Summer 2021 is being billed as a return to “normal,” as vaccinations against COVID-19 continue and businesses resume regular operations. But, behind some of the rosy projections for the resumption of life as we knew it, there are some hard realities facing business owners in every sector, particularly quick-service restaurants. In this edition of “What’s Brewing,” we examine some of those and offer some insight to help you operate your business.
Quick-service franchisees face daunting ‘quit rate’ in addition to hiring crisis
It’s amazing what you find when you dive deep into U.S. Department of Labor data.
As Dunkin’ franchisees and other quick-service franchise owners continue to grapple with an unprecedented labor shortage across the nation, the Washington Post recently reported on the millions of workers who have willingly or unwillingly left the restaurant industry during the pandemic and have never returned. The Post piece points to recent U.S. Department of Labor data showing that restaurant and hotel job openings are at their highest level ever recorded.
In early June, the agency released a “job openings and labor turnover summary” showing that overall job openings reached a recorded high of 9.3 million by the end of April. Not surprisingly, the restaurant and hotel sectors, which are statistically grouped together by the feds, ranked high on the list.
But here’s where it gets interesting. As the data shows, it’s not just a problem of hiring enough workers to fill spots as the economy slowly rebounds and businesses expand. It’s also a problem of keeping previously hired workers, due to “separations,” as defined by “quits, layoffs and discharges.”
Indeed, the agency now runs a separate “quits levels” chart showing the extent to which workers are voluntarily bolting jobs within individual industries. Can you guess which industry has the highest “quits rate” in the nation? Yes, it’s the accommodation and food services sector.
In April alone, a record 681,000 workers within the sector, seasonally adjusted, just up and quit. Gone. See you later. Out of here.
The reasons for the worker exodus vary (and can be endlessly argued) – employees worrying about their health or looking for higher paying jobs or hoping to collect enhanced unemployment benefits, etc.
But the bottom line is this: Quick-service franchisees, including those at Dunkin’, are not just facing a hiring crisis as they attempt to ramp up operations and fill openings as the economy slowly expands. They’re facing a first-class retention crisis as well – or a “quits crisis,” if you will.
Minimum-wage hikes and increased automation: Going hand in hand?
Dunkin’ franchisees and their corporate partners have been looking for innovative, operational efficiencies ever since William Rosenberg founded the chain in the 1950s. Most recently, Dunkin’ started testing a contactless checkout model in California called Shop Anywhere, where customers can grab their items of choice and pay using a QR Code on their smartphones. It’s the latest example of innovation at Dunkin’ and it could be a long-term solution for franchisees struggling to hire, retain and pay higher wages to employees. Some are already connecting the dots between automation and minimum-wage increases.
Ed Renis, the former McDonald’s chief executive in the U.S., recently made headlines by warning that the fight for a $15 minimum wage has directly contributed to the restaurant industry’s move toward more automation. Renis told Fox Business that minimum wages have “corrupted the labor market” and all but forced management to find alternatives. “Technology is always cheaper than people,” Renis bluntly says of the alternatives available to food-service chains.
Chris Kempczinski, the current CEO of McDonald’s, isn’t as blunt as his predecessor about the minimum wage. But earlier this month he acknowledged that restaurant industry wages are indeed rising fast—so much so that the minimum wage of $15 may no longer be competitive in some markets. He also confirmed the chain is testing automated drive-thrus at 10 McDonald’s locations in Chicago, according to QSR magazine.
Inspire Building the ‘The Bionic Model’
Speaking of innovation and technology, Inspire Brands Chief Information Officer Raghu Sagi recently told CIO magazine’s Martha Heather that Inspire was at work on an “advanced analytics data platform in the cloud.” They’re calling it the “Bionic Model.”
Here’s how Sagi describes it: “Because we are a multi-brand company, with team members working in seven different restaurant brands, we have a real opportunity to use technology to help with productivity, scheduling, time keeping, and inventory levels.” One key to the technology is a “self-learning chatbot” on the Inspire help desk “to boost productivity and deliver internal support to employees in our support centers.” Sagi said the plan to build a data platform that provides analytics for each brand, including “a solution that uses labor modeling to forecast employee scheduling.”
There are a lot of other interesting tidbits in the CIO piece. The big takeaway seems to be that Dunkin’ franchisees can expect to be more digitally integrated with their Inspire cousins—exchanging and adopting ideas and implementing shared technologies, assuming Sagi’s bionic model will work.
Confusion over EEOC’s vax incentives guidance
The U.S. Equal Employment Opportunity Commission has made it clear: employers can indeed require employees to be vaccinated against COVID-19. But most employers, including many quick-service franchisees, have been reluctant to mandate vaccinations for various reasons, not least out of fear they’ll still face potentially expensive and protracted lawsuits.
So, some employers have resorted to merely encouraging and even offering incentives to workers to get vaccinated. The only problem: recent EEOC guidance on vax incentives is reportedly leaving many employers confused. It seems some incentives are OK as long as they’re not “so substantial as to be coercive.”
Bloomberg Law reports that most legal experts believe small perks offered to employees as incentives, such as $100 cash bonuses or raffle tickets, don’t rise to the “coercive” level. But it gets tricky if the incentives are used to encourage employees to reveal sensitive information, such as medical histories, that they normally wouldn’t want to share.
Bottom line: Mandating vaccinations for workers may be technically legal, but with so many legal caveats, exceptions and tripwires, it may not be worth it.
A Dunkin’ perk entices customers to get vaccinated
Perhaps only in Massachusetts could the promise of a free Dunkin’ iced coffee be enough to convince people to get a COVID vaccination. As Boston’s WBZ TV reported, Gov. Charlie Baker heralded “Dunkin’ Days” as a way to increase participation in the Commonwealth’s vaccination campaign. All newly vaccinated people received a free iced coffee – and each day five lucky individuals were selected to receive free Dunkin’ coffee for one year. Massachusetts ranks among the top U.S. states for fully vaccinated adults—maybe the coffee has something to do with it.
As the summer rolls on, we will continue keeping an eye out for the issues affecting you and your business, so you can focus your efforts on running your business—and hopefully getting some well-deserved rest and relaxation.