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Why a long-term approach is the best strategy for labor challenges

José Cil, CEO of Burger King owner Restaurant Brands International, said staffing challenges are a long-term problem that requires long-term solutions.
labor shortage burger king
Photograph: Shutterstock

Given restaurants’ acute labor challenges at the moment, it’s easy to forget that many of them had a lack of workers before the pandemic.

And fast-food restaurants in particular have long had issues with high turnover. “There’s always been a challenge around staffing,” José Cil, CEO of Burger King owner Restaurant Brands International, told investors on Monday, according to a transcript on the financial services site Sentieo.

That is unlikely to be fixed anytime soon. As such, Cil said, the best strategy for dealing with labor challenges is to take the long-term view. “The best operators do a great job with it and those that struggle don’t,” he said.

“We believe this is going to continue to be a challenge and a responsibility for us in this industry, and that’s why we’re focused on a long-term approach to creating the right environment in our business for our franchisees and for their team members to be able to drive good, strong staffing levels as well as retention.”

The labor challenge has created enormous headaches for a huge number of operators—exacerbated by an omicron variant that has resulted in people calling in sick at high rates, which has led to a number of closures.

Some 920,000 workers quit their jobs at restaurants, bars and hotels in November, according to federal data, a “quits” rate of 6.9%—or 159,000 more people than who quit their jobs in October. Some 8.4% of jobs in those industries were open that month, according to federal data.

The shortages have led to soaring wage rates. Wage rates in 2021 have increased about 10% for restaurants. “We’re seeing that as well,” Cil said.

The higher wage rates, combined with rising costs for food, have led franchisees in RBI’s various brands to increase prices in the “mid-high single digits.” At the moment, Cil said, “we haven’t seen much of a pushback from consumers yet,” but the company is monitoring it. That reflects some comments earlier this month from Burger King’s biggest U.S. franchisee, Carrols Restaurant Group.

RBI itself doesn’t operate restaurants, for the most part. Its brands, including Burger King, Tim Hortons, Popeyes and now Firehouse Subs, are largely run by franchisees.

Yet the company has also been talking with hourly employees, in fast food and other industries, as well as consultants, in trying to determine the factors behind recruitment and retention. One thing the company found, Cil said: “There’s a lot more to staffing and retention than just raising wages. Some of it has to do with the environment in the restaurant.”

That includes internal culture, whether employees are engaged and whether there are opportunities for growth. There are some other factors, too, such as challenges with child care and transportation. Benefits are also important.

Cil said RBI is working with its franchisees to share potential solutions. The company has been working to increase its field teams over the past year-plus, and Cil said the company has been trying to provide tools for its franchisees to use to help improve retention.

“The franchisees make the decisions,” Cil said. “It’s their business, but it’s our job, we feel, to help provide tools and best practices to the franchisees so they canmake better decisions.”

The company has been working on some practical elements. RBI is working to reduce ingredients and simplify its menu, so operations are easier and the restaurants

RBI is also working to automate more in the kitchen—Cil mentioned automated fryers, broilers and beverage dispensers to simplify preparation. That’s in addition to existing efforts to increase mobile orders, prepay, delivery and outdoor digital menu boards.

All these efforts, Cil said, will be important to maintain staffing over the long term. “I don’t want to be too dramatic here, but we believe there’s a war for talent out there,” he said. “Staffing and retention is key to driving exceptional guest experiences. And so we’re doing everything we can, understanding it’s not just a wage and benefits issue. It goes far beyond that.”

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