Restaurant chains across the nation are settling into the idea that they will be understaffed for the foreseeable future and are beginning to adjust to a post-pandemic reality, according to Reuters.
The crisis transcends the type of food on offer, or the relative costliness of the establishment, with Applebee’s and IHOP facing staffing shortages just the same as Burger King, Popeyes and even privately held chains such as Marco’s Pizza, according to Reuters. Despite the fact the restaurant industry has seen a nearly 18% hike in hourly wages since February 2020 to $18.42 in June, the industry is short almost 635,000 workers since that time, according to Reuters.
IHOP, which is well-known for 24/7 service, is shortening hours at 400 locations, nearly a quarter of its U.S. locations, due to a lack of overnight workers, Reuters reported. Dine Brands Global CEO John Peyton told Reuters that depressed staffing levels are the “new normal.”
Restaurant dining activity is slightly above pre-pandemic levels, but there are still 630,000 fewer workers at dining establishments. The labor shortage is more pronounced in certain industries and many service sectors are still struggling with staffing issues. pic.twitter.com/3vFpDt6BeK
— Cetera Investment Management (@ceteraIM) August 22, 2022
IHOP and Applebee’s, each owned by Dine, have been staffed at 90% of the level they were in 2019, a trend that has continued for the past four quarters with no signs of stopping, Reuters reported. Dine saw a profit margin of 10.1% in the second quarter, down nearly 20% from the same time last year, as the cost of both goods and labor cut into profits, Reuters reported.
The cost of materials for food manufacturing was up 15.5% year-on-year in July, with the price of unprocessed foodstuffs and feedstuffs up 28.9%, according to the Bureau of Labor’s Producer Price Index. Wholesale food prices have gone up 16.3% year-on-year in July, but the average price of menu items had only gone up by 7.6%, according to the National Restaurant Association advocacy group. (RELATED: ‘Whiplash’: Economists Warn The Labor Market Is The Next Victim Of Inflation)
The tough conditions led to 43% of restaurant owners anticipating worse conditions in the next six months, the highest level of pessimism since 2008, according to a survey by the National Restaurant Association.
Burger King and Popeyes, owned by Restaurant Brands International, were in similar shape to Applebee’s and IHOP at stores managed by franchisee Carrols Restaurant Group, which have staffing levels at about 87.5% 2019 totals, Reuters reported. Restaurant Brands International said that new technology could help with cooking, allowing employees to focus on the guests, which is “the thing that matters,” CEO Jose Cil told Reuters.
McDonald’s, meanwhile, is testing automated voice-ordering at Illinois restaurants, but the accuracy wasn’t high enough for widespread deployment, according to Reuters.
Chipotle is an exception to the chains suffering with staffing shortages, claiming its wages and benefits make it more attractive, according to Reuters.
The privately-held Marco’s Pizza manages 20,000 employees across more than 1,000 U.S. locations, 11% less than it needs, co-CEO Tony Libardi said to Reuters. It has been incorporating machines that simplify the dough cutting and rolling processes that used to take up to eight hours, Reuters reported.
“We would like to hire and be fully staffed but we’re preparing for the inability to do that,” Lobardi told Reuters.
Dine, Restaurant Brands International, McDonald’s and Chipotle did not respond to a Daily Caller News Foundation request for comment.
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