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Staff Scarcity Chapter Two: McDonald’s

4 min read

Last month, I wrote about the staffing difficulties one independent Little Rock restaurant, Bruno’s Little Italy, was facing. This month, I look at a much bigger operator, McDonald’s, and the problems that one Arkansas franchisee, Eliecer Palacios, is tackling.

It can be easy to forget that giant restaurant chains like McDonald’s, headquartered in Chicago, are far from monolithic, that individual restaurants are owned and operated by local entrepreneurs. Palacios, who moved to Little Rock from Chicago 12 years ago, owns eight McDonald’s restaurants, four in Little Rock, including the location at University Avenue and Markham Street, and four in Saline County.

The chain announced last month that McDonald’s restaurants across Arkansas planned to hire 4,224 restaurant employees during the next three months.

The news release cited McDonald’s “flexible scheduling, extensive training, advancement opportunities and the opportunity to qualify for college tuition assistance, earn a high school diploma or learn English as a second language through McDonald’s Archways to Opportunity program,” a tuition assistance program.

When his restaurants are fully staffed, Palacios employs between 350 and 400 full- and part-time workers. But in the aftermath of the COVID-19 pandemic, keeping those restaurants fully staffed is a challenge, as it is across the country. Those challenges include, Palacios said, employees finding child care and employees who fear coming to work because of the continued potential for infection.

At the start of the pandemic in March 2020, his main focus was on maintaining his current staff, Palacios said, “and we were able to do that.” But starting earlier this year, the candidate population was smaller than it had been in the past. The situation started improving in June and July, but during the last six weeks “we have seen also a decline in the applicant flow,” he said. “That’s what we really want to emphasize, the need for hiring.”

“We believe that McDonald’s has a lot to offer our employees,” Palacios said. “That includes many more benefits than just a paycheck. We like to invest in our employees with training and other opportunities.” In addition, he said, McDonald’s seeks to retain loyal employees, making sure “we listen to their needs and certainly we’re sensitive with the situation with the pandemic, to make sure that they feel safe to come to work.”

His strategies align largely with corporate initiatives, including flexible schedules. Palacios also cited the $3,000 in annual tuition assistance McDonald’s provides to manager candidates and $2,500 to other staffers.

Nationwide, McDonald’s has raised wages at U.S. restaurants at least 10% this year to attract workers, but the labor shortage has persisted. “Certainly I was hoping and expecting that we were going to see the situation improve maybe a little bit more quickly than what’s materialized,” the chain’s CEO, Chris Kempczinski, told investors last month in the company’s third-quarter earnings call. “And I think it is going to continue to be a difficult environment for the next several quarters.”

Other food-service chains have continued to raise wages, with Seattle-based Starbucks announcing Oct. 27 that it was increasing its average U.S. employee pay to $17 an hour, up from roughly $14 an hour. That same day, Raising Cane’s Chicken Fingers, based in Dallas, announced that all hourly workers in Arkansas would be paid a minimum of $12 an hour, an average increase of $1 an hour and a $500,000 investment, according to the company. Raising Cane’s has eight restaurants in the state.

Nationwide, average hourly earnings for non-managers in the leisure and hospitality industry have risen to $16.71 in September 2021, compared with $14.80 a year earlier, a 13% increase, according to the U.S. Bureau of Labor Statistics. That’s still less than the next lowest-paid industry sector, retail, where average hourly earnings are $18.68.

At his Little Rock McDonald’s sites, Palacios said, he pays a starting hourly wage of $11.50 but that goes up to $15; for managers, it starts at $13.50 and rises to $16 or $17. McDonald’s says that 93% of its restaurants worldwide are owned by independent operators. “The majority of their restaurants are owned by the franchisees, so we want to make sure our plans are focused on people first,” Palacios said. “We realize that without people, we just can’t do the services that we aspire to do, so we’ve got to find a way to attract that talent and make sure that we treat them well and they’re successful with us.”

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