Fast-food restaurants have a problem: Customers are returning but workers aren’t.
And, increasingly, neither are their dining rooms.
A labor squeeze is transforming an industry that has been an enduring and at times controversial symbol of American capitalism. For many fast-food workers, the coronavirus pandemic opened new and better-paying alternatives to the demands of hot grills and deep-fryers. And a resurgent virus, powered by the delta variant, has compounded staffing shortages, forcing many store managers to reverse recent dining room reopenings or extend closures that took effect early in the pandemic.
“We cannot continue at the pace we are at,” a Chick-fil-A franchisee in Bessemer, Ala., wrote in a Facebook post in late August. “Our team members are exhausted and we have no relief for them in our current roster.”
The Bessemer location is one of at least a dozen Chick-fil-A outlets in the state that were drive-through-only as of early September, according to managers and customer service representatives. Others have joined them, including in Greenville, Texas, and Aberdeen, Md.
Some McDonald’s outlets have also pivoted to drive-through-only service and reduced hours, while the chain touts polished online ordering tools and invests in technology designed to smooth out the pick-up and drive-through experience. Yum Brands, which operates KFC, Pizza Hut, and Taco Bell, has leaned into services that minimize contact between workers and customers, including curbside pick-up and, in some cases, delivery.
The Big Mac maker, which had temporarily done away with most indoor dining early in the pandemic, said in late July it was on track to open nearly all of its dining rooms by Labor Day, barring a coronavirus resurgence. But a month later Reuters, citing internal company materials, reported that McDonald’s was advising franchisees on when to consider closing dining rooms in areas being hit hard by the delta variant.
Of the nearly 10 million job openings in the United States, roughly 1 in 6 are in the leisure and hospitality sector that includes food service workers, according to data maintained by the Federal Reserve Bank of St. Louis. That’s 1,734,000 openings vs. an estimated 1,475,000 unemployed people, the Fed data shows.
For the industry to meet customer demand, restaurants would probably have to draw workers from other industries, but there are indications that the opposite is true. An analysis of job seekers’ search history data by the company review site Glassdoor found that people who used to search for “restaurant server” are now more likely to type in “office assistant,” “data entry” or “Amazon,” for example.
Fast-food wages historically trail those in other service industry jobs, with the typical U.S. worker collecting about $11.80 per hour or $24,540 a year as of May 2020, according to the Bureau of Labor Statistics. A retail salesperson, by comparison, made $30,940 a year. But even the biggest among them are going to greater lengths to attract workers: Walmart, Target, and Amazon, for example, all announced full-ride college tuition programs for employees in recent weeks.
Some current and former fast-food workers say labor shortages merely reflect the limited appeal of low-wage work that can be physically demanding and stressful, conditions that existed long before the pandemic. The labor group known as Fight for $15 has grown into a global movement in more than 300 cities since its formation in 2012. And some economists question the accuracy of the term “labor shortage” in this context, saying businesses are simply offering too low a wage for an hour’s work.
“When I go shopping for an Audi and I can’t afford it, I don’t get to declare an Audi shortage,” said Erica Groshen, a labor economist with Cornell University. “At the wage being offered, businesses still aren’t getting as many applicants for work.”
Cristian Cardona, a 22-year-old former McDonald’s swing manager from Florida, said he has heard the criticism that shortages are fueled by elevated unemployment benefits — including the now-lapsed $300 a week in federal aid that supplemented state benefits — during the pandemic, or even laziness.
“I think the problem is workers are being paid too little working full time. That’s the real scandal,” he said.
Cardona said he decided to leave McDonald’s this year because $11 an hour wasn’t worth it. Though his pay was bumped up $13 before he left, he said, it did not line up with the responsibilities of supervising three or more people — roughly a dozen during the busiest shifts — at a time. He now works at a theme park in Orlando. He’s also affiliated with Fight for $15.
Workers see the lack of a living wage, Cardona said, and figure: “‘Do I want to be broke? Or do I want to be broke working 40 hours a week and working my life away?'”
In response to Cardona’s comments, a company spokesperson said: “We’re proud of the McDonald’s restaurant crew that have stepped up and made a difference in our communities during these extraordinary times, and we have sought to prioritize our restaurant employees at every turn with actions that make a difference.”
Government data suggests the sector overall appears to be boosting pay. Nonsupervisory workers in the accommodations and food service sector made an average of $15.91 per hour as of August, according to the Bureau of Labor Statistics. In February 2020, they made an average of $14.46 per hour.
“The fact that nominal wages have been increasing so rapidly over the last several months is itself pretty strong evidence that businesses really are doing a lot to attract and retain workers . . . the labor market is just really competitive,” said Michael Strain, an economist with the conservative American Enterprise Institute.
In May, McDonald’s announced that it had raised its hourly rate to a range of $11 to $17 for entry-level workers, and $15 to $20 for managers. Also in May, the fast-casual chain Chipotle announced that it had raised its average wage to about $15 per hour. Taco Bell, meanwhile, has used hiring parties to attract staff, as well as expanded benefits with paid time off, free family meals, and more employee development opportunities, Yum Brands CFO Chris Turner said during an earnings call in July.
A Chick-fil-A spokeswoman said in a statement that store decisions on hiring and wages are handled by franchise owners, who operate independently under the brand. Some are choosing to increase wages in response to local hiring conditions; one of the company’s locations in Hendersonville, N.C., recently increased its starting hourly wage to $19, for example.
For many fast-food establishments, the pandemic has accelerated a trend toward online and app-based ordering and drive-through technology.
At Yum Brands, revenue soared 34%, to $1.6 billion, in the most recent quarter – momentum that CEO David Gibbs said was underpinned by the Louisville-based company’s digital investments and “ability to serve customers through multiple on- and off-premise channels.” In a July 29 earnings call, he noted that digital sales, including online orders for pickup and delivery, are up 35% year-over-year. Meanwhile, roughly 1% of its KFC stores and 2% of its Pizza Hut locations were temporarily closed at the end of June, according to its earnings report.
McDonald’s also reported strong second-quarter gains, boosted by growth in its delivery and digital platforms and higher menu prices. U.S. sales were 25.9% higher than the same period in 2020 and 14.9% above where they were in a pre-pandemic 2019, the company said.
The average cost to close a restaurant to improve or add an advanced drive-through ranges from $125,000 to $250,000, according to Aaron Allen, founder, and chief executive of restaurant consultancy Aaron Allen & Associates. But he said stores can recover the investment quickly by boosting sales, removing bottlenecks, and ultimately increasing profitability.
Allen estimates that drive-throughs account for about half of annual sales for all fast-food and fast-casual restaurants, or roughly $169 billion.
“One of (the) other things they have done is turn all of us into the cashiers,” he said, pointing to restaurant apps, and touch-screen kiosks that have taken the place of some food service workers. “We did a study on automation and robotics and found that at least half could be replaced with robots or automation.”
But part of the labor disruption also stems from how employees were treated at restaurants, he said, and the draw of the gig economy, which offers more flexible hours and doesn’t require workers to toil in front of a hot grill.
While larger national chains appear to be mostly paring back services, some are shutting down locations indefinitely.
Dutch Girl Donuts, a doughnut bakery in Detroit, told customers it would temporarily close on Sept. 1 “in an effort to resume a full staff and hours.”
Online commenters implored the shop to reopen. “I don’t even live in Detroit anymore but I’ll fly home to pick up a shift right now. I don’t even need money just pay me in donuts,” one person wrote
“Need to pay more dough!” wrote another.