Why restaurants and bars have been losing jobs lately

Sabri Ben-Achour Dec 6, 2023
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One reason hiring has slowed is consumer pushback to restaurants setting higher prices in the wake of ongoing inflation. Robert Nickelsberg/Getty Images

Why restaurants and bars have been losing jobs lately

Sabri Ben-Achour Dec 6, 2023
Heard on:
One reason hiring has slowed is consumer pushback to restaurants setting higher prices in the wake of ongoing inflation. Robert Nickelsberg/Getty Images
HTML EMBED:
COPY

We’ll get the latest read on the labor market Friday when the monthly jobs report comes out. In the last jobs report, which looked at October, the economy added about 150,000 jobs. But there was one industry that actually lost jobs — 7,500 of them. We’re talking about restaurants and bars.  

One possible reason for the dip: inflation. If you thought you’ve seen sticker shock at restaurants, try being the restaurant. 

JR Raksasuwan is co-owner of Chalong, an upscale Thai restaurant in New York’s Hell’s Kitchen neighborhood.

“A pack of chicken. Before the pandemic, it used to be just $40 for a pack like this big,” Raksasuwan said. Picture a wholesale bag of chicken the size of a fold-out menu. “Now it’s at $110. Can you imagine that?” 

He had to raise menu prices, and that did not go over so well.

“The people, they start complaining about why everything is more expensive than before,” he said. 

The settling in of higher prices may be contributing to a slowdown in parts of the restaurant industry, says Alex Susskind, professor of food and beverage management at Cornell.

“Inflation numbers have cooled a little bit but they haven’t cooled universally across the economy,” he said. “There is some consumer-based resistance when you raise prices.”

That’s true particularly at sit down restaurants.  

“In September and October, we’ve seen significant decreases in guest traffic, like five to 10 percent decreases,” said Gregg Thomas, a managing director of BDO.

Hiring in the restaurant industry has slowed down too. It is on average still growing, but it has been bumpy.  In two of the last three months the industry actually lost a few thousand jobs.  And that may be more than just the aftermath of high prices.

“Restaurant industry employment growth essentially mirrors on a macro scale what goes on with national employment growth,” said Hudson Riehle, senior vice president of research at the National Restaurant Association. “Look at national employment growth. It still is positive, but it’s been moderating over the past couple years.”

But one way the restaurant industry stands out from just about every other major industry — it still has not regained the level of employment it had before the pandemic.

“We’re about 14,000 jobs shy,” said Thomas. This isn’t true for every type of restaurant — fast food employment is up 3% compared to before the pandemic. “Limited service restaurants, which you would know as the coffee brands out there, or ice cream stores, that kind of thing, they’re up 128,000 jobs, a 13% increase over pre-pandemic.”

The problem is the sitdown restaurants and the fine dining places. 

“They’re down 214,000 jobs, 4% lower,” Thomas said.

In Houston Texas, there’s a clue as to why. Tracy Vaught is president of H-Town Restaurant Group, which owns five establishments that employ 450 people.

“It used to be a little higher per restaurant before the pandemic but it’s less now. Just trying to run a tighter ship I would say,” Vaught said.

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