McDonald’s recently announced plans to hire 375,000 people this summer, which would be close to half the workforce at the chain’s 13,500 domestic restaurants.
And then this week, we found out why. It is expanding into late-night and is kicking it off with a marketing push this weekend.
It’s a sign that the labor picture is much better now than it had been in some time. McDonald’s certainly couldn’t undertake an effort like this, and be so public about it, if the company and its operators weren’t at least somewhat confident in their ability to find enough workers. Late-night hours are toughest to staff, after all.
“It’s a very delicate balance,” Michelle Korsmo, CEO of the National Restaurant Association, told me on this week’s episode of the A Deeper Dive podcast. “Right now, we’re kind-of at a one-to-one ratio, where the number of openings is equal to the number of people looking for work. So that is a very delicate balance.”
How long remains a big question, however.
In conversations with operators during the National Restaurant Association Show this week, immigration concerns were a somewhat surprisingly common topic. Many brands have expansion plans.
The ability to find workers is crucial to that plan. If the government proceeds with limits on immigration and its ready supply of labor, that would be a deep problem.
Immigration limits were cited in a Fitch Ratings report lowering the restaurant industry outlook to “deteriorating.” While the report rightly cited the impact diminishing consumer confidence could have on industry sales in the near-term, it’s the impact of immigration on the supply of labor that is particularly concerning.
As Korsmo noted on the podcast, it wasn’t all that long ago when the restaurant industry could not find enough workers to keep restaurants open. I can still remember, quite vividly, looking for an open Jimmy John’s one evening to get sandwiches for myself and my eldest child just before one of his high-school wrestling matches—only to be greeted by sign after sign saying the restaurants were closed because of staffing issues.
And it’s not like labor isn’t a major concern among operators right now. Finding and keeping workers is routinely at the top of any survey of major concerns of restaurant operators by the association.
Immigration has long fueled the pool of labor for restaurants. One out of every five U.S. restaurant workers were born outside the country. The industry has an insatiable need for workers and a limited ability to use automation to replace them. The U.S., much like most other Western nation, is simply not producing enough children to maintain population growth.
Cutting that off would be brutal, and not just for restaurants but for many other industries that supply restaurants, such as agriculture.
Labor inflation hammered much of the restaurant industry after the pandemic. It didn’t just keep McDonald’s from keeping its restaurants open. It drove up the price of labor, hurt profitability and helped fuel the bankruptcy filings we’ve seen over the past two-plus years. That one-to-one ratio Korsmo talked about won’t remain for long if the supply of labor falls.
The good news is that Korsmo provided at least some glimmer of hope for immigration reform on the podcast.
“Things are happening that you wouldn’t necessarily think would have happened a year ago,” she said.
Immigration is one of the country’s biggest competitive advantages on the world stage. For the restaurant industry, fixing it remains paramount.