While Friday’s jobs data were disappointing to some, the narrower data sets released this morning were, on balance, positive for the restaurant space.  Accelerated employment growth in the younger age cohorts suggests that sales at QSR and fast casual are likely to remain strong into 3Q.

Below, we discuss employment by age and restaurant industry employment.  These serve as proxies for demand and operator confidence, respectively, in our models.


Employment by Age (demand)

Employment growth by age was positive in July as the 20-24 YOA cohort saw growth accelerate to +205 bps from +175 bps in June, the 25-34 YOA cohort saw growth accelerate to +204 bps from +184 bps in June, the 35-44 YOA cohort saw growth accelerate to +53 bps from +28 bps in June, the 45-54 YOA cohort saw growth accelerate to -94 bps from -100 bps in June, and the 55-64 YOA cohort saw growth accelerate to +348 bps from +210 bps in June.


This is an important metric for the restaurant industry.  Given the discretionary nature of casual dining expenditure, and the highly-competitive nature of the industry, we infer that sustained employment growth in core demographics is necessary for continued comp growth in the absence of new unit growth or income per capita growth.  Within the QSR segment, we continue to find that a vast majority of the management teams we track consistently highlight the importance of employment growth to the success of their business.  The sequential accelerations in 20-24 YOA and 24-53 YOA cohorts should sit well with QSRs in 3Q13. 





Restaurant Industry Employment (confidence)

The Leisure & Hospitality employment data, which leads the narrower food service data by one month, suggest that employment growth in the food service industry saw a slight sequential deceleration in July.  Leisure & Hospitality employment data registered a month-over-month gain of 23k (second chart below), a deceleration from the prior month’s 57k month-over-month gain. 


Sequential Moves

Leisure & Hospitality: Employment growth at +3.39% in July, down 4 bps versus June


Limited Service: Employment growth at +5% in June, down 3 bps versus May


Full Service: Employment growth at +2.65%, up 28 bps versus May










Howard Penney

Managing Director


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