The fact that foodservice is facing a continued labour shortage has been well-documented by this point. While staffing levels have rebounded to some degree in some areas, restaurants are still struggling to attract the quality and quantity of workers that they need to handle the resurgent growth in indoor dining in Canada, the U.S., and beyond.
Generally, managers and operators have looked to attract and retain workers through a variety of attractions such as cutting operating hours, offering higher pay and better benefits, and placing an emphasis on a welcoming and flexible company culture.
Still, though, the struggles continue.
An unprecedented shortfall
The most recent U.S. Bureau of Labor Statistics (BLS) data indicates that employers are looking to fill about 1.49 million jobs in the foodservice and accommodations industry. The last month in which hiring outpaced job postings was March 2021. Nearly 30,000 workers left their jobs per day in August, a historically high quit rate. Clearly, that is unsustainable.
Even ubiquitous chains such as fast-food giants McDonald’s and Wendy’s have been facing unprecedented shortfalls. The BLS reported that there were roughly 1.7 million job openings in the leisure and hospitality sector that includes foodservice workers in August.
McDonald’s franchisees, for example, are seeing wage inflation of over 10 per cent year-to-date while corporate-run restaurants are up over 15 per cent, according to CEO Chris Kempcsinski. That is impacting the company’s locations in several ways, including hours of operation, and corporate is focusing more on training — among other things — to try to tackle the problem.
Meanwhile, Wendy’s has seen declining restaurant margins due in no small part to the rising cost of labour, and CEO Todd Penagor realistically expects that to continue.
Burger King and Popeyes parent company Restaurant Brands International has seen an average of a one-hour reduction in operating hours at Popeyes in the last quarter, noted CEO José Cil. The company’s CFO Matthew Dunnigan said it is assessing ways to “simplify life” in its restaurants to ease the crisis, such as changing menus or processes.
That focus on ease was echoed by Domino’s Pizza CEO Ritch Allison, who stressed that not only reevaluating wages but employing technological solutions to allow for more efficient operation with fewer labour hours per sale will be key moving forward.
Raising prices across the board
In response to the soaring costs of labour, as well as food and other supplies, restaurants have been raising their prices at record levels this year. Starbucks, for example, recently accelerated its plan to raise its base wage to US$15 an hour.
BLS data shows that limited-service menu prices rose 7.1 per cent year-over-year in October, while FSR prices climbed 5.9 per cent over that same period. Both numbers were the highest on record.
Fast-food chains have raised their prices more aggressively in part because their prices were generally lower to begin with.
The sharp trend in menu prices is at least partially fuelled by the fact that, generally, consumers seem accepting of them. After all, while consumers have visited restaurants less frequently during the pandemic and the recent reopening across North America, they have largely spent more overall.
Some restaurants are also turning to digital kiosks to tackle the labour shortage.
Sam Zietz, CEO of digital-kiosk maker GRUBBRR, told Business Insider that demand for its products has boomed. He added that digital kiosks offer the dual advantage of taking more orders and being cheaper than hiring an adequate number of cashiers, which allows for human workers to focus on roles that add more value, such as servers or cooks.
Kiosks also tend to take larger orders than cashiers, largely due to the ease of use and the personalization opportunities.
Ultimately, the likelihood is that the labour shortage will ease over time, but operators and franchisees may have to look to how large-scale chains are responding and attempt to replicate those measures in an attempt to mitigate the damage and hasten the recovery.