The day-to-day grind of the restaurant industry tends to crack the crystal ball. For example, a decade ago, off-premises represented roughly 15 percent of barbecue chain Famous Dave’s total sales. Today, it’s close to 55 percent. And now the legacy brand is looking at drive-thru restaurants and even kiosks. Was that in the 2020 look-ahead cards back in the day? Probably not.
But with all of that long-lens uncertainty aside, it’s probably safe to assume restaurants—from a top-line and traffic growth perspective—are going to limp home in 2019.
TDn2K’s latest restaurant industry snapshot provides plenty of ammo to be pessimistic about restaurant sales growth in December. Firstly, at 2.1 percent same-store sales, December 2018 was tied for the strongest month last year, which means a tough comparison. More notably, though, the shift of Thanksgiving into December of 2019 converts from tailwind to headwind this month. “Expect for casual dining, upscale casual, and fine dining to have abysmal sales and traffic growth numbers,” TDn2K said.
Additionally, a softening economy continues to hinder consumer spending. And then there’s this reality, which has been a repeat point throughout the year: As long as the economy keeps growing, slower or not compared to past months, and labor markets remain tight, restaurants will struggle to find and retain qualified employees. That’s not shifting. The unemployment rate ticked down to 3.5 percent from 3.6 percent in November, back to the 2019 low, and matching the lowest jobless rate since 1969. Meanwhile U.S. restaurants added 25,300 jobs in November and 308,700 over the past year, according to new data from the Bureau of Labor Statistics.
For chains specifically, net growth in the number of locations was 1.5 percent, year-over-year, according to Black Box Intelligence’s Market Share Report. So, the challenge at hand deepens: Despite low unemployment levels, chain restaurants are still adding units and trying to fill additional positions. Per TDn2K’s People Report, year-over-year job growth is 2.64 percent currently (2.62 percent in September).
And while all of this takes form, turnover rates for restaurant employees and managers remains rocky. In the case of hourly crew members, turnover increased slightly in October after a small drop in September, TDn2K said. That might be a good sign, but these figures have improved only to degrade quickly in the past. The sample size currently just isn’t large enough. “It seems the industry has reached its ceiling in terms of hourly employee turnover and is now moderating,” TDn2K said. “The relentless climb in turnover rates may be over, but considerable easing of turnover pressures are not expected considering the tight job market.”
Management turnover has alternated between rising and decreasing for three consecutive months, which also suggests stabilization of a sort. It’s likely many brands have found a winning formula compared to past years when this problem really started to manifest. Also, systems and store designs that better leverage decreased staffing levels, like smaller dining rooms and more automation.
Either way, the ability to staff correctly, operate efficiently, and retain top-level employees will continue to separate the leading brands as rising wage rates pressure the labor line.
Source: Thanks https://www.qsrmagazine.com/finance/restaurants-add-more-jobs-face-more-challenges