Growing Pains: Big Chains Post Strong Pandemic Sales, Struggle with Post-Pandemic Demand

Posted in Takeout on July 27, 2021

327_the-creative-exchange-jCvbQdgHxFo-unsplashMajor restaurant chains had no choice but to flex their off-premises muscle when COVID-19 hit. As discussed in a previous post, bigger proved to be better during the pandemic, as large chains were able to rely on and build out their already well-developed delivery, takeout and drive-thru capabilities. Digital ordering linked consumers to foodservice with contactless ease and became a lifeline that made the difference in whether operations sank or swam in a rising tide of restrictions and infection rates.

Primarily dependent on dine-in revenue, the full service segment was hit the hardest, but overall the top 500 chains (as determined by the market research firm Datassential) lost 3,616 restaurants and suffered a 4.3% drop in sales last year.1 The limited service segment fared better. A small portion with large digital infrastructures even managed to post double-digit growth1—a remarkable feat, given the circumstances.

Wingstop, Popeyes Louisiana Kitchen and Papa John’s led the charge among the 30 big chains that leveraged off-premises so effectively—and managed to get even bigger during an especially bleak period of widespread declining sales and closing locations.1 Further down the list of big chains with big gains are Domino’s Pizza, Jersey Mike’s Subs, Chipotle, Wendy’s and KFC.1

From Famine to Feast: Traffic Roars Back, Staffing Lags Behind

Now, with restrictions lifted and dining rooms reopened, operators are still grappling with the long-term effects of the pandemic on the industry, and new problems are emerging. A surge of job openings may signal a time of renewal, but even large chains are struggling to fill open positions and meet consumer demand.

According to Cracker Barrel CEO Sandra Cochran, 10% of her chain’s restaurants in May were critically short on staff and unable to keep up with demand, and staffing levels at another 25 locations were cause for concern.2 Cochran cited stimulus-enhanced employment benefits and increased competition as key factors in the labor shortage. “Everybody’s hiring at once in the restaurant industry as America opens up,” she said. “But we’ve also got new competitors for a lot of similar skill sets, companies like Amazon.”2

McDonald’s President and CEO Chris Kempczinski echoed Cochran’s sentiments. “Everybody is in a hiring mode right now,” he said. “So everybody is trying to reopen and everybody is out there staffing.” Kempczinski also said McDonald’s is increasing pay to attract labor: “You need to be able to pay higher wages to get the people you need.”2

Pent-up demand mixed with short-staffed restaurants are a recipe for rising frustration, survey results show. Consumer market strategist Lisa W. Miller found that 43% of consumers surveyed in June were frustrated with staffing—a big jump from 21% in February.3

While it’s understandable for restaurants to be hungry to regain lost ground, Miller urges caution in the rush for revenue without sufficient staff to provide a satisfactory customer experience. “We can’t sacrifice today’s guest experience to make up for last year’s lost sales,” she said. She recommends a more prudent approach: “Make sure that your seating capacity aligns with your staffing capacity.”3

Whatever challenges your operation faces, on-premises or off, Mondelēz International Foodservice has the trusted brand ingredients and culinary expertise to help you manage margins and maximize sales. From travel-friendly dishes to signature desserts, our chefs can custom-create menu concepts to help boost business. Reach out below to learn more about custom menu solutions for your operation.

1 NRN staff, “30 big restaurant chains that got even bigger in 2020, against all odds,” Nation’s Restaurant News, June 21, 2021

2 Maze, Jonathan, “There are a huge number of restaurant job openings right now,” Restaurant Business, June 8, 2021

3 Ruggless, Ron, “Prickly pandemic consumers emerge into restaurants,” Nation’s Restaurant News, June 25, 2021

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