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HomeMarketChipotle Is Hiring 15,000 Workers. Why Layoffs Aren't Hitting Retail Yet.

Chipotle Is Hiring 15,000 Workers. Why Layoffs Aren’t Hitting Retail Yet.

Chipotle is bulking up its workforce as companies in tech cut staff.

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Anna Moneymaker/Getty Images

Layoffs? What layoffs?

That’s the attitude
Chipotle Mexican Grill
(ticker:
CMG
) brought to the table on Thursday, saying it was looking to hire 15,000 employees ahead of what it calls burrito season, the period of stronger demand that runs from March to May.

Chipotle is in the midst of an ambitious expansion plan that would more than double its North American footprint to 7,000 stores. The company currently operates nearly 3,100 restaurants in North America and Europe.

“We will continue bringing in new crew to support Chipotle’s aggressive growth plans, while simultaneously promoting and upskilling those currently in role,” said Scott Boatwright, chief restaurant officer.

The move is a contrast to the layoffs snaking their way across the economy in response to the Federal Reserve’s effort to fight inflation by reducing demand for goods and services. While the job cuts started in Big Tech, they have since spread to other sectors. Recently, chemicals giant
Dow
(
DOW
) and manufacturer
3M
(
MMM
) announced they were reducing their workforce, joining the likes of
Microsoft,

Alphabet,

Amazon,

IBM,
and
SAP.

So far, workers in the services side of the retail sector seem to be insulated from those trends. Retailers and restaurants have struggled to attract and retain labor over the past two years, after the pandemic prompted an industrywide exodus of talent from the sector.

That shortage of staff is still a problem, and make it less likely that retailers are going to be cutting significant chunks of their front-line workers in the near future, said Rob Klitsch, industry principal of retail and hospitality at the human- resources management company UKG.

Earlier this week,
Walmart
(
WMT
) said it was raising starting wages for hourly workers to compete for labor.
Starbucks
(
SBUX
), meanwhile, has been making hefty investments in its workforce in a bid to both attract employees and quell unionization efforts at its stores.

It helps that consumer demand has remained fairly resilient even though the latest government report on gross domestic product, released Thursday, showed slower growth.

“The pace of economic growth moderated in the fourth quarter but remained expansionary,” said Phillip Neuhart, director of market and economic research at First Citizens Wealth Management. “Real personal consumption growth slowed but was above 2% as consumers continued to spend despite elevated inflation.”

Much of that growth was led by increased spending in services, including travel, food services, and accommodation, according to the report. That’s beneficial for restaurant chains like Chipotle, which gain as long as consumers continue to prioritize spending on experiences over goods.

If there are layoffs in retail, Klitsch expects them to be concentrated at the corporate level. They may also be more prevalent among retailers that toe the line between tech and retail, or in sectors that have been hard-hit by shifts in consumer behavior prompted by the economic reopening.
Wayfair,
for example, cut 10% of its global staff this month in an effort to trim costs following a series of disappointing quarters as people curbed their spending on furniture.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

Credit: marketwatch.com

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