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More small restaurant owners are implementing hiring freezes until at least Q2 2023 as inflation persists.

Hiring activity slows for small restaurant owners

According to a new survey, 11% of small restaurant owners are reducing their staff this month, marking a 5% jump from November.

New data from Alignable shows that 11% of small restaurant owners are reducing their staff this month as layoffs and hiring freezes become more pervasive across industries. This marks a 5% jump in restaurant staff reductions from November. Further, the 44% of restaurant owners who say they are still hiring report trouble finding the right workers.

The report shows that twice as many small business owners across industries – 15% – are laying off employees in December versus November. Employers note they can’t afford to hire full-time, permanent staffers as inflation persists, as labor costs exceed revenue, and with the potential of a recession looming.

Though there have been some signs of inflation peaking, it remains the biggest challenge for business owners. In fact, 64% of small employers say inflation continues to negatively impact their business and has hindered recovery efforts from Covid-related impacts. Just 14% of small business owners believe they have fully recovered from Covid, which is down from 24% in October and 43% year-over-year. This response is echoed by a recent study from J.D. Power, which finds that 65% of small business owners say inflation has had a severe or major impact on their business.

Though this data paints a somewhat ominous hiring picture for small restaurants, the industry is in a better position than most other segments. For instance, 19% of small gym owners are laying off employees this month, while retail layoffs are at 14%. Just beauty, manufacturing and travel are faring better than restaurants.

Still, the acceleration of restaurant layoffs comes at an inconvenient time as the holidays tend to bring in an influx of diners and catering orders. Overall, the industry remains about 400,000 employees short of pre-pandemic numbers, which has taken a toll on operations and sales throughout the year.

As predictions of a recession grow, and layoffs accelerate throughout several industries, employers are likely to remain conservative until the microenvironment settles a bit. Alignable notes that 74% of all small business employers have implemented hiring freezes until at least the second quarter of 2023, for instance, representing a 12% jump from November. In the restaurant space, 56% of operates plan to freeze onboarding until Q2.

That said, there is some reason for optimism. Seventy-two percent of small business owners believe conditions are heading in the right direction for 2023, while 37% of small business owners expect their revenue to increase in the new year.

Contact Alicia Kelso at [email protected]

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