A labor shortage is forcing chains like Subway and Dunkin' to cut hours, close dining rooms, and push employees to work harder than ever
- Fast-food chains are keeping dining rooms closed and cutting hours due to a lack of workers.
- Some employees who have been hired are working extra hours, resulting in more mistakes and burnout.
- "Everyone ... is struggling to keep stores open from lack of staff," said a Subway franchisee.
As COVID-19 cases decline and safety restriction loosen, fast-food chains are looking to return to business as usual.
There is just one problem - they cannot find enough workers.
"We are struggling to get people," one McDonald's franchisee told Insider.
"I don't have enough," added the franchisee. "Can't get enough. Wish I had enough."
The franchisee and others who spoke with Insider - some of whom were granted anonymity because they were not authorized to speak about the topic - said that chains are being forced to change practices due to a lack of workers. Some restaurants are shortening hours, while others are reluctant to reopen indoor dining.
"It's just craziness out there," said John Motta, a Dunkin' franchisee who serves as chairman of the Coalition of Franchisee Association. "People are closing early, people are not opening lobbies."
"This is the COVID of 2021," Motta added. "This is the pandemic of 2021 - lack of people to work."
Companies are struggling to fill open positions
A whopping 42% of small business owners said they had job openings that they could not fill, according to a March survey by the National Federation of Independent Business.
"I think everyone in the industry - it's not unique to Subway - is struggling to keep stores open from lack of staff," a Subway franchisee told Insider.
Fast-food chains with drive-thrus relied heavily on a to-go-centric model to boost sales during the pandemic, as they shuttered indoor dining. Now, franchisees at McDonald's and Dunkin' said they have refrained from reopening dining rooms in part because it's difficult to find enough employees to staff their restaurants. (McDonald's said it is taking a judicious approach to reopening, informed by local COVID-19 case rates.)
"Stimulus and unemployment are killing the workforce," said the McDonald's franchisee, who said labor shortages stopped him from reopening his dining room.
Some fast-food franchisees that stopped breakfast and late night service during the pandemic are unable to open for longer hours because they can't find enough workers.
At Subway, many franchisees pushed back against corporate demands to return to pre-pandemic hours - following a period of flexibility - in the fall. A McDonald's manager said that, while his location has not brought back 24-hour service, it is still difficult to staff the first and last shifts of the day.
"We're kind of struggling to hire because the only people who are applying are teenagers," the McDonald's manager said.
The labor shorting is putting more pressure on workers
The labor shortage is making existing workers' jobs more difficult, contributing to burnout and the vicious cycle that has helped drive away some potential employees.
The McDonald's manager told Insider he and other managers have been forced to cover more and more shifts as their employer scrambles to hire people. As a result, he said, his sleep schedule is "completely out of wack."
"There's been days I've worked 16 hours because we just couldn't get coverage for it," the manager said.
Fewer, over-stretched employees also results in longer wait times and more mistakes, according to Motto. This yields more angry customers, filing complaints and taking out their ire on employees.
One person took matters into their own hands at an Outback Steakhouse in Memphis, putting up a sign that asked for understanding from customers and claimed that some "people just do not want to work."
"For the Outbackers that do show up for work, we ask for your understanding and patience," reads the sign, according to a photo posted on Twitter. "They are doing the very best to ensure your dining experience is what you have come to expect from Outback Mid-town."
-I CUSS ALOT...STILL ⚖️ (@ish_not) April 14, 2021
Elizabeth Watts, a representative for Outback Steakhouse, told Insider that the sign was posted by an employee and not approved by the restaurant or company. The sign was removed soon after it was posted, Watts said, and does not reflect Outback's position or perspective.
The person who posted the Outback Steakhouse sign and franchisees who spoke with Insider argue that the stimulus package and enhanced unemployment benefits have made it harder to hire workers. However, Credit Suisse analyst Lauren Silberman told Insider that the industry struggled to find enough employees for years before the latest stimulus package.
Restaurants are an "exceptionally difficult business" to work in, Silberman said. Employees face a high rate of sexual harassment and assault on the job, while Bureau of Labor and Statistics data shows that the median pay is $11.63 per hour. Workers increasingly have more options outside the restaurant industry that offer a guaranteed $15 per hour, such as Amazon or Target, or more flexibility, like Uber or DoorDash.
And working in restaurants has only become more dangerous and difficult over the last year.
"I think there's a fear element," Silberman said. "Because these are frontline workers, and we're still in the midst of a pandemic."
Fast-food chains will ultimately be forced to pay workers more
Fast-food chains are going to have to do more than close dining rooms and end late-night service if they want to win back employees.
IHOP, McDonald's, and Taco Bell are holding recruitment events, with hopes of hiring thousands of workers. Chains are debuting perks, including new benefits for managers at Taco Bell and a leadership conference for employees at Whataburger.
"It's no secret that the labor market is tight, which is why we are thrilled to host our fourth round of Hiring Parties in partnership with our franchisees," Taco Bell's chief people officer Kelly McCulloch said.
But, perks can only go so far. Chains will have to pay workers higher wages to compete with companies that have already established a starting wage of $15 per hour.
"There's no reason that the government has to mandate minimum wage," Motto said. "Because the market is making it grow on its own."
"I don't know if anyone could pay minimum wage and keep their doors open today," the Dunkin' franchisee added.
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