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Economic Development News Viewpoints

What would you like for dinner? Reservations!

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Dr. John E. Stapleford

Dr. John E.
Guest Columnist

What’s happening?

According to the U.S. Bureau of Labor Statistics, over the most recent decade total employment in Delaware has hardly budged while jobs at full-service restaurants have soared. From 2004 through 2014 total private sector Delaware employment rose only 2 percent, being hard hit by the 2008 recession. During the same period employment at full- service restaurants in Delaware jumped a whopping 30 percent.

Why is it happening? 

The soaring demand for full restaurant services cannot be explained by the trend in prices. Overall prices have risen 19 percent over the past 10 years while prices at full-service restaurants have jumped 30 percent. And the supply side has kept pace with demand as between 2004-14 the number of full-service restaurants in Delaware rose 36 percent compared to just a 5 percent increase in total business establishments.

Clearly the explanation for the increased demand lies with demographic factors. The two most prominent are the aging baby boomers and the double wage-earner family.

Since the recession, the population in Delaware has been increasing about 1 percent a year. Meanwhile the population age 55 and older has been going up 3 percent a year. There are currently 285,000 “boomers” in Delaware and this is projected to rise to 341,000 by the year 2025 “¦ to comprise one-third of the total population. With its retirement demand, boomers already are 40 percent of the Sussex County current population.

Given a median income of about $40,000, accumulated wealth and smaller household size, the boomers in Delaware in 2014 spent approximately $316 million on food away from home “¦ roughly equal to their share of the state’s population. Of this spending, 47 cents of every dollar came from households headed by a person age 55 to 64, and 36 cents from household headed by a person 65 to 74.

The other major demographic change is the astounding increase in the labor force participation rate of married women since the 1950s. Today among married-couple families, 53 percent have earnings from both the wife and the husband.

According to the American Time Use Survey, married mothers with children under 18 where only the husband works spend 610 hours a year in food shopping and preparation compared to 343 hours when both the mother and the father work. This, of course, explains the high levels of purchases of food away from home among households headed by persons 35 to 54 years of age.

The implications for business? 

There is no doubt that the full service restaurant industry in Delaware has provided a welcome counter-cyclical relief in an otherwise very slow economy. And a welcome outlet to boomers weary from decades of cooking and to tired two-wage-earner households.

Most of the 19,000 jobs at Delaware’s full-service restaurants, however, are part time, as reflected in the average annual pay of $17,600. The flexibility of the restaurant job schedules does match well for workers such as students and persons seeking a second income. And unreported tips are a tax-free bonus.

Together with the almost 95,000 part-time jobs in Delaware, restaurant jobs are a major reason why personal income growth has slowed in Delaware. The average annual pay in the state now tops $53,300. As the bulk of additional jobs come in such low-paying, predominantly part-time industries as restaurants, temporary help, retail and seasonal warehousing, it creates a drag on the wage bill that translates into slower personal income growth. And in the never- ceasing search for efficiency, the average number of employees per restaurant is slowly dropping.

The spatial impact of full-service restaurants varies widely in Delaware as well. Half of the restaurants are sited in New Castle County and 38 percent in Sussex County. Almost all the growth in the number of full service restaurants over the past decade has occurred in New Castle and Sussex counties. The latest data on full-service restaurant sales (2012) has New Castle capturing 56 percent of the market and Sussex 36 percent. 

Dr. John E. Stapleford is a consulting economist. He can be reached at jstaplef@msn.com or (302( 650-4965.

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