The fast food industry is in crisis, and it's only getting worse
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- The fast-food industry is flailing without enough workers.
- Over 60% of fast food owners said that they'd closed part of their dining rooms in August.
- Operators said supply chain disruptions and low margins were making things worse.
- See more stories on Insider's business page.
Fast food is facing a major reckoning as understaffed stores, supply chain problems, and the Delta variant of COVID-19 are hitting the industry at the same time, possibly ruining plans of recovery after a notoriously difficult 2020.
A new survey from the National Restaurant Association, reported by Restaurant Business Online, shows just how bad things have gotten. Restaurant operators overwhelmingly said that finding staff was the number one challenge they face, with 75% agreeing. Of owners surveyed, 78% said that didn't have enough workers to handle business, which led to many closing dining rooms or seating areas to lower the number of customers they could serve.
Nearly half of operators said that they reduced dining capacities voluntarily. According to the survey, 61% of fast-food restaurants, and 81% of full-service restaurants said that they decided to shut parts of dining rooms in August because they didn't have the workers to serve those areas.
Business owners say they're unable to find staff and in some cases even cite a lack of desire to work, while workers say they can demand better pay and benefits in the tight labor market. This mismatch has led to restaurants decreasing hours and closing dining rooms.
Three Chick-fil-A restaurants in Alabama had to close their dining rooms over lack of staff, though they continued to make food for delivery.
"We, along with many businesses, are in the middle of a hiring crisis," the Calera, Alabama Chick-fil-A restaurant said in a Facebook post. A McDonald's location in North Carolina made a similar move, closing the dining room while keeping the drive-thru running.
Two more Chick-fil-A locations in northern Alabama have started closing early because of "extremely short staffing," Grace Dean reported for Insider. Two campus Starbucks locations at the University of Alabama temporarily closed dining rooms due to "limited staff and supply chain challenges," The Crimson White reported.
Staffing issues are a problem across the country. In an August earnings call, Wendy's president and CEO told investors that some dining rooms were closing early and operating drive-thru only because of a lack of workers.
For restaurants that are open, they're operating with fewer workers than before. Full-service restaurants are working with 6.2 fewer employees in back of house and 2.8 fewer in front of house than they did in 2019 on average, according to a report from Black Box Workforce Intelligence. Cooks and line cooks, managers, and bartenders especially are in demand, Restaurant Dive reported.
The limited restaurant staff is also serving different menus than in past years. Of operators in the survey, 95% said that they'd faced disruptions or problems reordering supplies, and 75% used that as a chance to update menus based on availability.
Even as sales are up over 2019 levels in some cases, profits aren't. Prices of ingredients and labor have increased, and 65% of operators said that their profit margins shrunk in the previous three months.
"Our nation's restaurant recovery is officially moving in reverse," executive vice president of the association, Sean Kennedy, said in a statement.
Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.
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