Friday, March 24, 2023

Quit Rate for Restaurant Workers Hits All-Time High

Quit Rate for Restaurant Workers Hits All-Time High

News Brief:

  • The accommodation and food services sector reported 1.3 million job openings in April, up from 989,000 in March, according to the U.S. Bureau of Labor Statistics Job Openings and Labor Turnover Summary released on Tuesday. Comparatively, this sector had 295,000 openings a year ago, just a month into the pandemic.
  • Hiring levels reached 1.2 million in April, compared to 395,000 in April 2020. In the last month, hiring jumped 22.9%.
  • While these numbers indicate the hotel and restaurant industry is hiring, the quitting rate is 5.6%, an all-time high, according to Bloomberg, and the highest of any other sector. In April, the segment lost 681,000 to attrition, which is about half of the new hires the two industries brought in.

The JOLTS data reflect how deep the labor shortage is getting, especially for the foodservice sector, which makes up a bulk of the combined industries. With quit rates so high, food services are likely in a perpetual state of hiring, meaning they are spending time and money recruiting and training a lot of employees. This could be a $20 million to $40 million expense each year for national QSRs.

That hasn’t stopped chains, including IHOP, Chuck E. Cheese, Chipotle, Whataburger, Sonic, and KFC, from setting goals to hire in the thousands. Restaurants are offering significant perks from iPhones to generous hiring bonuses, but that may not be enough to keep these employees on the job. A lack of a consistent workforce could derail recovery plans, especially for many independents. Some have had to push back reopenings and aren’t able to open seven days a week due to a lack of staffing.

While employers have said the extra unemployment benefits have kept workers from returning to the job, employees say low wages and tips and concerns over safety have had them thinking about entering other industries. Wages are beginning to rise, especially for back-of-house employees. As of April, average hourly wages for production and nonsupervisory employees were $14.96 compared to $13.99 in January, according to the BLS. Chains, like Starbucks, McDonald’s, Chipotle, and Darden have already started increasing their hourly wages.

The data shows a bit of a silver lining: Layoffs in the accommodation and food services sector were only 188,000 in April, compared to over 1.9 million in April 2020, and the industries are clearly switching to massive hirings instead of mass layoffs. One of the biggest challenges after hiring new employees will be retention, with restaurants like Chipotle, Starbucks, and Darden improving their benefits during the last 18 months in a bid to hold on to staff and lure additional workers.