It was never easy running a quick-service franchise. But over the past few months, the lives of Dunkin’ franchise owners have gotten infinitely more complicated. Franchisees already had their hands full before the coronavirus crisis hit keeping customers happy, keeping employees satisfied, and keeping bottom lines healthy—all while negotiating the challenges posed by various federal, state and local regulations. But the coronavirus has upped the ante when it comes to regulatory compliance. Franchisees are on the hook for ensuring that employees and customers alike follow scores of necessary, but at times convoluted safety rules issued by various state, county and municipal governments.
Despite the challenges, the quick-service sector has continually showed its strength. The durability of the drive-thru business has helped operators stay open and hold onto millions of employees. Still, some of the changes of the past few months are likely to become permanent and will force franchisees to maintain greater focus on employee and customer health in the years ahead, experts say.
Restaurant Sector Helps Lead Jobs Recovery
The good news is the restaurant industry regained 1.5 million jobs in June.
The bad news? Employment in the industry is still down by more than 3 million since the coronavirus crisis hit in full force in March, triggering state lockdowns and a sharp economic downturn. That’s the gist of the latest report from the federal Bureau of Labor Statistics.
Jobs at quick service and other restaurants accounted for a healthy percentage of the economy’s overall labor gains in June, accounting for 1.5 million of the 4.8 million jobs added across the country in the month.
Restaurants – classified by the government as “food and drinking places” – saw the second largest batch of job gains, second only to the leisure and hospitality sector, which regained 2.1 million jobs in June.
The gains bring down the overall jobless rate to just over 11 percent, while the number of people without a job fell from over 20 million to 17.8 million.
June’s gains come after May’s surprise employment report, which found 2.7 million jobs had been created even as economists had predicted a further round of job losses, not a rebound in the battered labor market.
“These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain it,” the Bureau of Labor Statistics said in a press release.
Still, there are reasons to be cautious. June’s job report did not reflect surges in cases of COVID-19 in Texas, California and several smaller states that have prompted a slowdown or, in some cases, a rollback of reopening plans.
Guidebook for navigating coronavirus regulations
While Dunkin’ has largely regulated how franchisees must operate during the pandemic, the rules and regulations coming from different cities, counties or even states can be conflicting and confusing. Different states have their own regulations – or “advisories” – on whether your employees and customers need to wear masks. A review of the National Restaurant Association’s list of all the varying state, county and city coronavirus safety requirements illustrates the point. Every jurisdiction seemingly has their own wrinkles to the rules.
Pima County, Arizona, for example, requires temperature checks not only of all restaurant employees, but also of vendors, contractors and third party delivery workers as well as they arrive on site. Yet gloves are not required if hands are being “sanitized” between servings.
Sonoma County, California requires customers in drive-thru lanes to wear masks, while San Diego County says it will levy $1,000 fines – or even dole out a six-month jail sentence – for front-of-the-house restaurant workers who fail to wear masks.
By contrast, all restaurant workers in St. Louis County, Missouri are required to wear masks, even when they are not dealing with customers, while the city of Springfield – Missouri’s third largest – requires employees to have their temperatures checked with touchless thermometers before they start their shifts.
States, cities forge ahead with wage hikes
Minimum wage hikes are one thing the coronavirus pandemic has not put a stop to.
On July 1, three states, 18 cities and three counties all raised their minimum wages, with the increases set months or years earlier after the passage of legislation.
Oregon led the way on the state side, with an increase to $12 an hour, while Portland topped its home state with a jump to $13.25 an hour, USA Today notes in a story headlined: “Minimum wage hikes in three states, 21 localities to aid low-paid workers slammed by Covid-19.”
But Portland’s new $13.25 an hour wage is hardly the highest, with franchise and restaurant owners in San Francisco, Washington, D.C. and Los Angeles all now adjusting to the reality of higher payroll costs.
The minimum is now $16.07 in San Francisco, while in Washington, D.C. the wage floor has now been raised to $15 an hour, up from $14 an hour previously. In Los Angeles, the minimum is now $15 an hour, at least for big employers, up from $14.25 before.
Bringing up the rear, Illinois has raised its minimum to $10 an hour, while Nevada has gone to $8 an hour for workers with health insurance, with a jump to $9 an hour for those who don’t have health insurance through their employer.
New approach to employee health needed?
The coronavirus pandemic continues to upend life across the United States. It has had a major impact on the restaurant industry, and the quick service sector as well. Dunkin’ and franchisees in other QSRs have had to scramble to stay afloat these past few months amid a barrage of new regulations and a roller-coaster-ride of an economic downturn. Still, without a crystal ball, it’s hard to sort out which changes are likely to be temporary and which ones will become just part of the cost of doing business.
In a provocative piece in QSR Magazine, Roslyn Stone, chief operating officer for Zero Hour Health, argues that the restaurant industry in the wake of Covid-19 must make employee health and safety a top priority or face punishing, real world consequences to their bottom line.
“Preventing the spread of illness has now become a corporate issue,” writes Stone, a restaurant industry health and safety consultant who has worked restaurant sector companies like Bloomin’ Brands, Chipotle and Sodexo over the past three decades. “In the future, employers who do not make employee health and wellness a priority will see their stock prices drop, customers dry up and workers protest unsafe work conditions.”
So, for restaurant CEOs and franchise owners alike, what should be on the menu of upcoming changes? The restaurant industry should brace for the likelihood – and expense – of “employer-led Covid testing” down the line, Stone writes, and budget accordingly.
That’s in addition to decking out employees with the right personal protective equipment (PPE) to keep them and the customer safe, temperature checks before employees sign in, as well as daily wellness checks, or “symptom surveys,” Stone notes. And it won’t be cheap.
According to Stone, “one client has calculated their anticipated costs for daily temperature checks across their organization at $2.8 million annually.” Just the cost of having every employee wash his or her hands every half hour can add up fast, amounting to $400 in lost labor in a 20-person operation.
Still, not confronting the health issue head on could make things even worse, she warns. “These costs, however, are dwarfed by the potential cost of another round of shut downs which many believe could sink entire industries.”
What with the coronavirus and the thicket of government safety regulations the crisis has spawned, it is a particularly challenging time now for Dunkin’ and other franchise owners.
Depending on where you do business, the requirements for everything from the type PPE your employees wear – and when they wear it – can differ greatly. The same goes for things like temperature checks, symptom surveys and other coronavirus safety rules as well. Overall, higher health and safety costs are likely to be a permanent addition to franchise bottom lines amid the realities of life with the coronavirus.
And the old challenges haven’t gone away either, with business costs rising in several states and cities as previously planned minimum wage hikes take effect.
So, staying informed has never been more crucial than it is now. Keep your eye on this space, and Independent Joe will ensure you are ahead of the game when it comes to the issues that impact your franchise and your bottom line. •