For the second straight month, the June Jobs Report continued to deliver some good news on the unemployment front. The US economy added 4.8 million jobs across all industries, beating the 3.2 million in gains estimated by economists. Similarly, the unemployment rate fell from 13.3% to 11.1% — again beating economist estimates of a decline to 12.5%. But to be fair, we are in unprecedented times, which makes forecasting economic data mostly a crapshoot. If you were to go back to 1960, there were only three months with job gains more than 500,000, and never a month with more than 800,000 job losses. This year, however, the US economy lost nearly an eye-watering 21 million jobs in April and then gained close to 5 million jobs last month.

The record numbers reported were due to the gradual easing of coronavirus-related restrictions which helped more businesses reopen and bring back workers. Most of June’s jobs gains were from the rehiring of leisure and hospitality workers (2.1 million to be specific or two-fifths of the total jobs added) that were laid off or furloughed as the pandemic spread through the country. Out of this 2.1 million it was the food services and drinking establishments that saw the biggest return to work with their payrolls swelling by 1.5 million people in the month – and all this was on the back of a positive month previous with 1.4 million jobs added to the industry in May.

The nearly 3 million jobs added in May and June however remain far off their pre-pandemic levels. Before closures of restaurants across the country led to mass layoffs, the industry employed 12.3 million workers. According to data from the U.S. Bureau of Labor Statistics, restaurant employment bottomed out at 6.3 million jobs in April, and with the 2.9 million workers restaurants have managed to add back nearly half of the jobs they lost. “While a two-month employment bounce of 3 million jobs is impressive, it only marks the beginning of a long road to recovery for the restaurant industry,” the National Restaurant Association said in a July 2 report.

Similarly, the easing of business restrictions not only saw employees returning but also the beloved customer! According to the National Restaurant Association, restaurant and food service sales totaled $47.4 billion in June, marking the second straight month of growth after sales hit a low of $30 million in April. While actual June sales dropped more than 25% from the year-ago period, it was an overall improvement from the revised 38% drop in May. Bigger restaurants and brands, especially ones focused on takeaway and delivery services, are outperforming their smaller peers. Domino’s Pizza Inc. reported July 16 that its second-quarter same-store sales grew 16.1% for U.S. stores from the year-ago period. Shares of most of the biggest publicly traded restaurant companies rose in the month ended July 15 indicating that the industry has finally started showing some confidence.

While the June jobs report brought mainly good news fears of a second wave of are making many skeptical with the industry getting hit hard again in the past two weeks by new closings. A rise in new COVID-19 cases towards the end of the month has caused local and state authorities to delay reopening, and in some cases, rolling back phases by shutting bars and reinstating on-premise restaurant service restrictions as they try to get the case surge under control. In Texas, for example, restaurants may continue to offer on-premise dining, but capacity has now rolled back from 75% to 50%, and California announced last week the closing of its nearly 86,000 restaurants to on-premise dining. This will no doubt have an effect on the hospitality unemployment rate for July and the good progress felt in both May and June. “Rising cases, delayed dine-in re-openings and potential re-closings are a clear near-term negative for full-service restaurants,” Jake Bartlett, a SunTrust Robinson Humphrey analyst. As a result of these business restrictions returning for in several states the National Restaurant Association is calling on Congress to pass legislation that would provide targeted relief for eateries.

Bottom line
It is great to see many workers who were furloughed have started joining back sooner than expected and witnessing improving fortunes for food and beverage establishments. However, the restaurant industry’s struggles are far from over as the challenges posed by Covid-19 will continue to disrupt and impact the industry into 2021. “It’s apparent that the road to recovery is going to be a challenging one for the U.S. restaurant industry,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “Consumer demand is there as is the want for normalcy, but there is nothing normal about this situation.”