1/n Thread on #restaurant labor
2/n Labor market for restaurants is more difficult than it has ever been. I have heard more franchisees / large operators say that they have spent more time "flipping burgers" or something similar than in the last 20 years
3/n COVID + unemployment + stimulus made this all the worse. Who wants to make $10/hr when you can chill at home for less? It's hard to blame these people that have probably never really had a real vacation in their entire lives
4/n For restaurants, they are getting hit by the other sectors. Wages are rising everywhere and restaurants struggle to be competitive
5/n Spoke with a franchisee last week. He had a manager making $50k / year. 24 years old. $CMG recruited to a store across town. Offered $65k. Franchisee matched. $CMG comes back with $80k. Franchisee can't match and lets employee go
6/n Spoke with another operator in a midwest market. Small independent chain. Line cooks making $14 / hour. Entire line gets recruited away to another restaurant. $21 / hr + full benefits. How do you compete if you don't have high volumes?
8/n Spoke with 35 unit operator in a city that said he needs 350 employees to be fully staffed
9/n Price increases are coming. Between labor and commodity, there is no choice. Many brands have started without customers blinking
10/n Saw an analysis for QSR that a $10 -> $15 wage progression would need 22% price increase to offset EBITDA impact in the P&L
11/n So question comes down to who has the most pricing power. I like the chances of someone like Dunkin' that can raise small coffee from $1.60 -> $2.00 vs. someone like $WEN that needs to raise the Quarter pounder meal from $8.50 -> $10.50
12/12 What the coastal states have taught us though is that eventually pricing comes through for good brands and usually offsets wage increase. Seems to work out a lot of the times
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