A labor shortage is forcing chains like Subway and Dunkin’ to cut hours, close dining rooms, and push employees to work harder than ever

mcdonald's drive thru
Restaurants are struggling to hire workers.

  • 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.
  • See more stories on Insider’s business page.

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

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Dunkin’ is one of many chains struggling to fill open positions.

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.”

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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How wearable pods designed to keep spectators dry at sporting events came to be used by drive-thru workers at Chick-fil-A and Dunkin’

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  • Under the Weather produces weatherproof pods.
  • Most customers were sports fans and festival goers, but it pivoted to fit around COVID changes.
  • Drive-thru and curbside workers at Dunkin, Chick-fil-A, and Olive Garden have used them.
  • See more stories on Insider’s business page.

You might have seen them on your most recent trip through the Chick-fil-A drive-thru, on a plane, or at a kid’s sporting event. Under the Weather Pods are weather-resistant, screened-in structure that can be worn or sat in.

Rick Pescovitz designed the first pod in 2010 after he got the idea from an experience he had sheltering in a Porta Potty from bad weather during his daughter’s soccer game. The Porta Potty inspired the shape of the original pod, which was made based on a laundry basket with a steel wire structure, Pescovitz told Insider.

nevada soccer

The pods, which now come in more than 30 variations, were originally a big hit with parents like Pescovitz, and tailgaters, he said. Under the Weather began reaching out to crossing guards and ticket takers too, and business picked up in 2014. Since those early days, the company has sold a few hundred thousand pods according to Pescovitz

Read more: Chick-fil-A’s out-of-control drive-thru lines have it facing off against local businesses and battling lawsuits

When COVID hit the US in March 2020, it could have been disastrous for the niche company. Before the pandemic, 90% of customers were sports fans and music festival attendees, Pescovitz, said, and February through May was the busiest season. COVID essentially shut down all of the company’s usual business, and they were forced to pivot.

IntubationPodMinn

Peskovitz saw the need for PPE on the news and he thought, “we could do something like that.” Within four weeks Under the Weather had come up with a concept, samples, and the final product of the intubation pod, which provides extra protection for healthcare workers during one of the most potentially contagious procedures. Under the Weather donated and sold these pods to hospitals and EMTs.

Under the weather pods
Under the Weather Pods.

The wearable line has been the most popular since the start of the pandemic due to the rise of curbside pickup, Peskovitz told Insider. He says 25 to 30,000 sales can be directly attributed to COVID. Some Chick-fil-a locations use the walking pods for drive-thru and curbside employees, a deal that Peskovitz says has been “really good for us.”

Many people are “uncomfortable or too prideful,” to wear the pods, one Indiana Chick-fil-A employee told Insider. However, he likes them, saying “it keeps us dry, keeps iPads dry, blocks out the wind, and makes it more tolerable.”

NJ covid test

As drive-thru and curbside pickup continues to grow in importance, other brands are testing out the pods. Dunkin’ and Dutch Bros. Coffee have rolled them out, and they’re being tested at Portillos, Olive Garden, and Outback Steakhouse.

In the future, Peskovitz says he wants Under the Weather to grow sales to businesses and work with corporate chains directly, rather than finding interested franchisees to sell to separately. Private buyers can purchase pods directly from Under the Weather, or from Amazon, Dick’s Sporting Goods, or Walmart.

Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.

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Americans are expected to spend their third stimulus checks on clothes, home improvement, and dining out – and it could boost stores like Kohl’s and Home Depot

coronavirus stimulus checks memes
Getty Images

  • Outdoor dining and home improvement stores will benefit from Americans spending stimulus checks.
  • Value retailers like Walmart and Dollar General will also benefit, as in the past, Jefferies said.
  • Past stimulus checks have provided a crucial boost to the economy amid the COVID-19 pandemic.
  • Visit the Business section of Insider for more stories.

Retailers and restaurants are poised to see a boost in Americans buying goods if President Joe Biden signs the $1.9 trillion stimulus package, as expected.

Apparel, home improvement, outdoor dining, and travel companies are set to benefit from Americans who receive the extra $1,400 in their bank accounts, analysts at Jefferies said in a Monday note.

After the last stimulus checks in January, retail sales that month saw an 8.9% bump, indicating consumers want to spend the extra dollars, Jefferies said. This time around, the checks, which in most cases are more than twice the amount of January’s, could boost sales once again.

Read more: Buy these 14 stocks set to go into overdrive as consumers’ stimulus checks arrive in March, Cowen says

Some retailers who didn’t see much of a lift in the last stimulus round because of the “dead of winter” will likely benefit this time because of the spring season. With the nice weather, home-improvement projects and outdoor dining will be on the rise, so Home Depot, Lowe’s, Olive Garden-owner Darden Restaurants, and Outback Steakhouse-owner Bloomin’ Brands are poised to benefit. Apparel stores such as Ross and Burlington Coat Factory also will see a bump, per the report.

The January spending bill increased Americans’ year-over-year spending 20%, according to Bank of America research. Those who received the checks also spent 30% more on their credit cards than people who didn’t. Value-based retailers, like Walmart, Kohl’s, Dollar Tree, and Dollar General, saw an increase from the January checks, and they’ll “see outsized benefits” this time around, too, Jefferies said.

Companies most affected by shutdowns caused by the COVID-19 pandemic a year ago were department, clothing, and shoe stores, along with restaurants and furniture stores, Jefferies said. Those same companies are now likely to “generate the most opportunistic areas for spring 2021 stimulus benefit,” the note said.

One survey, however, wasn’t as optimistic that spending would ensue from the next round of stimulus checks. The survey, conducted by Morning Consult and commissioned by Bloomberg, found that 34% of Americans, many of whom lived in wealthier households, planned on putting the $1,400 into savings.

In April last year, many Americans received the first round of stimulus checks, worth $1,200. Most people used the money to buy the basics: groceries and medicine. Many also used the cash to buy takeout meals and even streaming and gaming services as they hunkered down at home. Big box retailers like Walmart and Target posted blowout sales for that quarter last year, saying stimulus checks were largely to thank.

At the time, the checks gave the economy a crucial boost, according to experts. Now, on the third round of government spending as the federal debt increases, President Joe Biden has said, “now is the time to go big,” adding that the government can’t spend too much to help the economy.

Read the original article on Business Insider