Entering the summer, there was so much hope life would return to some semblance of normal after more than a year of emergency COVID-19 lockdowns and restrictions. Vaccination programs were fully under way. Government officials were lifting pandemic business restrictions. One could finally meet up with old friends without masks. But that was then and this is now, thanks to the Delta variant. In this edition of “What’s Brewing,” we examine some of the latest pandemic challenges facing franchisees, as well as other key issues impacting your business during these turbulent times.
Policy confusion and recovery woes
If you randomly tossed 10 darts at a map of the United States, you’d likely find 10 sites with 10 different policies for dealing with the Delta variant surge sweeping the nation. Things like requiring proof of vaccinations in order to sit inside a restaurant.
New York City is poised to require such passes. But in nearby Boston? Forget it, the mayor initially said, only to reverse herself a few weeks later. A return to mask requirements indoors? San Francisco says yes. But in Texas the governor is adamant: no more restrictions.
The Delta-driven hodge-podge of state and local guidelines, rules and restrictions most definitely disrupted the summer’s already shaky restaurant-industry recovery – and the confusing array of rules is preventing quick-serve and other restaurant companies from implementing uniform COVID policies. McDonald’s recently made headlines by becoming the first quick-serve chain to reinstate mask mandates – but only in certain locations.
The bottom line: Every franchisee has to figure out what is right for his or her business, depending on their specific localities. But everywhere it seems, there is dread the Delta variant and breakthrough COVID cases will be discouraging millions of Americans from comfortably returning to their favorite eateries.
The Washington Post recently nailed the issue with an article headlined: “‘We can’t take another blow’: Some restaurants may not survive renewed mask mandates.”
Nor are they likely to survive a stay-at-home workforce that many thought would be returning this fall to urban towers and suburban office parks. Many large companies – Amazon, Apple and Wells Fargo – have already punted into January 2022.
Wages and prices go up
Major corporations, including Dunkin’ parent company Inspire Brands, may have played a role in convincing Congress not to include a $15 minimum wage in the recently passed COVID relief bill, as Newsweek reports, although minimum wage battles are still being fought at the state levels, in places like Wisconsin.
But the noise around a higher minimum wage seems to have quieted to an extent, as a result of the extreme staffing shortages affecting businesses across the country. With their backs to the proverbial wall, many franchised business owners are raising wages on their own in order to attract and keep workers.
Take 7-Eleven. A recent survey of hundreds of 7-Eleven franchisees found an overwhelming majority had raised their wages beyond what was mandated by their state or local minimum wage laws. Even with higher pay and perks, many small business owners are struggling to keep up with salary and benefits packages other companies are offering. It’s all part of a heightened battle among businesses to recruit and hire workers.
According to QSR Magazine, McDonald’s recently announced it was further boosting its wages and benefits in the face of wage competition from such quick-serve rivals as Chipotle and Taco Bell.
Franchisees are trying to balance higher labor costs (not to mention supply-chain disruptions and other market forces) with menu increases in order to avoid dealing with angry customers at the counter or drive-thru. One study finds Dunkin’ at the top of the pack of quick-serve restaurants that have boosted prices the most. According to Business Insider, Taco Bell spiked prices 10%; Dunkin’ increased 8%; and McDonald’s increased 8%.
So when will it all end? Many hope the September expiration of enhanced unemployment checks will spur more job growth, though experts are divided on how much federal benefits actually impacted the slow return of service workers. CNBC ran the headline, “26 states ended federal unemployment benefits early. Data suggests it’s not getting people back to work,” citing a study by the payroll and time-management firm UKG. It found, in the states that ended enhanced benefits, the number of shifts hourly employees worked was about half of what it was in those states that continued to pay the extra $300-per-month benefit.
The latest product shortage: Paper bags and straws?
Has it really come to this? Most everyone has heard about, or felt, the shortage of various products due to supply-chain problems. And now, some quick-serve chains are experiencing a tightening of key supplies like paper bags and straws tied to the pandemic-era spike in drive-thru and take-out business, as Yahoo! News reports.
The supply-chain problem in general looked like it was easing a bit in late spring and early summer, and then you-know-what (i.e. the Delta variant) hit, and it seems things are getting clogged up again, as Reuters reports.
In fact, the news agency reports the global supply chain is now reaching the “breaking point, threatening the fragile flow of raw materials, parts and consumer goods, according to companies, economists and shipping specialists.”
Dunkin’ franchisees have likely been paying attention to coffee futures that have been rising over the past six months due to global crop shortages and supply chain issues. Luckily, Dunkin’s supply strategy isn’t impacted by short-term fluctuations. If problems persist, the industry will face an awakening and consumers will face higher prices. Another Delta punch…
PRO Act gets AGs’ support
Attorneys general across the country are engaged in a letter-writing campaign over passage of closely-watched legislation called the Protect the Right to Organize Act of 2021 (PRO Act). In April, a group of 14 Republican AGs, led by South Carolina’s Alan Wilson, wrote a letter to U.S. Senate leaders opposing passage of the act, which Republicans said would undermine states’ “right-to-work” laws.
Now 17 Democratic AGs have responded, writing their own letter last month to U.S. Senate leaders in support of the measure, saying it’s needed to provide protection to workers trying to organize unions.
So where does this leave the controversial PRO Act? It’s going to be close. Remember: Democrats need every single Dem vote to pass legislation in the Senate. Or they need a few GOP defectors. Right now, it looks unlikely Dems will get either. We’ll see.
Dunkin’ commits to only cage-free eggs
Dunkin’ is the latest company to commit to using only cage-free eggs at all its locations globally, and the move is being praised by at least one animal-rights group. The move comes as more states are adopting cage-free laws. Utah is the latest, having passed its regulations earlier this year. Other states include California, Colorado and Massachusetts.
Dunkin’ had been making progress in its sourcing of cage-free eggs in recent years. But Inspire Brands, which purchased Dunkin’ late last year, recently announced in an updated sustainability policy that it has globally “committed to 100% sourcing of cage-free eggs across all brands by the end of 2025,” as New Food magazine reports.
Inspire previously announced that two of its other brands, Arby’s and Sonic, had committed to only cage-free eggs. Now Dunkin’ is locked on the same cage-free target. Among others, the nonprofit Lever Foundation is praising the Dunkin’ move.
But there is certainly a cost. Cage-free eggs cost more to produce, but as more governments, companies and consumers demand cage-free eggs and more poultry companies adapt to that demand, prices should come down, eventually. It’s all about supply and demand, after all.
The coffee incentive
So, it seems all those free cups of Dunkin’ coffee and other freebie incentives being offered in places like New Haven, Conn. haven’t had a huge impact enticing people to get vaccinated.
According to marketing experts interviewed by the Hartford Courant, there
are generally two types of people who haven’t been vaccinated yet: those adamantly against vaccinations, in general, and those who simply haven’t gotten around to getting a shot. The latter are the ones who might conceivably respond to small incentives, such as the prospect of free cup of java, to finally get a shot, experts say.
So, the bottom line is that incentives only help a little, but may still be worthwhile if they can help save the life of one person, for the cost of a cup of coffee.
