Faced with labor shortages, prices are rising in US fast food restaurants

·3-min read
Short of workers, the US fast food industry has been raising prices.

In light of the pandemic, workers have been falling out of love with the hospitality sector. In the United States, recent events appear to have led many of the industry's employees to decide that they no longer want to continue in this career path. One of the more surprising consequences of the situation is that labor shortages in the sector are driving up prices in fast food restaurants. And American fast food chains have already rolled out solutions to counter this staffing crisis.

From cutting boxes of chicken wings from ten to eight pieces, to making pizza promotions available online only. In the US, the Domino's chain is searching for solutions in the face of the current labor shortage. In a few weeks, the firm's decisions should be enacted, said the head of the fast-food chain, Ritch Allison, at the recent ICR Conference.

In the United States, fast food restaurants are facing record inflation. Prices are up 7.1% from last October, according to figures from the US Bureau of Labor Statistics. And not since the Bureau started collecting data on the restaurant industry has this increase been so high. The trend does not appear to be new, since Business Insider reported in July that American fast-food restaurants had no other choice than to increase their prices by up to 10%. Such was the case at Taco Bell, but also at McDonald's, with an 8% increase.

According to the association representing American restaurant businesses, more than three quarters of restaurant owners (78%) do not have enough staff to support current demand in their business. For workers, the restaurant sector is no longer attractive: 15% of employees said they would change business sector in 2021 and 33% of employees said they would leave the sector by the end of 2021, according to a Black Box Intelligence study. As a result, the restaurant and bar industry, one of the hardest hit by the wave of resignations currently affecting the United States (the so-called Great Resignation), reportedly has one million unfilled vacancies, according to the National Restaurant Association.

Rising commodity prices also explain the reasons for this inflation. Pork prices have risen by 14.1% and beef prices by 20.1%. This new situation is shaking up the business model of fast-food chains, even for the American chain that made the five-dollar pizza its signature concept. Last week, the CEO of Little Caesars announced that the price of the chain's flagship product would have to go up by 11%, despite remaining unchanged since 1997. However, the price is still relatively accessible, at $5.55. Moreover, to reassure customers, the boss told Forbes that the pizza would have 33% more pepperoni.

Could tech be a solution to curb rising prices? In Israel, a start-up has launched a fully automated robot restaurant that can make up to 50 pizzas per hour without any human intervention. The Spoon reports that the company behind the system, Hyper Food Robotics, is now working on other autonomous robots to make items like bowl food, burgers and ice cream.

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