Dive Brief:
- McDonald's has told the National Restaurant Association in a letter that it won't participate in lobbying efforts against minimum wage increases at the federal, state or local levels, Politico reports.
- The fast food chain said its average starting wage is more than $10 per hour at its corporate-owned stores and that franchisees likely offer similar wages. Comparatively, the federal minimum wage is $7.25.
- McDonald's vice president of government relations Genna Gent told the National Restaurant Association, which opposes the $15 minimum wage, that the company believes wages should increase over time and all industries should be treated the same way. Gent said the discussion over wages is important and the company will no longer stand in the way.
Dive Insight:
Labor recruitment and retention are becoming big topics of discussion among fast food restaurants, especially as the pool of available workers has shrunk. Adding to the pressures from low unemployment is the fact that the number of fast food jobs has grown twice as fast as the labor force, according to the New York Times. About 30% of youths aged 16 to 19 had summer jobs last year compared to 2000, when 45% did. Increased immigration enforcement has also added pressures, especially since immigrants make up 20% of the workforce, according to the New York Times.
McDonald's employed 235,000 people as of last year, but its labor force has been in decline. Five years ago, a CBS news report called the chain one of the biggest employers in the U.S. with 420,000 workers.
The fast food chain is in the middle of a National Labor Relations Board lawsuit that accuses franchisees of punishing employees for partaking in protests to increase the hourly minimum wage, which likely hasn't helped with recruitment efforts.
McDonald's CFO Kevin Ozan said during the JP Morgan Gaming, Lodging, Restaurant and Leisure Forum conference that labor is the chain's biggest challenge right now, especially since its operations are labor intensive. He said restaurants that are staffed to guidelines, which take into account volume and time of day among other things, have better sales. Unfortunately, many of its restaurants have not been staffed to guidelines, one of the reasons why its drive-thru times have suffered in recent years.
To help address its labor issues, the company is looking at strategies to increase efficiencies and operations so less labor is needed. One way has been through technology and self-order kiosks.
Many companies are looking to incentives and benefits to increase retention. Shake Shake introduced an equity program that gives general managers a stake in the company. Several chains, including McDonald's, Papa John's, Denny's, Starbucks, Taco Bell and Chick-fil-A, offer scholarships or educational programs to entice employees.
With McDonald’s shifting its attitude on minimum wage, others could very well follow suit, especially since retention remains a top priority for many fast food companies.
