Wednesday, October 29, 2014

Food Services and Drinking Places Sales per Employee

The following chart shows the two year moving average of real monthly food services and drinking places sales per employee (using CPI for food away from home, September 2014 dollars).

Click to enlarge.

1. Increasing real sales per employee is good.
2. Declining real sales per employee is bad.

These are universal truths. Taken to an extreme, zero real sales per employee eventually results in those employees visiting the unemployment line.

So if someone says the restaurant industry is strong, healthy, and robust, you might want to take it with a grain of salt. Although the sales are currently impressive and the employee growth is currently impressive, the employee growth has been exceeding the real sales growth (as seen in this chart). This is bad.

Let me summarize. If I was forced to choose between using my life savings to open a restaurant right now or getting a hot poker to one of my eyes, I'd have to give it some serious thought.

October 21, 2014
McDonald's 3Q same-store sales fall 3.3%

Operator faces pressure worldwide

This is not investment advice.

See Also:
New York City's Theoretical Jobs of the Future

Source Data:
St. Louis Fed: Custom Chart