How Top Multi-location Brands Are Leveraging Digital Advertising for Local Recruitment
The restaurant industry has been one of the most greatly impacted sectors affected by the pandemic....
It’s well-known that the restaurant industry is in crisis when it comes to staffing. We talked about the creative approaches that many franchise and multi-location brands are taking to fulfill those needs. This staffing challenge has impacts far beyond filling roles at established franchise locations.
According to a report by the International National Franchise Association, as of August 31, 2020, the franchising market experienced an estimated total loss of 1.4 million jobs due to COVID-19, of which 59.8% were temporary, and 40.2% were permanent.
The staffing challenge is impacting the franchising growth model
The staffing challenge poses the issue: If you can’t staff existing locations, how can your brand expand to open new locations and attract new franchisees?
Justin Bartek, Director of Marketing at JINYA Ramen Bar faced this challenge when opening a new location in AZ. “We had to delay opening a new location by four or five days because we couldn’t meet our minimum staffing quota to open. Every day we’re not able to open, money is being lost.”
Bartek shared that the staffing challenge is even greater when opening in new markets where the brand isn’t as well known. “In established markets, it may be a little easier to expand locations because some existing team members from our other nearby restaurants could temporarily help to open, but that’s not a long-term solution.”
24/7 Franchises are facing different issues
As restaurant demand and sales increase again around the country, organizations that offer a 24/7 service model find it even more difficult to fully staff locations for 24 hours a day, despite high unemployment rates around the country.
1851 Franchise.com shared that during the brand’s Q1 earnings call, Denny’s executives said that the lack of staff prohibited over two-thirds of their franchisees from returning to 24-hour a day service, which is a big revenue source for the diner chain.
“We can't even find the individuals to interview,” said Denny’s CFO Robert Verostek during the call, also stating that the brand is seeking to hire 20,000 people across the organization.
The inability to staff locations enough to stay open all night is having a great impact on Denny’s, and other 24/7 brands like 7-11, in their post-pandemic recovery. In Q1 2021, Denny's same-stores were down 20% from the same period of 2019 and 9.7% from the first quarter of 2020, according to the earnings call.
A positive outlook for franchise brands
Despite the staffing challenges, the INFA report shows that historically, franchising businesses have expanded faster than the overall U.S. GDP. The franchise model’s distinct structure has allowed for faster hiring, business expansion, and more consistent performance than independent businesses.
After many business closures in 2020, the commercial real estate market also presents many available opportunities for would-be franchise owners and those looking to expand. Two South Florida Twin Peaks operators shared with franchising.com that they are developing new locations of the restaurant and sports bar chain in three high-profile sites in Broward and Miami-Dade counties that were previously unattainable. “We would never have been able to get in pre-pandemic,” said Fred Burgess, president of DMD Ventures, the developers.
Fortunately, franchise industry growth and recovery are expected to approach pre-pandemic levels by the end of the year with franchises hiring 8.3 million workers by the end of 2021.
New approaches to hiring and maintaining staff, attracting new customers, and adapting franchise models will continue to evolve as we look to the future.
Find out how your franchise brand can better collaborate with all locations and create localized marketing campaigns that serve each community's needs.