Restaurant Industry Loses Jobs for the First Time Since April as New Restrictions Hit Employment

Alexi Rosenfeld | Getty Images
  • Food and drinking places lost 17,400 jobs in November as new restrictions weighed on restaurant sales.
  • This is the first month since April that the industry has lost jobs.
  • Same-store sales across the industry fell 10.3% in November, according to Black Box Intelligence.

The restaurant industry lost jobs for the first time since April as new restrictions to fight the coronavirus pandemic weighed on sales at eating and drinking places.

The surge of new Covid-19 cases in November weighed on overall job growth, which slowed down to its lowest rate since May. Unemployment decreased from 6.9% to 6.7%, according to the monthly Department of Labor report. Food and drinking places lost 17,400 jobs in November, and the industry has an unemployment rate of 13.8%.

But the spike in infections is hitting the restaurant industry particularly hard. This autumn, states and municipalities across the country began imposing another round of restrictions on bars and eateries after reopening indoor dining and expanding capacity during the summer months.

Reduced capacity or pivoting entirely to takeout and delivery means fewer workers are needed inside the kitchens or serving up food.

Los Angeles County, for example, has closed restaurants to all in-person dining, whether it's indoors or outdoors. The state said Thursday it could reimpose stay-at-home orders if hospital capacity becomes constrained. Delaware had placed new restrictions on restaurants in mid-November, but on Thursday issued a stay-at-home order, as cases continued to climb.

Nationwide, the seven-day average of daily new Covid cases has risen to more than 179,400, according to data collected by Johns Hopkins University — the highest yet. This week, grim records have been set for the number of patients in hospitals and the number of people who have died of Covid in the U.S.

And while some consumers may have been willing to dine at restaurants when the number of Covid cases was lower, the new surge, combined with cold weather, appears to have hit customer traffic. Black Box Intelligence, which tracks restaurant data, found that the industry's same-store traffic declined 16.3% in November. Same-store sales fell 10.3%, representing the biggest decline since August.

The new surge in cases also comes after the end of summer hiring in the fast-food sector, although unemployment data is seasonally adjusted. McDonald's said it would hire 260,000 people this summer as it reopened its dining rooms.

Industry experts are expecting a new wave of restaurant closures and bankruptcies this winter, which will further shrink the number of available restaurant jobs. However, talks for another stimulus package have resumed on Capitol Hill, which could bring relief both to restaurants and their out-of-work employees. Earlier this week, President-elect Joe Biden said that restaurants should be given grants, not loans, to aid their recovery from the crisis, echoing a sentiment voiced by Treasury Secretary Steven Mnuchin.

Copyright CNBC
Contact Us