Franchise Sector Gains Jobs in January, ADP Report Says
A snapshot of franchise sector employment gains and losses for January 2019, from the ADP National Franchise Report.
After job growth in franchising slowed overall last year, the sector started out strong in 2019, gaining 33,000 jobs in January according to the ADP National Franchise Report. That comes after a growth rate of 1.82 percent in 2018—or 140,000 jobs—down from 2.74 percent (212,000 jobs) the year before.
The net increase for January was fueled by franchise restaurants, which ADP reported added 36,000 jobs. Food retailers, business services and accommodations, however, combined to post a loss of 4,100 jobs for the month. Other gains came from auto parts and dealers (2,600) and real estate (100).
An arm of payroll service ADP, the ADP Research Institute produces its employment reports in collaboration with Moody’s Analytics and uses transactional payroll data from one in six U.S. workers.
Looking back to January 2018, ADP reported the franchise sector added only 19,700 jobs, a noticeable difference from this year.
Overall, private sector employment increased last month by 213,000 jobs.
“The labor market has continued its pattern of strong growth with little sign of a slowdown in sight,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in an announcement of the employment numbers. “We saw significant growth in nearly all industries, with manufacturing adding the most jobs in more than four years. Midsized businesses continue to lead job creation, however the share of jobs was spread a bit more evenly across all company sizes this month.”
Mark Zandi, chief economist of Moody's, noted the job market weathered the government shutdown well. “Despite the severe disruptions, businesses continued to add aggressively to their payrolls,” he said. “As long as businesses hire strongly the economic expansion will continue on.”
Labor issues remain a concern across the industry, as we reported last month, with some brands such as Wingstop cutting hours and unloading some of its under performing menu items to address the labor challenge.
“While Wingstop is well positioned as a brand to be able to handle the negative impact of wage inflation, we still have a number of initiatives to combat that,” said CEO Charlie Morrison, presenting at the annual ICR Conference in January. “We eliminated potato salad and baked beans, replaced them with loaded fries.”
At Ruth’s Chris, COO Cheryl Henry aims to better prepare employees and chart their career path with them.
“We focus on labor because it’s a very tough labor market. But we have industry-low turnover, that’s a big focus for us,” said Henry, touching on a investment in evolving the brand toward “Ruth’s 2.0.” “Some of the investment we made was related to retention. Part of that was development and training. The more we can invest into training employees the more invested they are and the longer they stay.”