Takeaway: Within casual dining, we are bearish on DRI, BLMN, TXRH, and BWLD.

Employment data released this morning by the Bureau of Labor Statistics suggest near-term strength for Quick Service and Fast Casual trends.  Full-service employment growth suggests a possible stabilization in hiring trends.  Our view is that casual dining trends decelerated in October versus September.  Knapp Track Casual Dining sales data track BLS employment growth data for the full-service and leisure and hospitality industries.  Within casual dining, we are bearish on DRI, BLMN, TXRH, and BWLD.


BLS DATA SHOWS QSR HIRING ACCELERATING (Corrected) - knapp vs leisure   hospitality


BLS DATA SHOWS QSR HIRING ACCELERATING (Corrected) - knapp vs full service emp growth



Employment by Age

Employment growth among 20-24 YOA cohort, which has been highlighted by many QSR and fast casual management teams as an important source of demand, decelerated to 1.4% year-over-year in October from 3% in September.  Employment growth among 55-64 year olds accelerated, sequentially, in October to 5.4% from 3.6% in September.  If this acceleration were to continue, it would be a positive signal for casual dining sales.





Industry Hiring


The Leisure & Hospitality employment data, which leads the narrower food service data by one month, suggests that employment growth in the food service industry may have tracked sideways-to-down in September.  On a sequential basis, the Leisure & Hospitality employment data registered a month-over-month gain of 11k (second chart below).   As the first chart of this post illustrates, the trend of employment growth within the Leisure & Hospitality seems to be stabilizing at roughly 2%.


Sequential Moves


Leisure & Hospitality: Employment growth at +2.54% in October, down 2 bps versus September

Limited Service: Employment growth at 2.7% in September, up 56 bps versus August

Full Service: Employment growth at 4.4% in September, up 22 bps versus August


BLS DATA SHOWS QSR HIRING ACCELERATING (Corrected) - restaurant employment


BLS DATA SHOWS QSR HIRING ACCELERATING (Corrected) - leisure   hospitality


Howard Penney

Managing Director


Rory Green


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