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At McDonald’s, some sign of an improving labor crisis

The company said about 1% of its stores have shortened hours, down from 10% earlier. But many dining rooms remain closed.
McDonald's labor crisis
Photo courtesy of McDonald's

The COVID-related labor crisis appears to be easing, at least if you look at McDonald’s.

Chris Kempczinski, CEO at the Chicago-based burger giant, said only 1% of the chain's restaurants are operating with shortened hours because of the COVID-19 pandemic. That was down from 10% in December, which he referenced in a recent interview with the Wall Street Journal.

“When I made that comment, that was the middle of December, and we were in peak Omicron,” he said, referring to the omicron variant of the coronavirus that surged in numerous cities starting in December.

In the five weeks since, Kempczinski said, franchisees have worked to ensure their restaurants were fully staffed. “Our franchisees have done just a terrific job of finding ways to get the talent that they need into the restaurants to keep the restaurants running,” he said.

The latest surge in infections continues to cause problems in restaurants around the country, leading to temporary closures as people call in sick and operators can’t find enough staff to keep operating. Yet the comments from Kempczinski do suggest an improving environment on that front—given the chain’s sheer size.

Still, labor costs as a whole are increasing. Wage rates are up 10% over the past year. The rising labor costs have eaten into company margins and have resulted in operators increasing prices—though the company says there are no indications of a customer pushback as of yet.

And many restaurants remain with limited services. Kempczinski said that about 80% of the chain’s dining rooms are currently open. Or, put another way, 20% of them are closed.

The company wants more of those dining rooms open, for a simple reason: To take pressure off the drive thru. Executives said Thursday that its drive-thru service times were hurt in 2021 because of labor challenges. That was a step back after a multi-year effort to improve speed through the crucial lane, which even before the pandemic was the source of about 70% of sales.

“We put extraordinary pressure on the drive-thru as we had some dining rooms closed in 2021,” Kempczinski said. By opening the dining rooms, he said that will take pressure off the drive-thru and could help with service times.

“We did see a little bit of a step back in service times because of the operating environment,” he said. “The challenges of just making sure that we have the staffing we need.”

He said the company is focused on improving those service times, considering them key toward keeping customers. “When we reduce service times, we see customer satisfaction go up,” Kempczinski said. “That is something we’re all focused on.”

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