Wendy’s closed some dining rooms because of the labor shortage, which it said is putting pressure on its drive-thrus

wendys drive thru
Wendy's has closed dining rooms due to the labor shortage.
  • Wendy's CEO Todd Penegor said the company had more dining rooms closed during Q3 than Q2.
  • Around 15% of its dining rooms were closed during the third quarter.
  • "That does put pressure on our digital business," Penegor told investors Wednesday.

Wendy's says that its drive-thrus are under pressure because of the labor shortage.

CEO Todd Penegor said that the chain had closed some of its dining rooms due to understaffing, which in turn led to more customers ordering at its drive-thrus.

The US is suffering from a labor shortage as record numbers of Americans quit their jobs in search of better wages, benefits, and working conditions.

Restaurants have been especially hard-hit, and they've been cutting their hours and closing their dining rooms, both because they can't find enough staff and because labor is getting more expensive.

Penegor said on Wendy's third-quarter earnings call Wednesday that the labor shortage had led to some "inconsistency" at its restaurants.

"We had more dining rooms closed during the third quarter on average than we did during the second quarter," Penegor said.

He said that 85% of the company's dining rooms were open during the third quarter, which ran to October 3, compared to 95% in its second quarter.

"That does put pressure on our digital business," Penegor said. The closure of dining rooms led to more drive-thru and mobile orders, as well as more delivery drivers coming into the restaurants, he said.

"And you do see throughput challenges with staffing tighter," Penegor added.

"One of the big keys for us is to get our dining rooms open to really support taking pressure off of the drive-thru and support our digital business moving forward," Penegor said.

Penegor didn't say whether the 85% figure related to all restaurants globally, nor whether all these closures were related to the labor shortage. Some restaurant chains have been closing their dining rooms because of rising cases of the Delta variant.

In its 10-Q Form, Wendy's said that its dining rooms had been reopening "at each restaurant owner's discretion."

"During the third quarter and the first nine months of 2021, restaurant operations have been impacted by increased pressure on labor availability brought about by both the COVID-19 pandemic and other macroeconomic factors," the restaurant said. As of October 3, "substantially all restaurants were open across the Wendy's system, and the majority of restaurants had dining rooms open," it added.

Wendy's isn't the only chain that's closed dining rooms due to the labor shortage. Some Chick-fil-A, Popeyes, and McDonald's restaurants have made the move, too. McDonald's also said last month that its service was slower because of the labor shortage.

Penegor told investors Wednesday that there didn't seem to be a pattern to which areas of the US were worst hit by the labor shortage, noting that there were "good pockets" and "bad pockets" across the country.

Wages in the industry are rising as workers hold out for better pay. Wendy's CFO Gunther Plosch said that wage inflation was at between 7% and 8%.

"We're starting to see staffing improve but still not to the level that we need it to be to really drive all the opportunity that's out there in front of us," Penegor said. "And that's going to take a little bit of time because that labor market is not going to snap back overnight."

Got a story about the labor shortage? Email this reporter at [email protected]

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