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

dunkin
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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Hundreds of Subway, Dunkin’, and Burger King locations closed in 2020 – here are the chains with the most closures

Subway Restaurant
Subway assembly line.

  • More than 10% of all US restaurant locations closed during the pandemic.
  • Dunkin’, Burger King, and Subway were the hardest hit large chains.
  • But others like Domino’s and Starbucks added locations last year.
  • See more stories on Insider’s business page.

10% of all restaurants have closed since the beginning of the pandemic in 2020, including hundreds of locations of major chains, according to food industry research firm Dataessential’s new report.

No sector of the industry was safe. Closures affected fast food, fast casual, casual, and fine dining. Subway closed more stores than any other large chain examined by Dataessential, closing out the period with 1,557 fewer stores, a 6.6% loss. Dunkin’ lost a net 559 stores, the report said.

Read more: Chipotle CEO Brian Niccol answers 9 questions about the chain’s future including the fight for delivery profits, menu innovation, and franchising

Even fast food staples were hit by the pandemic. Burger King closed 319 locations, while McDonald’s closed 173. However, that only amounts to a 1.2% loss for McDonald’s, which still has well over 13,000 locations. Baskin Robbin’s, Hardees, and Steak N Shake each closed restaurants, while Little Caesar’s bucked the positive trend for pizza chains this year, closing 120 locations.

Some restaurants did manage to open new locations. Domino’s came out on top, opening 358 new stores. This isn’t necessarily surprising: pizza and wings were hailed as early winners in the pandemic as Americans increasingly ordered from brands that were already set up to accommodate delivery, like Papa John’s and Wingstop.

The rest of the pizza industry saw huge losses, up to $30 billion in March and $50 billion in April. The trend doesn’t apply to all pizza chains, though, as Little Caesar’s shows.

Starbucks, Taco Bell, and Chipotle all also all ended the year with over 200 additional stores apiece. Each of these chains has invested in drive-thrus throughout the pandemic.

Starbucks is making efforts to improve drive-thru efficiency with digital drive-thru screens for ordering and handheld devices for baristas to input orders on. Taco Bell cut more than a dozen items in 2020 to make drive-thru lines move more quickly, and sales grew as a result. Chipotle is opening hundreds of Chipotlane drive-thru lanes, with plans to more than double locations.

Most restaurants that added locations have embraced drive-thrus and mobile ordering, while chains that didn’t suffered, though this doesn’t explain every chain.

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

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Subway will bring back roast beef and rotisserie chicken after months of demands from franchisees and angry customers

roast beef
Subway’s roast beef will return to menus this summer.

  • Subway will bring back its roast beef and rotisserie chicken this summer, sources told Insider.
  • The two sandwiches disappeared last year, to the dismay of some customers and franchisees.
  • “Who has a deli shop without roast beef? I mean, it’s ridiculous,” said one Subway franchisee.
  • See more stories on Insider’s business page.

Subway is bringing back its roast beef and rotisserie chicken sandwiches.

The deli staples are finally returning to the menu this summer after disappearing last June, two sources with direct knowledge told Insider.

A Subway representative said in an email to Insider that while the chain “can’t unpack all the details just yet, we can confirm that fresh, exciting changes are coming for Subway fans. We look forward to sharing more with you soon.”

When Subway got rid of the sandwiches last year, it was a top-down decision that some operators questioned, according to a veteran Subway franchisee operator from California who wished to remain anonymous.

“Plus who has a deli shop without roast beef? I mean, it’s ridiculous,” the franchisee added. Subway blamed the menu cuts on the pandemic, the franchisee said.

Customers and franchisees have questioned Subway’s strategy

Subway was among many restaurant chains like McDonald’s, Panda Express, and Taco Bell that trimmed menu items during the early days of the pandemic.

But when restrictions lifted in various parts of the US, Subway operators wanted to bring back the two sandwiches to appease consumers, who were demanding the return of the two premium subs on social media.

“The customer reaction was horrendous,” the franchisee said. “People were pissed off that those two items were gone. You would think that they would bring them back faster, but they didn’t. But finally, this year, they said they are bringing them back.”

“I won’t eat at Subway again until they bring back Roast beef,” reads one recent comment on Subway’s Facebook page. “I thought it was a temporary thing but the restaurant I was at today said it was a forever thing. So I said that’s the stupidest thing I heard today. I canceled my order and walked out.”

The decision to ditch rotisserie chicken and roast beef is not the only strategy that franchisees say has come from the top without support from the operators that own 100% of Subway locations across the US.

Last June, many franchisees refused to participate in a heavily-hyped two-for-$10 sandwich deal. Franchisees told Insider they have also pushed back on the company’s decision to require stores to pre-pandemic hours of operation, despite sales slumps and difficulty staffing locations.

Some franchisees blame CEO John Chidsey, who was hired in November 2019, for the top-down approach.

“He doesn’t really communicate well with franchisees,” a second franchisee told Insider. This source also asked to remain anonymous as this person was not authorized by the company to speak to the press. “It’s obvious that he thinks franchisees are his employees.”

Are you a Subway franchisee or employee with a story to share? Email ktaylor@insider.com and nluna@insider.com, or get in touch via the Signal encrypted messenger app at (646) 768-4740 or (714) 875-6218

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Subway moves jobs from Connecticut headquarters to Miami, where the sandwich chain’s CEO owns a home

subway sandwich
Subway is moving some workers south.

  • Subway is moving some jobs from its Connecticut headquarters to Miami, Florida.
  • The chain’s CEO has a home in Florida, and the company is based in Milford, Connecticut.
  • Miami, Florida has become a hotspot for tech and finance companies in the pandemic.
  • See more stories on Insider’s business page.

Subway is shifting some of its workforce to Miami, Florida, where the chain’s CEO owns a home.

The chain told employees that it was moving several business units to Florida on Thursday, the New York Post reported. The Post reported that “at least some staffers were told that they would not be invited to Miami when the transition takes place in 2022.”

A representative for Subway confirmed the report, telling Insider that the majority of the company’s workforce will remain at its Milford, Connecticut headquarters.

“We can confirm that some functional areas are moving to Miami,” Subway said in a statement. “These include more consumer-facing positions in marketing, culinary and some global transformation roles. This enables the brand to establish even more seamless collaboration with our supply chain organization, the Independent Purchasing Cooperative, which is also based in Miami.”

Subway CEO John Chidsey is also based in Florida, two sources with knowledge told Insider. The Post reports that Chidsey, who joined Subway in 2019, owns a four-bedroom, four-bath home in Coral Gables, near Miami. Subway declined to comment on where Chidsey is based.

Read more: Real estate moguls who bet on Miami and Palm Beach are making bank off finance and tech giants’ flight to Florida

Miami has become a hot spot for finance and tech companies during the pandemic.

Companies including Goldman Sachs, Citadel, and Blackstone are planning to either open offices or rumored to be considering leasing space in South Florida. Insider’s Daniel Geiger reports that the South Florida market has seen new interest from more than 1 million square feet worth of tenants in recent months, as companies relocate headquarters and set up satellite spaces.

Subway has struggled in recent years, with concerns linked to outdated branding and the number of locations outpacing demand. The company laid off roughly 500 people from its Connecticut headquarters in 2020.

Restaurant Business reported in January that an estimated 2,200 to 2,400 Subway locations closed in 2020. Subway told Restaurant Business that the actual number of permanent closures was lower than this figure, which would represent up to 10% of its total US locations.

Do you have a story to share about Subway? Email ktaylor@insider.com or get in touch via the Signal encrypted messenger app at (646) 768-4740.

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