Last Month the restaurant industry marked its 26th straight month of job gains, adding nearly 70,000 jobs. This brings the jobs number to within one percent of the February 2020 peak! *
Looking forward, the National Restaurant Association (NRA) predicts that the industry will reach $997 Billion in sales this year, partly due to increased pricing power. They also predict that about 12.4 million workers will be employed by the end of this year versus 12.1 million at the end of 2022.
About 66% of franchise operators are optimistic about business for the coming year, and most plan to increase spending on new technology or other upgrades to their facilities.
Headwinds still remain a concern, and labor is still one of the biggest. Despite good employment numbers, many operators report a lack of good job candidates. In the NRA’s survey, 62% said they were understaffed. Most operators say the quality and number of workers available have decreased. Coffee and snack businesses seemed to be in a better position versus full-service restaurants.
Labor costs continue to increase, though at a slower rate than in 2021 which saw an increase of $2.37 per hour. In 2022 wages grew by $1.46 per hour. The slowing trend in wage growth is predicted to continue throughout the year. A higher-than-average turnover rate also aggravates labor costs. **
Operators hope to hire new employees when possible. In fact, 87% of operators plan to hire more workers in the next 6 to 12 months.
Mark Wasilefsky, head of the restaurant franchise finance group at TD Bank,… predicted restaurants would still see large shifts in consumer behavior as dine-in traffic nears pre-pandemic levels. These changing behaviors and preferences could put pressure on restaurants to increase investment in in-store technology and off-premise channels despite macroeconomic challenges.
“Consumers are demanding a better digital and in-store experience, which requires an investment in their physical and digital presence,” Wasilefsky said. “Brands with solid digital and delivery programs and up-to-date facilities will have a distinct advantage. In addition, operators with stronger balance sheets and overall better liquidity positions will be able to take advantage of this opportunity.” according to resturantdive.com
These surveys were completed before the recent bank failures. The impact on the restaurant business would only be felt if Americans lost faith in the system as a whole. It could lead to credit tightening, making it more difficult to obtain business loans, or in the worst case, it might lead to an overall lack of confidence in the economy where consumers are afraid to spend money, leading to a recession.
Over the last three years, the industry has proven that it can adapt and innovate through unpredictable challenges. Those qualities will continue to be important in navigating the road ahead.
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