The April 2018 US jobs report revealed that job and wage growth are slowing down in the foodservice and hospitality sector, though they’re still growing faster than the private sector average. Below, we take a further look at where employment and wages stand as of April 2018, along with how they’ll shape the industry and impact restaurant companies, investors, and operators in the months ahead:
Some 164,000 jobs were created in the US in April, marking 7 years and 7 months of uninterrupted growth. Average monthly job creation is 199,750 year to date, 10% lower than 2017.
These numbers are largely influenced by the positive figures in the restaurant industry: foodservice & drinking places saw an increase of 14,800 employed persons, greatly improving March’s figure of 3,700.
The leisure & hospitality sector ranked fourth in job creation in April. A full 18,000 jobs were created in the industry, behind the job creation figures for professional & business services, education & health services, and manufacturing.
Year to date, the foodservice industry has created 7% of the new jobs, amounting to 59,000 positions.
Meanwhile, wage growth continues to be moderate. Average hourly earnings for the private sector increased 2.6% (compared to last April), reaching $26.84. Hourly wages in the leisure & hospitality sector continued to increase faster than the average, growing 2.9% in April year over year. Overall, wages in leisure & hospitality are close to 40% lower than the overall average in the private sector, but this difference has been slowly decreasing over the last 4 years.
Last month’s increase is similar to the previous month and about 12% larger than the increase in average hourly wages for the private sector as a whole. Since March, however, the rate of wage increases in the foodservice sector has been decelerating, while wage growth in the private sector has largely stabilized.
In the last 10 years, restaurant wages and prices have moved in a high correlation, but wages have recently started climbing faster. The wage increases since the beginning of 2016 have almost to doubled the increase in prices of food away from home. As a consequence, restaurants — especially those in the full-service category — are struggling to maintain their margins.
We’ll be updating labor data each month, so be sure to check back. For more about the above categories, and the reports used to quantify these charts, visit US Restaurant Labor Data: An Overview.
Aaron Allen & Associates is a leading global restaurant industry consultancy specializing in growth strategy, marketing, branding, and commercial due diligence for emerging restaurant chains and prestigious private equity firms. We have helped helped restaurant companies around the world drive revenues, increase profits, and enhance the guest experience through improved marketing, messaging, and menu engineering. Collectively, our clients post more than $100 billion, span all 6 inhabited continents and 100+ countries, with locations totaling tens of thousands.