staffing pressures

As the holiday season approaches, staffing pressures for restaurant operators unfortunately remain at record highs. People Report™, a TDn2K™ company, has confirmed this in its latest Workforce Index, a quarterly barometer of market pressures on employment measures.

Each quarter, the Workforce Index measures five employment components: employment levels, recruiting difficulty, job vacancies, employment expectations and turnover. Each component is ranked on a scale of 0 to 100, and values over 50 indicate increased levels and difficulty.

The Q4 Workforce Index posted an overall reading of 74.2 for the fourth quarter of 2016, up 2.9 points from 71.3 in the third quarter. This marks the ninth consecutive quarter the Index has posted a value over 70, indicating labor pressures will increase through the end of 2016.

More Jobs for the Holidays

Job growth in the industry is expected to continue throughout the fourth quarter as restaurants seek to fill holiday positions. 50 percent of restaurant companies reported that they added staff at the both the hourly and management level in the third quarter. Furthermore, the Employment Levels Index for upscale casual and fine dining restaurants jumped 15.2 points to 77.7 for the fourth quarter. The Recruiting Index for this segment also jumped almost 35 points from the previous quarter to 87.5.

Michael Harms, Executive Director of Operations at TDn2K, anticipates that these restaurants in particular are gearing up for the holiday crowds. Customers are more likely to host holiday parties at restaurants with a higher price point, as opposed to lower-priced restaurants in the family dining and quick service segments. Therefore, upscale casual and fine dining restaurants have more positions to fill, yet are finding that there aren’t enough available workers.

Recruiting difficulties won’t stop at the upscale casual and fine dining segment. Quick service continues to be plagued by increasing labor pressures across the board. The Recruiting Index for quick service restaurants also posted a value of 87.5 for the fourth quarter of 2016, an 8.3 increase from third quarter. The Expectations Index, which measures the expected increase or decrease of current staffing levels, reached a value of 90 this quarter. Likewise, 60 percent of quick service restaurants reported an increase in vacancies at both the hourly and management level.

The Turnover Plateau

There does appear to be a very small light at the end of the tunnel. The Turnover Index decreased for three out of four dining segments for the fourth quarter, and two segments reported a decrease of at least 10 points. This does not mean that turnover levels are actually decreasing for restaurants, as every segment is still reporting values over 50. However, it does indicate that levels have reached a plateau and are increasing at a slower pace now. While this still isn’t necessarily good news for operators, it does leave a small bit of space for optimism. “There is a maximum turnover rate in the industry, and it’s only going to go up at a certain rate for an amount of time before it plateaus,” explained Harms.

Thus, the restaurant industry is headed into an interesting final quarter. Much remains to be seen as to how the new FLSA regulations, minimum wage increases and upcoming presidential election will affect labor pressures for restaurant companies. In the meantime, the primary focus must remain on recruiting, hiring, training and retaining the best employees.

Want a copy of the Q4 Workforce Index?

Contact Michael Harms at michael.harms@tdn2k.com for the full report and more information on how to participate in the quarterly Workforce Index survey.