Restaurant Turnover Rates Improve to Pre-Pandemic Levels

This article originally appeared in Nation’s Restaurant News and contains commentary from Tony Smith, CEO and co-founder of Restaurant365.

The United States economy added 275,000 jobs in February – about 75,000 more than expected – while the unemployment rate ticked up to 3.9%, from 3.7% in January. According to data released March 8 from the Bureau of Labor Statistics, the 3.9% unemployment rate is the highest level in the past two years.

Employment at restaurants and bars accelerated in February, with net 41,600 jobs added during the month versus a loss of 2,400 jobs in January. February marked the strongest monthly increase since January 2023 for the industry’s workforce, illustrating a continued demand for both restaurant employment and usage.

“It’s exciting to see both total U.S. employment and hospitality jobs rise by 42,000 and 275,000 positions, respectively, in the second month of the year. We know that in many parts of the country, January can bring a slight lull after the holiday rush, but February arrived in full swing, and rising restaurant jobs are a positive indicator of a strong consumer economy this year,” Tony Smith, CEO and co-founder of Restaurant365 said in a statement. 

Eating and drinking places are 31,000 jobs above their February 2020, pre-pandemic employment peak. Still, there continues to be room to grow. According to the BLS, there were 941,000 job openings in the combined restaurants and accommodations sector at the end of January.

According to a recent survey from the National Restaurant Association, 88% of operators, both limited-service and full-service, said they are likely to hire additional employees in the next six-to-12 months. The association expects the industry to add an additional 200,000 jobs this year.

As operators look to fill more roles, retention rates are improving in the industry, according to the BLS and reported by the National Restaurant Association. During the last four months, an average of 4.8% employees in the sector quit their jobs, which is a full percentage point below the average monthly quit rate of 5.8% during 2021 and 2022. It’s also slightly lower than the average quit rate of 4.9% from 2019.

Higher retention levels were a major theme during the latest round of earnings calls. Brinker noted its 12-month turnover improved at both manager and hourly levels, while Chipotle reported it is also seeing less turnover. Shake Shack executives reported the best staffing levels “in years,” which directly impacted a stronger labor and restaurant-level margin performance. And, BJ’s CEO Greg Levin said his company’s retention levels are now better than pre-COVID levels, “bringing added stability and less training time and cost to our business.”

The improvement in retention rates comes as wages continue to increase; in February they were up another 0.1% and are 4.3% higher year-over-year. The National Restaurant Association’s survey shows that 62% of operators said they’re “very likely” to expand payrolls this year.