurants has shifted over the past several years, and tastes are changing as millennials replace baby boomers as the driving force in the economy.
Rycroft explored some of the key trends taking place directly within the restaurant industry. One of the biggest current issues is the “share of stomach” battle, which has evolved over the past several years. Historically, restaurants only had to worry about competing against each other; now, recent data has introduced grocery and convenience stores as growing threats to restaurant growth. “There are opportunities for us to get meals in places that we didn’t have five or ten years ago,” Rycroft explained. This is due to the increased demand for variety and convenience.
Likewise, technology is a now becoming big player in the marketplace. The introduction of targeted technological marketing such as loyalty programs and mobile apps have changed the way brands reach their consumers. Additionally, technology has impacted operational duties including hiring, labor scheduling and inventory management. “This is an area where brands need to be experts because the leverage of technology is going to be critical going forward.”
Fernandez took a deeper dive into data from Black Box Intelligence™ to analyze exactly where the restaurant industry is headed in the final quarter. Here are some of the key data points: The restaurant industry experienced its third consecutive quarter of negative comp sales, reported at -1.0 percent for the third quarter of 2016. Over the past eight years, restaurant comp traffic has declined -13.3 percent.
TDn2K also reports average turnover at both the hourly and management levels have increased consistently over the past five years, and management turnover is now higher than in 2006, prior to the recession. Furthermore, People Report has found that most hourly turnover occurs within the first 30 to 60 days. “It’s critical now for restaurants to attract, screen, hire and engage the employees that make a difference for them.”
For more information on these insights, please contact Victor Fernandez at [email protected].
Naroff examined the various economic trends that will be affecting restaurant growth over the next few years: unemployment rates, income growth and consumer confidence. He detailed that operators can expect that “tightening labor markets leading to better income and spending growth, but buying patterns are changing as well.” Restaurant sales will continue at trend rates but will not be distributed evenly, so restaurants must be able to adapt to the changing tastes and preferences of their consumers.
Although slowing, growth in the workforce is still solid enough to reduce the unemployment rate, which contributes to the challenge of finding qualified workers. Naroff expects this problem to worsen through the end of the year. People Report™ data has revealed that job growth in the restaurant industry also slowed during the third quarter of 2016.
On the other hand, low unemployment rates are contributing to a boost in income growth and consumer confidence. Naroff expects consumer spending to accelerate through the final quarter of 2016. This doesn’t necessarily translate to spending in restaurants, though. The perception of eating out in restaurants has shifted over the past several years, and tastes are changing as millennials replace baby boomers as the driving force in the economy.
Rycroft explored some of the key trends taking place directly within the restaurant industry. One of the biggest current issues is the “share of stomach” battle, which has evolved over the past several years. Historically, restaurants only had to worry about competing against each other; now, recent data has introduced grocery and convenience stores as growing threats to restaurant growth. “There are opportunities for us to get meals in places that we didn’t have five or ten years ago,” Rycroft explained. This is due to the increased demand for variety and convenience.
Likewise, technology is a now becoming big player in the marketplace. The introduction of targeted technological marketing such as loyalty programs and mobile apps have changed the way brands reach their consumers. Additionally, technology has impacted operational duties including hiring, labor scheduling and inventory management. “This is an area where brands need to be experts because the leverage of technology is going to be critical going forward.”
Fernandez took a deeper dive into data from Black Box Intelligence™ to analyze exactly where the restaurant industry is headed in the final quarter. Here are some of the key data points: The restaurant industry experienced its third consecutive quarter of negative comp sales, reported at -1.0 percent for the third quarter of 2016. Over the past eight years, restaurant comp traffic has declined -13.3 percent.
TDn2K also reports average turnover at both the hourly and management levels have increased consistently over the past five years, and management turnover is now higher than in 2006, prior to the recession. Furthermore, People Report has found that most hourly turnover occurs within the first 30 to 60 days. “It’s critical now for restaurants to attract, screen, hire and engage the employees that make a difference for them.”
For more information on these insights, please contact Victor Fernandez at [email protected].