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Teens without jobs spells trouble for fast-food industry

shutterstock 108634499
shutterstock 108634499

What happened to all the teenagers who would beg for summer jobs at their local fast-food establishment? That’s the question franchisees of joints such as McDonalds, Burger King and Taco Bell have been asking for years now. More like crying, actually.

The reason for their desperation is a combination of factors that have colluded to make the lives of fast-food restaurant owners a living hell: severe shortages in workforce applicants, an explosion in the number of restaurants popping up, and a demand for increased salaries.

They don’t make ’em like that anymore

Ah! The way it used to be! Super scant wages, with no benefits and long hours. Immigrant workers making up 20 percent of the workforce and an endless supply of workers in the form of teenagers hungry for summer work. For fast-food store-owners, these were the glory days. But this industry simply does not exist anymore. And this is because the model by which it had been surviving and thriving is being slowly stripped away.

Immigrant workers are harder to come by these days for fast-food franchise owners, and with the demand for increased wages, the ability to provide the quintessential inexpensive food experience is becoming more and more difficult to achieve for the fast-food industry. As for the workforce, not only immigrants but teen-aged workers used to be a large part of it. Roughly 45 percent! That number has decreased to less than 30 percent in 2017.  In fact, there used to be “56 teenagers in the labor force for every ‘limited service restaurant’ (the kind where you order from the counter.)

Are the teens just lazy now?

Why aren’t teens lining up outside of Burger King looking for summer employment anymore? Why aren’t teens willing to work for three burgers a day, a handful of ketchup packets, and $3.73 an hour? Turns out that it is not because they are lazy. No, it is actually because the emphasis on education and “focusing on your studies” has doubled or tripled in the last few years, and teens often aren’t working at all anymore (for money that is). The perceived value of a minimum-wage job as compared to other experiences such as internships or summer programs has diminished. These days, you will be more likely to find teen-aged people in the library during the summer than at a minimum-wage position in the fast-food industry.

The lack of available help has created some odd situations for owners. Jeffrey Kaplow, who owns three Subway restaurants in New York, presumably didn’t become the owner of these three restaurants just to work them himself. But that is exactly what he finds himself doing many a’mornin’ shift — tending the counter right alongside his meager number of employees. In addition, franchisees across the nation have had to become creative in sourcing employees and prospective employees: They are doing things like placing Craigslist ads, asking other franchisees for referrals, and even seeking to hire people from Subways that have closed (so desperate. If this was a dating site, these owners would be getting blocked left and right).

How are they surviving?

Fast-food restaurant owners are surviving these upsets and changes by the very skin of their teeth. To entice workers — of which boatloads of applicants has, in years past, turned into slim-to-no applicants — owners have increased wages, begun to offer more incentives such as dental insurance, sign-up bonuses, and even extended travel reimbursement opportunities.

Tamra Kennedy, who owns nine Taco John’s franchises in the Midwest, also has gotten familiar with working the counter, just as Kaplow has. She has a few other tricks up her sleeve as well, though. She started offering $100 as a bonus to new employees who reached 100 hours, and “merit increases” for workers, bi-annually. What’s more, she pays all of her workers more than the minimum wage.

“Hiring has been more challenging in the last two years than probably the previous 10,” Kennedy said. Even with her innovations, Kennedy reports that half of her stores are understaffed, and that she has had to devise workarounds just to compensate: Things like digital probes that record food temperatures instead of hiring paid human employees. She also has nifty technologically-advanced registers that can produce reports that employees used to have to complete by hand.

Takeaway

“I’ve never seen the industry in this kind of situation,” said Robert S. Goldin, a partner at the food consulting firm Pentallect. “It’s never been like this.”

And Goldin is right. At least, he is according to an estimate from Dean Haskell, a partner at National Retail Concept Partners, a restaurant and retail consulting firm in Denver. Haskell analyzed public financial filings from 15 major chains and determined that those companies spent about $73 million more on labor last year than the year before. Will the fast-food industry be able to survive these wage hikes and labor force dips (more like plummets)? It remains to be seen because, right now, it seems like they are barely hanging on.

 

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