This Week In Foodservice

Jerry Stiegler aggregates key industry information and provides brief analysis to help foodservice professionals navigate the data.

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Labor Continues to Affect the Foodservice Industry

Lots and lots of labor news. Robots running Thai food to and from the kitchen. McDonald’s efficiency pledge. Pandemic changes show some staying power in California. These stories and more This Week in Foodservice.

A complicated labor situation continues to affect the overall foodservice industry.

Total nonfarm payroll employment rose by 194,000 in September, and the unemployment rate totaled 48.0%, a 0.4% decline, per the U.S. Bureau of Labor Statistics. These job gains missed the mark by a wide margin, with Bloomberg reporting the projected median job growth number was 500,000. This comes at a time when employers across all industries, including foodservice, remain hard up to find employees.

Notable job gains occurred in leisure and hospitality, in professional and business services, in retail trade, and in transportation and warehousing. Employment in public education declined over the month, per the BLS. Employment in leisure and hospitality increased by 74,000 in September, with continued job growth in arts, entertainment and recreation (43,000). Employment in foodservice and drinking places changed little for the second consecutive month, compared with an average monthly gain of 197,000 from January through July. Employment in leisure and hospitality declined by 1.6 million, or 9.4%, since February 2020. The disappointing jobs numbers affect the restaurant industry on two fronts. First, higher employment generally means consumers seek the convenience that restaurants and foodservice operators offer. Second, it often leads more people to look for jobs in the industry. Unfortunately, 78% of operators told the National Restaurant Association in a September survey that their businesses did not have enough employees to support existing customer levels.  

Although the industry added back many of the jobs lost during the early months of the pandemic, a majority of restaurants remain understaffed. In a September 2021 survey fielded by the National Restaurant Association, 78% of operators said their restaurant did not have enough employees to support existing customer demand. Among restaurants that were understaffed in September, 83% of operators said their restaurant was more than 10% below necessary staffing levels. Thirty-nine percent of understaffed operators were more than 20% below necessary staffing levels.

As a result of being understaffed, 68% of operators say their restaurant reduced hours of operation on days that it is open for business, per the NRA. Further, 46% of operators cut back on menu items, while 45% closed their restaurant on days that it would normally be open. And 44% reduced seating capacity as a result of being understaffed.

Overall, the number of unemployed persons fell by 710,000 to a total of 7.7 million, per the BLS. Both measures are down considerably from their highs at the end of the February-April 2020 recession. They remain greater than their levels of 3.5% and 5.7 million prior to the coronavirus pandemic in February 2020.

The labor force participation rate was little changed at 61.6% in September and has remained within a narrow range of 61.4% to 61.7%, since June 2020, per the BLS. The participation rate is 1.7 percentage points less than in February 2020.

The number of persons not in the labor force who currently want a job was 6.0 million in September; little changed over the month, but it is up by 959,000 since February 2020. These individuals were not counted as unemployed because they were not actively looking for work during the last four weeks or were unavailable to take a job.

Economic News This Week

  • Initial jobless claims totaled 326,000, a decrease of 38,000 for the week ending Oct. 2, 2021, per the S. Department of Labor. The 4-week moving average totaled 344,000, an increase of 3,500 from the previous week. This is the lowest level for the 4-week average since March 21, 2020, when it was 2 million.
  • The number of job openings declined to 10.4 million on the last business day of August following a series high in July, per the S. Bureau of Labor Statistics’ Jobs Opening and Labor Turnover Study. Hires decreased to 6.3 million while total separations were little changed at 6.0 million. Within separations, the quits rate increased to a series high of 2.9% while the layoffs and discharges rate was little changed at 0.9%.
  • The private sector added 568,000 jobs from August to September, per the ADP National Employment report. Small businesses (1-49 employees) added 63,000 jobs. Medium-sized businesses (50-499 employees) added 115,000 jobs. And large businesses, those with more than 500 employees, added 390,000 jobs.
  • Small business optimism slipped in September with labor shortages and inflation continuing to impact operations, per the NFIB. The NFIB Uncertainty Index climbed to 74, a 5-point increase. Owners expecting better business conditions over the next 6 months decreased 5 points to a net negative 33%. Also, 51% of owners reported job openings that could not be filled, a 48-year record high for the third consecutive month. A net 42% of owners reported raising compensation, also a 48-year record high.

Foodservice News This Week

  • Many changes to help California restaurants stay afloat during the pandemic will remain on the menu, so to speak, for a while. California Governor Gavin Newsom signed a series of bills that promise to help the state’s restaurant community in a variety of ways. One bill promises to help streamline the process for restaurants to obtain proper permitting for outdoor dining that includes alcohol service. Another bill allows greater use of existing catering permits at the same location in a given year, which will help accommodate additional ways operators can serve customers. California restaurants’ ability to sell beer, wine and cocktails with takeout orders picked up by the customer has been extended for five years, too. The California Restaurant Association, which had lobbied for these changes on behalf of its members, was naturally excited by this development. “Many people ordered takeout more frequently since last spring of 2020 and have stuck with that habit,” says Jot Condie, president of the CRA. “The ability to order a drink with a takeout meal, order a drink in an expanded outdoor restaurant space, or receive greater use of a catering permit, are welcome reforms. They will assist restaurants as they seek to stabilize and increase options to serve the dining public.”
  • In an effort to offset its labor challenges at the store level, Raising Cane’s is deploying 50% of its corporate office staff to work at the quick-serve chain’s restaurants across the country. The 450 corporate staffers will work as fry cooks and in any other necessary capacity to keep the restaurants operational. In addition, the company set a goal to having its corporate staff recruit 10,000 new employees while out in the field.
  • From burgers to bulbs, McDonald’s set a goal of cutting the chain’s greenhouse gas emissions to net zero by 2050. Net zero plans require companies to decrease carbon dioxide emissions and offset any remaining emissions using projects that capture the gas. McDonald’s is working with Science Based Targets initiative (SBTi) to revamp its existing climate change goal
  • Consumers who wish to dine indoors at Los Angeles restaurants will have to provide proof of vaccination, per an ordinance passed by the city council. The ordinance applies to a variety of indoor public spaces, including malls, movie theaters and more. Only two L.A. city council members voted against the ordinance, with one saying he felt it was too hard on businesses. In contrast, L.A. Mayor Gil Garcetti feels the ordinance, which takes effect Nov. 4, 2021, will prompt more people to become vaccinated.
  • A Minneapolis-based Thai restaurant uses robots to run food orders from the kitchen to tables, where staff serve guests. This is the latest example of a way technology can complement existing staff and potentially offset labor challenges by helping an operator make more effective and efficient use of its most important asset – it’s people. The addition of Dee Dee, as the robot is known, takes some burden off the staff and allows them to focus more on the guests.
  • BBQ Holdings acquired Tahoe Joe’s, a five-unit California steakhouse. What makes this deal more intriguing is that it includes the intellectual property for buffet brands, which includes Home Town Buffet, Ryans, Furr’s Fresh Buffet and Old Country Buffet, per published reports. This is the multiconcept operator’s second acquisition this year as BBQ Holdings purchased Village Inn and Baker’s Square in June. Other concepts owned by BBQ Holdings include Famous Dave’s, its flagship brand, and Granite City Food and Brewery.
  • Pokeworks has reopened all six of its New York City locations. The last unit to come online was the chain’s Grand Central location in Manhattan. In September, Pokeworks reopened its flagship location in the Bryant Park neighborhood and even opened the chain’s first franchised unit near Hudson Yards. The chain promises more growth and development, including a new restaurant design, in the future.
  • Growth Chains: Aloha Poke Co. opened the first eleven planned stores for the Houston-metro market. Biscuit Belly, a chef-driven fast-casual breakfast and brunch concept, inked development deals 10 franchised units, 5 of which will be in the Atlanta metropolitan area and 5 in Nashville. Little Caesars intends to grow its presence in the New England region with a goal of awarding more than 50 new franchise units across Boston and Providence by 2026.