Texas Restaurants: Growth Amidst Staffing & Cost Woes

**Texas Restaurants Mark Eleventh Quarter of Growth Amidst Staffing, Cost Hurdles**

AUSTIN, Texas – May 15, 2024 – The Texas restaurant industry achieved its eleventh consecutive quarter of sales growth in the first quarter of 2024, spanning January through March. The sector recorded a 2.1% increase in nominal sales across the state, translating to a 0.7% rise after adjusting for inflation.

Employment in the industry also saw significant expansion, reaching an impressive 1.5 million jobs in Texas by March 2024. This represents a 2.5% jump in employment during Q1 alone, contributing to the state's overall employment growth of 3.0% in March compared to the prior year. The statewide unemployment rate concurrently dipped to 3.8% in March.

Despite these positive indicators, restaurant operators in Texas continue to grapple with significant challenges. Approximately 70% of operators report ongoing difficulties in finding and retaining sufficient staff to fill open positions. Elevated food costs also persist, exerting considerable pressure on profit margins.

As a direct response to these rising operational expenses, nearly 90% of Texas restaurants raised their menu prices during Q1. A substantial 78% of operators anticipate further price adjustments in Q2, which began in April, to manage escalating costs.

The prevailing sentiment among many restaurant owners reflects caution regarding the immediate future. Roughly two-thirds (67%) of operators expect business conditions to worsen over the next six months. While Texas continues to outperform national averages in both sales and employment growth, concerns over shaky consumer confidence and broader economic uncertainties are influencing outlooks. For instance, average weekly hours in Texas's private service-providing sectors increased by just 0.4% in March compared to the previous year, suggesting a tempered growth environment.