Macroeconomic forces and geopolitics combine to create a negative backdrop for SMEs. Despite these significant headwinds, there are several reasons for relative optimism for the restaurant industry.
Large leading companies continue to experience and anticipate significant macroeconomic challenges. fedexCEOs of, for example, are currently anticipating a global recession. many related forces Including the softening of private consumption contributes to this forecast. higher interest rates; exchange rates that make US exports more expensive; A negative wealth effect associated with a decrease in assets (such as stocks). Changes in business investment So, regardless of whether we are in (or is about to enter) a technological recession, Economic growth has slowed and will slow Relative to trend.
Restaurant industry Especially strongly affected by the new coronavirusHowever, the industry is making strides toward recovery. Total restaurant sales increased from $66.3 billion in January 2021 to $86.2 billion in August 2022 (adjusted for inflation).anecdote of hard to get a reservation Certain restaurants have a lot. Additionally, despite the large macroeconomic cloud, there are offsetting forces that could mitigate the impact of the recession on restaurants by providing another source of demand. These include: Employees are increasingly returning to the officeshould increase demand for restaurants, coffee shops and bars for office workers. Rise in domestic and foreign tourists demonstrating growing desire to travel for the time being; When Restaurant industry employment remains well below pre-pandemic trendlineThis suggests that modest shocks to demand that may occur during a macroeconomic contraction will have relatively little impact on “lean” or understaffed businesses such as restaurants.
recession? inflation? Stagflation? Competing narratives and evidence make it difficult to understand where small and medium-sized restaurants and their employees stand. We analyzed employment data for hundreds of thousands of employees in over 50,000 restaurants. Homebase also conducted a pulse survey of more than 100 restaurant owners in mid-September and mid-July. To understand how they are performing in light of current events.
Hours worked by restaurant workers in September 2022 are down compared to September 2021 and September 2020 after a relatively strong spring and early summer.
working time
(7-day moving average; compared to Jan 2020 (i.e. pre-Covid))
1. Significant drop due to major US holidays. A noticeable drop in mid-February 2021 coincides with a period that includes the Texas power crisis and severe weather in the Midwest. Source: Headquarters data.
The proportion of restaurant workers working in September 2022 is approximately 6 percentage points lower than the same period in 2021.1
working employee
(7-day moving average; compared to Jan 2020 (i.e. pre-Covid))
1. Significant drop due to major US holidays. A noticeable drop in mid-February 2021 coincides with a period that includes the Texas power crisis and severe weather in the Midwest. Source: Headquarters data.
Restaurant owners are evenly split on whether they intend to open new locations for their current businesses in the next year or two.
As of mid-September, about 39{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of restaurant owners plan to expand their business by opening new restaurants in the next 1-2 years. This number has increased by nearly 4 percentage points since July 2022. The proportion of owners who do not plan to open new locations for their current business dropped by more than 4 points in the corresponding period. In both July and September, restaurant owners were significantly more likely than owners in other industries to have expansion plans. For example, in September, the overall percentage of owners planning to open a new restaurant within 12-24 months was 9 percentage points lower than that of restaurant owners.
Survey question: Are you planning to open new locations for your current business in the next 12-14 months?
sauce: A pulse survey of homeowners. Ns >100 in mid-July and mid-September
Owners’ employment intentions for the next 1-2 years were revised upwards in September
Nearly 95{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of restaurant owners expect to hire at least one additional employee within the next 1-2 years. As of mid-September, the restaurant owner plans to increase his workforce by more than 56{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} over the next one to two years. This contrasts with his 44{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} increase scheduled for July 2022. These figures are consistent with the growing intention of owners to open new locations for existing businesses with the right staffing.
The owners now plan to hire more employees in the next 1-2 years than they did in July, but expect it to be more difficult to hire.
As the previous slide showed, most restaurant owners plan to hire new employees within the next year or two. However, compared to July 2022, restaurant owners believe it will be more difficult to hire employees now. In fact, 27{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of his owners believe it will be difficult to hire workers in the next 1-2 years. This is up from his 22{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of restaurant owners who expressed the same sentiment in July 2022.
Survey question: Do you think it will be easier, same or harder for your organization or business to hire employees in the next 12 months than it is now?
sauce: A pulse survey of homeowners.
Given how hard it is to hire, we asked restaurant owners the best way to find good employees (hint: referrals)
The turnover rate in the restaurant industry is relatively high. Finding good workers at the best times is difficult. In a tight labor market, that could be a big deal. Home Base’s September Pulse survey revealed that owners found referrals particularly effective. This is because referrals are his three of the top five search channels an owner uses to hire top employees. Top 5.
Survey question: Based on your experience, which of the following is the best way to find good employees?
sauce: A pulse survey of homeowners.
Hiring and employee management is one of the most difficult aspects of running a restaurant.
Hiring employees (37{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}), managing employees (12{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}), and related labor costs (9{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) are among the top five challenges restaurant owners must contend with. Intermediate supply costs (15{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) and, to a lesser extent, economic uncertainty (6{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) round out the top five challenges facing owners today.
Survey question: What is the most challenging aspect of running a business today?
sauce: A pulse survey of homeowners.
To retain and manage their employees, restaurant owners use a variety of strategies
In the current environment, it is difficult to hire and retain the best workers. As a result, we asked restaurant owners what strategies they use to retain employees. Among owners using retention strategies, the most frequently cited strategy was the use of achievement awards (29{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). His 22{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of owners cited the introduction of a new tipping policy. About 19{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of owners offer their employees the shifts they want. Rounding out the top five were offering more payments (12{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) or gift or gas cards (10{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}).
Survey question: Do you have any of the following strategies in place to retain employees (select all that apply)?
sauce: A pulse survey of homeowners.
With a leaner workforce and increased sales, restaurant owners report their employees are (nominal) more productive
More than a third of restaurant owners report their employees are more productive than they were last year, and more than 10{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of owners say their employees are significantly more productive than they were at this time last year. reported to have improved.
When asked the reason for this increase, several owners indicated improvements in management processes and technology.
“Clearer expectations will be communicated, a step-by-step process will be available, and clear punitive action will be taken.”
“Keep morale high. Communicate. Treat your employees with respect and understand that you can’t run a business without them.”
Financial and staffing issues are impacting employee camaraderie in surprising ways
Over 45{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of restaurant owners believe their employees will be more productive (or significantly higher) this year than they were last year. With lean operations, 67{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of his owners believe the current economic climate has fostered camaraderie between teams.
This increased camaraderie is reflected in the willingness of employees to pick up teammates’ shifts (50{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). Improved processes and tools also improved employee communication (16{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). Owners also observed a general willingness of employees to help each other (14{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}), the more personal time they spend together (12{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}).
Survey question: How has the current economic situation created camaraderie within your team?
sauce: A pulse survey of homeowners.
California recently passed a landmark law to protect fast food workers.State restaurant owners have some concerns
California recently passed landmark legislation (AB 257), including the creation of the Fast Food Council, which sets minimum standards for wages, hours, and working conditions for restaurant workers. The Owner Pulse survey included her 53 restaurant owners in California. Those restaurant owners are concerned about the bill’s unintended consequences, including higher costs for consumers (51{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}), increased competition for labor (40{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) and the need to reduce labor costs (32{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). expressed. More automated operations (21{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). Since the law has just come into force, only one owner has been in contact with his employees about the law and only one owner has been asked about bills by his employees.
