Every day, every week, every month seems to pose new challenges for Dunkin’ franchisees, thanks largely to the pandemic and economic turmoil of late. The latest challenge: increased union-organizing activity within the food-service industry. In this edition of “What’s Brewing,” we explain why Dunkin’ franchisees should be concerned, though not alarmed, about the unionization trend, while exploring other issues of interest for running your business.
Union pushes into Starbucks
From lockdowns to supply chain woes to escalating wages, the pandemic has wreaked havoc on the operations of Dunkin’ and other quick-service franchisees around the country. Here’s another potential challenge for some franchisees: Unionization campaigns by employees.
The case worth watching involves Starbucks employees at three Buffalo, N.Y. stores who have filed petitions with the National Labor Relations Board to hold official union elections. If the campaign succeeds, it would be the first time a union represents any store employees at Starbucks, which has over 8,000 retail locations around the country.
Not surprisingly, Starbucks is throwing up obstacles to the unionization effort, saying in a recent filing that employees can’t unionize at individual store levels, as Fortune magazine reports.
But the big question is: How will the Starbucks effort impact QSRs? Already, employees at some smaller coffee shops are leading unionization efforts, such as workers at the four-unit Darwin’s Ltd. chain in the Boston area, where the company has voluntarily accepted collective bargaining by its employees if a majority favor union representation, according to Restaurant Business.
Meanwhile, there’s union activity under way in South Carolina, where labor activists are trying to organize lower wage workers in the food services, health care and other industries, according to published reports.
As some long-time franchisees will remember, unions have gained a small toehold in the Dunkin’ business over the years, at a former regional DCP in 2001, and at select locations, like the Dunkin’ at New York’s Penn Station. In some cases, there have been walkouts.
For franchisees already coping with historically bad staffing shortages, the idea of a unionized workforce may seem like salt in a wound. But it’s not so clear that unions can be running into Dunkin’.
On the one hand, the current economic and political environment is certainly conducive to union drives. The acute pandemic-era labor shortage has given workers extra leverage to demand and get higher wages and benefits. The Biden administration is also more union-friendly in general, with Marty Walsh, a former union boss and former mayor of Boston, heading the U.S. Department of Labor.
But here’s betting that unionization expansion, if any occurs at Dunkin’ establishments, will be very limited in scope. Why? Sooner or later, the current labor shortage will ease, stripping away much of the bargaining power workers now have across the country.
In addition, many food service jobs are not designed to be career jobs. Employees at QSRs typically come and go at a faster clip than in other industries. It’s simply harder to organize unions when there’s a lot of turnover within employee ranks.
What’s more, consider the time and geographic challenges union activists face in organizing workers one store or one franchise company at a time. The bottom line: Union activities may be picking up within the food services industry, but those are likely to be sporadic and isolated in nature, as they have been in the past.
Labor shortage: How much longer can it last?
While unions continue working to leverage the staffing situation, franchisees are taking whatever steps are necessary to keep their stores open and profitable during this season of shortages.
How tough is it? In Colorado, a Dunkin’ shop had to temporarily close after it couldn’t retain and hire enough workers, reports Yahoo! News. In New Hampshire, one Dunkin’ store closed after shifting all its workers to another Dunkin’ shop in a desperate attempt to pool enough employees together at one site, as the Concord Monitor reports. The list of Dunkin’ franchisees scrambling to find workers to staff stores goes on and on.
And you think it’s bad for Dunkin’ and other quick-service franchisees? The situation is even worse for independent restaurants, which are being crushed by the shortage of staffers, and which don’t have a corporate network of support, as Business Insider reports.
Across the industry, restaurant operators are asking: How much longer can this labor shortage last? One multi-unit restaurant operator in Texas told TV station KXAS, the labor shortage could easily stretch another six months to a year, based on the trends he’s seeing.
His prediction is supported by an article in the Wall Street Journal, which notes two important statistics. No. 1: U.S. employers are struggling to fill 10 million job openings; and No. 2, there are 4.3 million fewer workers today than when the pandemic first began in early 2020.
Generous unemployment benefits may have contributed to the shortage at one point. But most of those benefits have since expired, suggesting they were exacerbating the labor shortage, not causing it. The emergence of the Delta variant may also have kept more people on the sidelines.
But as the WSJ story notes, the shortage may be the result of a structural change within the U.S. workforce. Specifically, it seems to have been caused, at least in part by millions of people deciding to retire early, change careers or switch to self-employed/remote jobs, creating a huge nationwide void in available payroll workers in the process. Additionally, 4.7 million fewer international visas were issued last year which, according to the New York Times, likely prevented hundreds of thousands of foreign workers from taking jobs in the U.S.
Whatever the causes, some economists think we may be facing a long-term labor shortage as a result of structural changes.
Mandatory vaccine confusion
Confusion over vaccine mandates for workers and customers is creating additional problems for quick-service operators in major cities across the country. Once again, local and state governments are leading the charge on the customer front, with the Los Angeles City Council recently approving a sweeping mandate requiring customers to be vaccinated in order to enter restaurants and shopping centers, as CBS News reports. The City of Angels joins, among others, New York City in effectively requiring vaccine passes to get into establishments. It’s literally a case-by-case mishmash of local, state and regional edicts – and it’s forcing some quick-service establishments to reduce operations as a result, Reuters reports.
What about the federal government? The Biden administration has now issued a couple of vaccine-mandate guidelines for companies regarding workers – and they’re causing confusion within the restaurant industry. The latest pronouncement requires all employers with more than 100 employers to mandate vaccinations or undergo weekly Covid tests.
But does that apply, for instance, to individual Dunkin’ stores or to Dunkin’ franchisees with multiples stores? If it’s the former, they’re likely excluded from the guidelines. If it’s the latter, they’re likely not. Yet it’s not entirely clear which is the right way to go, although most experts believe the federal guidelines apply to individual Dunkin’ stores, according to a report at Franchise Wire.
One fast food franchise consultant is simply telling owners: Never mind what the federal guidelines mean or don’t mean – just require workers to get vaccinated. He says it’s all about competition and survival, Business Insider reports.
Here’s one way for franchisees to get around labor shortages, higher wages and potential union-organization efforts: fewer employees as a result of technology improvements. McDonald’s and other quick-service chains began using ordering kiosks even before the pandemic, but now it seems their value has skyrocketed.
Dunkin’ stepped up its tech adoption recently with the opening of its first digital-only store, in the heart of downtown Boston. Customers no longer see a person at the counter. Instead, they place their order at the in-store kiosk, or by using their mobile app. As Boston.com reports, “Orders are then available for contactless pickup at a designated area within the restaurant.”
Company officials say “Dunkin’ Digital,” as it’s been dubbed, is all about faster and more convenient service – and won’t necessarily lead to fewer employees. Instead, the technology frees up employees so they can assist with preparing orders and getting them out more quickly and accurately.
But as Independent Joe and other publications have consistently reported, advancements in technology – and artificial intelligence – will likely require fewer employees to smoothly run a store, thus preserving profits and peace of mind for franchisees.
These digital Dunkin’s are meant for a quick dash in and out; there are no tables and chairs. Dunkin’ plans to replicate the model for new, non-traditional locations, as well as some more traditional spots where younger customers probably won’t be alienated by such changes, considering their remarkable acceptance of new digital technologies in general. For older technology-challenged customers, it is a reminder that this is not your father’s Dunkin’ Donuts store.
Reusable cups and sandwich boxes: Waste not…
The Wall Street Journal recently reported that Tim Hortons, Burger King and McDonald’s have signed up to test a new sustainability initiative called Loop, which requires customers to return reusable packaging as part of an effort to reduce the amount of waste at restaurants.
This is not to be confused with refillable cups that customers keep and reuse over and over again whenever they frequent a restaurant. TerraCycle Inc.’s Loop program actually collects, cleans and redistributes reusable packaging. The Burger King program will entail charging customers a refundable deposit for each reusable cup and sandwich box.
It is hard to judge how well such a program will land with quick-serve customers and operators. There are daunting logistics – and costs – to consider. For example, where will operators store previously reused cups and packages? How will they keep track of customers’ deposits? As Fiona Thompson, a sustainability and packaging consultant at environmental consulting firm Ricardo PLC, told the Wall Street Journal, “It doesn’t always make sense for some people to pay such a high percentage of the cost of the item on the deposit for the container.”
But if it really reduces waste, it may appeal to sustainability-conscious customers. And, considering today’s ongoing supply-chain problems, it could help with other thorny product-stocking problems as well.
Finally, from the “don’t believe everything you read” category, this plea for a federal government takeover of Dunkin’. It is not a ploy by the labor unions or by a party of socialists. Instead the concept came in a humorous column in the media and celebrity blog Gawker. Writer Abdullah Shihipar offered the idea that the government should “Nationalize Dunkin’” because “if America runs on Dunkin’, should America not own Dunkin’?” His call for a caffeine new deal is clearly based on his affection for the brand and harkens America back to a century-old presidential misstep. He wrote, “Nearly 100 years ago, President Herbert Hoover made a promise that he failed to deliver on: the promise of a chicken for every pot. President Joe Biden can avoid the same fate, by delivering coffee, Dunkin’ coffee, for every pot.”