Changes to the Position Monitor
- Adding BJRI to Best Idea LONG
- Moving RRGB to SHORT Bias
- Moving SG to #2 Best Idea SHORT
Adapting to the New Norm: Navigating the Evolving Landscape of the Restaurant and Foodservice Industry
If the BLS data is correct, the February data would indicate an equilibrium emerging in the employment landscape of the restaurant and food service sector. This shift is marked by a resurgence in employment figures and a decline in the frequency of job transitions. Such a trend hints at a trajectory towards enduring expansion, mirroring the broader retail sales data but inconsistent with high-frequency traffic data. Yet, the sector's future perspective maintains a reserved optimism, with job creation expectations and continuous adaptation to the altered market conditions following the pandemic. We expect the data to be revised lower, but nonetheless, the February jobs data is consistent with our focus on small-cap names with businesses in the USA.
Employment Trends in February 2024
- Increase in Jobs: Restaurants and eating/drinking places saw a net gain of 41,600 jobs in February 2024, a significant improvement from the previous month's decline.
- Comparison with Previous Months: This increase is notable, especially considering the choppy job growth in recent months, but it's still below the average monthly increase seen in early 2023.
Long-Term Employment Outlook
- Above Pre-Pandemic Levels: As of February 2024, employment in eating and drinking places is 31,000 jobs above the February 2020 peak.
- Future Job Additions: The industry is expected to continue its expansion, with an additional 200,000 jobs anticipated to be added throughout 2024.
Normalization of the Labor Market
- Shifts in Job Openings and Quit Rates: A decline in job openings and a decrease in the quit rate among employees suggest a move towards a more stable labor market.
- Job Openings: The number of job openings in the broader Accommodations and Food Services sector has been below one million for four consecutive months, a significant change from the previous 30 months above that threshold.
- Quit Rate: The average quit rate has decreased to levels comparable to 2019, indicating increased job stability and potentially higher employee retention.
5. Sector Overview
- Scope of the Sector: Eating and drinking places constitute nearly 90% of jobs in the combined Accommodations and Food Services sector, a significant portion of the industry.
- Workforce Size: This sector provides jobs for approximately 80% of the restaurant and food service workforce, 15.5 million people.
Restaurant Traffic
Casual Dining traffic was down (2.5%) last week.
QSR traffic was down (4.0%) last week.
