Think you have recruitment issues? Try staffing overnight shifts

Restaurant concepts that operated 24 hours a day are having to temper that distinction because they can’t hire enough late-night staff.
Photograph: Shutterstock

When Denny’s decided to close for Christmas back in 1988, snapping more than 30 years of continuous service, the industry’s largest ‘round-the-clock operation hit a snag:  Many units couldn’t find the key to lock their front doors.

Today, those keys might be shiny from use. About 60% of America’s 24-hour Diners, as the brand calls its restaurants, still aren’t operating through the night, according to the most recent update from management. Night owls are still eager to have their 2 a.m. Grand Slams and Moons Over My Hammy, the executives say, but the chain can’t find enough hands to cook the food and take the money. 

That frustration translated into a 22-point gap in the second quarter between the same-store sales of units operating around the clock and the comps of stores that trimmed their hours. Diners open 24 hours posted a 12% two-year increase in comparable sales for the second quarter, while outlets that closed at night saw a decrease of 10% for the same period.

What’s more, “There's a fairly significant flow-through [for] those dollars,” CEO John Miller financial analysts.

The family-dining powerhouse isn’t the only overnight operator leaving money in the pockets of wee-hour guests because workers can’t be found. IHOP, a main rival, said only 27% of its restaurants were operating all night as of June 30, compared with the 50% that ran 24/7 before the coronavirus crisis.

Closings are so rare for Waffle House that temporary shutdowns are taken by weather authorities as signs of truly catastrophic local conditions. The chain declined to say how many of its stores, if any, have trimmed late-night service.

And it’s not just restaurants that are scraping to staff those off-hours. A large group of 7-Eleven franchisees have twice asked their franchisor to waive the comvenience-store chain’s 24-hour operating requirement, citing their inability to hire for the overnight shift.

The National Coalition of Associations of 7-Eleven Franchisees, a group representing 7,000 units in the United States, learned from a May survey that 50% of franchisees had taken on at least 10 overnight shifts themselves during the prior 60 days because they couldn’t recruit anyone for those hours.

Clearly, concepts that operated 24/7 before the pandemic are seeing that distinction eroded by their inability to staff late-night and overnight shifts. They attest that graveyard-shift positions may be the hardest ones to fill in the current labor environment.

It’s not from a lack of trumpeting the need. Help Wanted postings for overnight restaurant jobs tripled on the popular Snagajob website between January and June, to just under 4% of all food-related listings, according to the company. The volume has slowly eased since then, a representative said, but is still outstripping the January level.

What to do about it?

The Snagajob figures align with Denny’s experience. Since January, the chain has increased its aggregate store operating hours by 5%, to an average of 19 hours per unit, according to chain President Mark Wolfinger.

“We have worked with our franchise system, franchise-by-franchise, unit by unit, to map out a plan to increase our effective operating hours per day,” Wolfinger told financial analysts while downloading Denny’s results for the second quarter.

“In October, we expect to fully close the gap,” said Miller.

The franchisor declined to say what remedies it’s trying.

IHOP doesn’t feel quite as much pressure, according to President Jay Johns.

“24/7 is not SOP for us,” he told Wall Street analysts during the second-quarter conference call for IHOP’s parent company, Dine Brands Global. “It is not a contractual requirement that people are open 24/7. That is something the franchisees decide to do if they believe this is beneficial for them.

But “you do see a delta” between the sales of 24-hour units and those that close for the night, he acknowledged, declining an analyst’s request to quantify the spread.

“Every week, we're getting a few more restaurants that check into 24/7,” Johns added.

In the meantime, the brand president continued,  some IHOP franchisees are opting for what he termed 24/2, or keeping the doors open through the weekend but shutting at night during the week.

Like Denny’s and Waffle House, IHOP declined requests for information about what it’s doing to keep more units open around the clock.

The sales impact has been tempered for Denny’s by its launch of two virtual concepts, The Burger Den and Melt Down. The ventures tend to be popular during times that are less busy for the core Denny’s business, generating incremental sales without a corresponding rise in labor needs, Miller explained.

 “These brands provide opportunities not only at dinner and late-night to leverage underutilized labor and kitchen space, but we're also seeing a meaningful number of transactions during the week versus the weekend,” he said.

So, one analyst asked, why not scrap Denny’s 24-hour tradition and its accompanying problems and just use the virtual ventures to capture nighttime sales?

No way, said Miller.

“Remember, we're an all-day menu place, America's diner, always open,” he explained. “That's been our market position for many years.”

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