Workforce Intelligence (formerly People Report), a Black Box Intelligence (formerly TDn2K) company, recently released its quarterly Workforce Index™, a quarterly barometer of market pressures on employment. The most recent index conveyed a trend that is no longer a secret in the restaurant industry: the labor market is rapidly tightening, and there is no clear end in sight.

The Workforce Index for first quarter 2016 registered an overall reading of 76.4, increasing from 71.4 reported in the fourth quarter of 2015 and marking the seventh consecutive quarter that the Index has posted an overall reading over 70. Values over 50 indicate increased difficulty, and the strength of each value is measured by its distance from 50. Therefore, this quarter’s overall index is a strong indicator of the tightening labor market. This is in large part due to the rising turnover rates, which according to the recent Restaurant Industry Snapshot™, has increased for 27 consecutive months. Some other key labor indicators impacting this index include:

  • National unemployment rate closed 2015 at 5 percent
  • 65 percent of companies added hourly staff, while 51 percent added management positions
  • Recruiting difficulties increased for hourly and management positions in over 70 percent of companies
  • Turnover rates are increasing much faster for hourly employees, with 60 percent of companies reporting an increase, as opposed to 34 percent of companies reporting an increase in management turnover rates
  • 54 percent of companies reported an increase in vacancies at the hourly level, and 46 percent reported an increase at the management level

These numbers reflect a continuation of what the industry has seen building for almost three years. For a long time, staffing pressures have primarily affected quick service and fast casual restaurants. “Lower check averages and counter service makes hourly employment opportunities more fleeting by nature”, said Michael Harms, Executive Director of Operations at Black Box Intelligence (formerly TDn2K). This quarter’s vacancies index registered a reading of 90.6 for the QSR segment, which is up 17.7 points from the previous quarter and over 20 points higher than all other segments. Additionally, the recruiting index in the fast casual segment for the quarter was 90.9.

Labor pressures are now beginning to permeate the casual and fine dining segments. Last year, the overall index for casual dining in Q1 was 66.6, and the index for upscale casual/fine dining was 70.7. This quarter, both segments registered overall indices of about 79 points. This indicates the market pressures have spread beyond the QSR and fast casual segments and are now trickling throughout the entire industry.

So, what’s next? Unfortunately, market pressures are expected to continue rising throughout 2016. According to recent Workforce Intelligence (formerly People Report) data, turnover rates for managers are now higher than before the start of the recession in 2007, but the unemployment rate still is not as low as that time period. Workforce Intelligence (formerly People Report) analysts fully expect turnover to continue to increase as the unemployment rate drops, competition from retail and grocery gets stronger and the number of new jobs being created in the industry continues to grow. “These vacancy levels as well as the current rates of turnover are simply unsustainable in any business focused on quality guest service,” said Joni Thomas Doolin, founder & CEO of Workforce Intelligence (formerly People Report) & Black Box Intelligence (formerly TDn2K). “Savvy operators are laser focused on addressing these staffing issues immediately to gain a significant competitive advantage.”

For more information about the quarterly Workforce Intelligence (formerly People Report) Workforce Index, please visit our website. Questions? Contact Michael Harms at