Dive Brief:

• The National Restaurant Association’s 2023 State of the Industry report predicts employment in restaurants will surpass pre-pandemic levels in 2023, but that the recovery will be slow and many operators are likely to have trouble filling positions.
• The foodservice and restaurant workforce will expand by about 500,000 workers in 2023, NRA predicts. A majority of those new jobs (about 300,000) will be concentrated in restaurants, specifically, according to projections based on historical U.S. Bureau of Labor Statistics data. 
• Restaurant operators still face a tight labor market and may have trouble filling job openings, with 79% of operators surveyed by the NRA reporting difficulty hiring.

Dive Insight:

The NRA predicts restaurant employment will reach about 12.4 million workers by the end of 2023, compared to roughly 12.1 million at the end of 2022 and roughly 11.4 million workers at the end of 2021. This growth is predicated on NRA projections that do not foresee a serious recession in 2023.

Despite current employment levels, 62% of restaurants surveyed by the NRA say they’re understaffed. Only in one segment of the industry (coffee & snack) did a minority (49%) of operators feel they were understaffed. All other sectors as classified by the NRA saw majorities of operators report short staffing. About 54% of operators expect hiring to be about as difficult this year as last year, while 35% expect it to get more difficult.

One factor that may constrain employment is a weakness in inflation adjusted sales. The association foresees sales growth will be driven significantly by menu price increases necessitated by persistently high costs.

“While nominal food and beverage sales are projected to surpass pre-pandemic levels in 2023, they won’t on an inflation-adjusted basis,” NRA said in the report. 

In the labor market, costs are still increasing, though wage growth slowed in 2022 compared to 2021. According to BLS data, wages for nonsupervisory foodservice workers increased by $1.46 an hour over the course of 2022, compared to a $2.37 increase in 2021. The moderation in wage growth is likely to continue as employment levels surpass 2019 levels. However, 89% of restaurant operators said increased labor costs were a significant challenge for their businesses, and operators reported labor costs were up an average of 18.3%.

Turnover is one factor driving increased costs, with monthly hospitality and foodservice labor turnover still twice the national average at 5.4%. According to the NRA report, job openings are still high, with December 2022 seeing more than 1 million job openings in restaurants and accommodations. High turnover drives costs up by necessitating greater recruitment and training. 

All told, operators are still hiring, with 87% saying they’re likely to hire additional workers in the next 6-12 months, ranging from 91% of casual dining operators to 69% of coffee and snack establishments. These factors could increase competition among employers for workers, and some major brands are already queuing up aggressive recruitment targets.