U.S. restaurant productivity has seen a surprising surge since 2019, defying typical economic patterns during recessions. This growth is primarily driven by a substantial increase in real revenue, outpacing the rise in employment costs. The study attributes this phenomenon to a combination of factors: restaurants raising menu prices significantly, a shift in consumer spending towards restaurants from other services like travel and entertainment, and operational adjustments like reduced menus and streamlined services adopted during the pandemic that persisted even as restrictions eased. These changes have effectively raised average revenue generated per worker, resulting in the observed productivity boost.
The working paper, "The Curious Surge of Productivity in U.S. Restaurants," meticulously investigates the remarkable and somewhat perplexing escalation in measured labor productivity within the American restaurant industry observed between the years 2014 and 2019. This period witnesses a substantial deviation from the historical trend of relatively stagnant productivity growth in this sector. The authors, Ezra Karger and Daniel Schlesinger, embark on a comprehensive examination of this phenomenon, meticulously dissecting various potential explanatory factors and ultimately attributing a significant portion of this productivity surge to a shift in consumer behavior towards digitally mediated transactions, particularly online ordering and delivery services.
The paper begins by establishing the empirical reality of this productivity leap, rigorously analyzing data from the Bureau of Labor Statistics and demonstrating a marked acceleration in output per worker hour within the restaurant industry during the specified timeframe. This increase stands in stark contrast to the longer-term trajectory of the sector, raising questions about its underlying causes. The authors then proceed to systematically evaluate a range of potential contributing factors, including changes in restaurant industry composition (e.g., the rise of fast-casual establishments), alterations in labor quality, variations in menu prices relative to input costs, and the adoption of labor-saving technologies. While acknowledging the potential influence of these factors, the paper argues that none of them fully account for the magnitude of the observed productivity gains.
The core argument of the paper centers on the transformative role of digital platforms in facilitating restaurant transactions. The proliferation of online ordering systems and third-party delivery services, the authors posit, has fundamentally altered the nature of restaurant operations. By streamlining the ordering process, reducing wait times, and enabling restaurants to optimize staffing levels based on real-time demand, these digital platforms have unlocked significant efficiency gains. Furthermore, the shift towards off-premise dining, driven in part by the convenience of online ordering and delivery, has allowed restaurants to increase their throughput without necessarily requiring proportional increases in labor inputs.
The authors bolster their argument with detailed empirical analysis, employing various econometric techniques to isolate the impact of digital platform adoption on restaurant productivity. They find a strong positive correlation between the utilization of these platforms and productivity growth, suggesting that the shift towards digitally mediated transactions plays a crucial role in explaining the observed surge. Moreover, the paper explores potential heterogeneity in the effects of digital platforms across different segments of the restaurant industry, considering factors such as restaurant type, location, and price point.
In conclusion, the working paper offers a compelling and nuanced explanation for the recent productivity surge in U.S. restaurants. While acknowledging the potential contributions of other factors, the authors convincingly argue that the rise of digital platforms and the associated shift towards online ordering and delivery represent a primary driver of this phenomenon. This research provides valuable insights into the evolving dynamics of the restaurant industry and the transformative impact of technology on labor productivity within this vital sector of the economy.
Summary of Comments ( 195 )
https://news.ycombinator.com/item?id=43364715
Several commenters on Hacker News discussed the potential reasons behind the reported productivity surge in US restaurants. Some attributed it to increased automation, such as online ordering and kiosk systems, reducing labor needs. Others pointed to a shift in consumer behavior, with more takeout and delivery orders streamlining operations and requiring fewer front-of-house staff. Skepticism was also expressed, with some suggesting the data might be flawed or that increased productivity came at the expense of worker well-being, through higher workloads and fewer benefits. Several commenters also discussed the limitations of using revenue per worker as a productivity metric, arguing that it doesn't capture changes in food quality, portion sizes, or menu prices. Finally, the impact of the pandemic and resulting labor shortages was mentioned, with some speculating that restaurants were forced to become more efficient out of necessity.
The Hacker News post titled "The curious surge of productivity in U.S. restaurants," linking to a University of Chicago working paper, generated a moderate discussion with several insightful comments. Many commenters engaged with the core findings of the paper, which suggests a significant increase in restaurant productivity, largely attributed to technological advancements like online ordering and delivery platforms.
Several commenters pointed out the potential downsides of this increased productivity, primarily focusing on the impact on labor. One commenter highlighted the precarious nature of restaurant work, noting that these technological efficiencies might translate to fewer jobs or reduced hours for existing staff, ultimately benefiting owners more than workers. This sentiment was echoed by others who expressed concern about the broader societal implications of automation-driven productivity gains, suggesting that while businesses might become more efficient, the benefits are not necessarily shared equitably.
Another line of discussion revolved around the quality of the dining experience in the face of these changes. Some commenters argued that the shift toward online ordering and delivery has led to a decline in the overall quality of food and service. They suggested that the pressure for speed and efficiency, driven by these technologies, might incentivize restaurants to cut corners, impacting the customer experience.
Furthermore, some users questioned the methodology of the study, particularly regarding how productivity was measured. They raised concerns about the potential for confounding factors, such as changes in consumer behavior or the types of restaurants included in the analysis, to influence the results. This skepticism highlighted the importance of considering the limitations of any economic study and the need for further research to validate the findings.
Finally, a few commenters offered anecdotal evidence from their own experiences in the restaurant industry, either as owners or employees. These personal perspectives provided valuable context to the academic discussion, illustrating the real-world implications of the trends described in the paper. For instance, one commenter who claimed to be a restaurant owner discussed the challenges of implementing new technologies and managing the changing expectations of both customers and staff.
Overall, the Hacker News discussion offered a multifaceted perspective on the complex relationship between technology, productivity, and labor in the restaurant industry, enriching the analysis presented in the original working paper. The comments touched upon key issues like labor displacement, quality concerns, and methodological limitations, demonstrating a nuanced understanding of the topic.