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Several restaurant companies have reported significant year-over-year improvement in staffing levels.

Industry’s job gains in August outpaced Q2 average

The restaurant industry gained 14,900 jobs in August, putting it short of pre-pandemic levels by about 32,400 positions.

The jobs report released this morning by the Bureau of Labor Statistics finds a steady job market, with 187,000 positions added in August, versus 157,000 in July. The unemployment rate, however, rose from 3.5% to 3.8%, which marks the highest level since February 2022. That said, the unemployment rate remains low by historical standards.

Employment in leisure and hospitality continued to trend up in August by about 40,000 positions. The industry had gained an average of 61,000 jobs per month over the prior 12 months. Employment in the industry remains below its pre-pandemic February 2020 level by 290,000, or 1.7%.

For restaurants specifically, 14,900 jobs were added last month, putting the industry short of pre-pandemic levels by about 32,400 positions. August’s additions were ahead of the past several months. In July, the industry added 13,400 jobs, while in June, restaurant and bar jobs declined by nearly 1,000 positions, marking the sector’s first drop in nearly two and a half years. Between April and July, the industry added less than 11,000 positions each month.

Notably, the average monthly gain during Q1 was 53,000 jobs in the industry. According to the National Restaurant Association, 97,500 jobs were added each month during 2021 and 2022.

Still, several restaurant companies reported continued improvement in their staffing levels during the most recent round of earnings calls. Sweetgreen, for instance, reported improved throughput, lower turnover and stronger retention. BJ’s also reported stronger labor productivity, as items-per-labor hour surpassed pre-Covid levels. Potbelly and Papa Johns also both reported year-over-year improvements in staffing levels.

The industry is expected to continue chipping away at labor shortages, as companies like Chipotle create hiring campaigns to fill positions for the fall. Chipotle identifies fall as its second busiest season. As the overall job market continues to slow, the restaurant industry may find a somewhat less competitive recruiting environment in the months ahead, according to National Restaurant Association Chief Economist Bruce Grindy.

Also, according to the BLS report, wage increases are cooling, with average hourly wages up 4.3% year-over-year, but up just 0.2% from July to August.

This trend was also reflected during recent earnings calls. Chipotle, for instance, reported that labor costs in Q2 were down about 50 basis points from last year. CEO Brian Niccol said wage inflation is now “more normal,” but added there is still wage inflation pressures to navigate.

Texas Roadhouse executives said they felt pressure from staffing up their restaurants, but they expect the level of labor inflation to moderate as we move through the back half of the year.

Contact Alicia Kelso at [email protected]

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