September 2017 US Restaurant Labor Data

September 2017 US Restaurant Labor Data

September 2017 US restaurant labor data revealed that the country took a hit due to the recent spate of natural disasters, though perhaps not as hard of a hit as some analysts had suspected. That’s good news for operators and investors, with 2017 continuing to shape up as positive for the restaurant industry.

So far, 2017 US restaurant labor data signals a positive future for restaurant operators, though job growth in the sector has slowed slightly compared to August. On the other hand, wages have continued to rise 2.5% when compared to the 2016.

Below, we take a further look at where employment and wages stand as of September 2017, along with how they’ll shape the industry and impact restaurant companies in the months ahead:

SEPTEMBER 2017 US RESTAURANT LABOR DATA: EMPLOYMENT

Some 33,000 jobs were lost in the US in September, largely thanks to the double-whammy of Hurricanes Harvey and Irma in Texas and Florida. This marked the first month of job destruction in seven years, putting average monthly job creation at 148,200, year to date (21% lower than 2016).

That decrease was largely influenced by the negative figures witnessed in the restaurant industry: Food Services & Drinking Places saw a decline of 104,700 employed persons – larger than the number of jobs created in the previous three months combined.

The Leisure & Hospitality sector lead job losses in September — largely because of the closure of businesses in the areas hit hardest by the hurricanes. A full 111,000 jobs were lost in the industry, more than enough to offset the job creation in other industries.

Year to date, however, the industry has created some 129,000 jobs, only surpassed by Professional & Business Services and Education & Health segments. In fact, roughly one-quarter of the jobs created this year so far (compared to December of last year) came from Leisure & Hospitality.

Unemployment Rate Restaurants vs. the Economy

The unemployment rate at restaurants is decreasing fast, making it more important for operators to make an effort to retain key staff. While historically above the unemployment rate of the overall economy, the average unemployment rate for restaurants has decreased by 23% since 2015 (compared to 14% for the overall economy). The difference between the two rates is now at its lowest since 2013.

SEPTEMBER 2017 US RESTAURANT LABOR DATA: WAGES

The evolution of wages continued to show signs of strength in the labor market, according to September 2017 US restaurant labor data. The average hourly earnings for the private sector increased 2.9% (compared to the same month of 2016), to reach $26.55. Hourly wages in the Leisure & Hospitality sector continue to increase faster than the average for the private sector.

In September, the increase was 3.6% (year-over-year), similar to the previous month, and about 25% larger than the increase in the average hourly wages for all the private sector. Since March, however, the rate of increase in wages is decelerating, which compares with an stability of the wage growth rate for the private sector. Overall, wages in Leisure & Hospitality are close to 40% lower than what’s usual in the private sector, though the difference has been slowly decreasing in the last four years.

Though in the last ten years restaurant wages and prices have moved in a high correlation, wages have recently been climbing faster. The increase in wages since the beginning of 2016 has 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.

Restaurant prices and wages

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.

ABOUT AARON ALLEN & ASSOCIATES:

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.

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