Covid dealt a significant blow to the leisure and hospitality industry. Shutdowns, followed by various mandates and crowd restrictions, caused a sharp drop in employment across the sector.
In Louisville Metro, leisure and hospitality employment fell from roughly 69,000 workers to just 37,000 over the course of only a couple of months. Floyd and Clark County accommodation and food services employment dropped by a couple thousand.
As the economy gradually reopened, foot traffic returned. But restaurants and other establishments faced a new challenge: staffing. Businesses had customers willing to spend money, but they could not find enough workers to meet the demand. You might remember walking into a restaurant during that period and being told there was an hour wait, even though half the tables were empty. That wasn’t a demand problem. It was a staffing problem.
Households found extra cash following several rounds of government stimulus. This supported strong consumer spending on goods such as recreation equipment, camping and sporting goods, and home improvement items, anything that allowed people to spend time outdoors. RVs, for example, were selling like hotcakes.
After buying enough “stuff,” and as the economy continued to reopen, households began shifting their spending toward experiences, such as restaurants, concerts, and travel.
Growth in leisure and hospitality establishments continued as this experience-based economy gained momentum. By June 2024, employment in the Louisville Metro leisure and hospitality sector reached an all-time high, surpassing the pre-Covid peak by about 2,000 workers. The sector is highly seasonal, typically reaching its peak employment in June, and the June 2024 figure marked the highest level on record. In Floyd and Clark counties, employment in accommodation and food services reached a peak in the 2nd quarter of 2025, increasing by about 3% since pre-Covid, with 34 additional establishments.
Coming out of Covid, the sector faced several challenges, including staffing shortages and supply chain disruptions that made it difficult to obtain provisions and other inputs. Remember when it was tough to find chicken wings! At the same time, additional headwinds were developing.
Inflation reached a peak of roughly 9 percent in mid-2022, following the Federal Reserve rate hiking cycle that began in March 2022. Higher prices and rising wages have hit the restaurant industry particularly hard, and many establishments are still dealing with these pressures today.
Consider a few numbers that illustrate the challenges faced by the leisure and hospitality sector, which is dominated by restaurants and food services.
Since February 2020, the Consumer Price Index measure for Food Away From Home, the prices consumers pay when eating outside the home, has increased by about 35 percent.
Two of the largest costs faced by restaurants have also risen substantially. The Producer Price Index for All Foods, which reflects the prices paid by restaurants and food service establishments for food inputs, has increased about 31 percent since February 2020.
At first glance, that might appear manageable. Menu prices have increased by 35 percent while food costs have risen by 31 percent, suggesting slightly wider margins.
But labor costs tell a different story.
Average hourly wages in the leisure and hospitality sector have increased by a staggering 38 percent since early 2020. The combined rise in food costs and labor costs underscores the challenges that many restaurants and hospitality businesses face today. In Floyd and Clark County, for example, average weekly wages have gone from approximately $322 pre-Covid to $449 most recently, about a 39% increase.
After reaching a peak in June 2024, leisure and hospitality employment in Louisville Metro declined by roughly 3,500 jobs during 2025. This could reflect a combination of business closures, or establishments finding ways to reduce costs, perhaps by substituting technology or capital for labor in some cases. Floyd and Clark have bucked this trend, with recent data showing continued employment gains for 2025.
Leisure and hospitality was one of the largest contributors to job growth in the years immediately following Covid. The Louisville Metro decline observed during 2025 also coincides with a period of nearly flat overall employment growth across the metro region.
Restaurants and food service establishments are often one of the first places where shifts in consumer behavior show up. When households begin to feel pressure from higher prices, interest rates, or a softer labor market, dining out is one of the first expenses that tends to be scaled back. For that reason, trends in the leisure and hospitality sector can often provide an early signal of where the broader economy may be headed next. In Floyd and Clark, the trend has been mostly positive.
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