The fast food industry in the United States plays a vital role in the nation’s economy, employing more than five million individuals and serving as an integral part of American culture. In fact, 37% of US citizens consume fast food every day. Despite ongoing popularity, the industry is facing a serious labor shortage. As a result of the Covid-19 pandemic, many workers left the industry permanently due to changes in occupation, early retirement, and the increased availability of better paying alternatives. For these reasons, many major players such as Starbucks, Domino’s, McDonald’s, Wendy’s, and Chipotle, among others, are grappling with a scarcity of over 750,000 individuals compared to pre-pandemic levels, reflecting the significant impact the disease has had on the labor market.
But the lingering effects of COVID-19 aren’t the only factors forcing employers to hustle for hires.
A vast majority of positions in the fast food industry (80%) do not require prior work experience, nor do they mention minimum educational qualifications. Despite these low barriers to entry, the turnover rate in the industry consistently exceeds others. Related dissatisfaction among workers stems from various sources, including relatively lower wages, fewer benefits, and difficult or strenuous working conditions.
Despite these challenges, the industry is experiencing a steady 1.3% compound annual growth rate (CAGR) in 2023 alone. Over the past five years, the industry has grown at a CAGR of 2.5%, reaching $366.9 billion. Following a similar upward trajectory, the growth rate is expected to be 5.1% for the 2020-2027 period. Profits too, will be strong and are expected to be greater than 5% in 2023 for the beverage and fast food sector. And, despite a dearth of workers, the industry’s employment rate has steadily risen at a rate of 2.2% in the past five years. Taking occupational drain and job creation into account, that translates to approximately 650,000 openings to fill per year.
For obvious reasons, employers are now focusing on improving worker retention. Offering more benefits and higher wages is one widespread approach to offsetting the costs associated with high turnover. Attrition increases overhead considerably as restaurants have to spend time and resources on hiring and training, or even cut operating hours. Fast food giants like McDonald’s are increasing wages by up to 15% to remain competitive and retain talented employees. Coffee giant Starbucks also plans to increase average pay to nearly $17 an hour – up from $14.
While working to address attrition, fast food chains are also considering automation options.
Major fast food chains like McDonald’s and Wendy’s have implemented self-service kiosks in their restaurants across the US. This approach allows customers to place their orders and make payments without the need for human interaction, with the intention of improving efficiency and reducing wait times. Additionally, artificial intelligence (AI) integrations in the drive-thru ordering process are increasingly being explored as a potential strategy for minimizing errors and wait periods.
Automation goes beyond customer-facing interactions: fast food kitchens are now witnessing the emergence of robots designed to handle specific tasks. Robotic arms, such as MISO Robotics’ Flippy, a hamburger patty griller, are being introduced into kitchens to handle tasks like frying and burger flipping, providing cutting-edge solutions to meet industry requirements. Other players include Picnic, which specializes in automated pizza stations and Autec, a company that makes sushi robots. Domino’s, too, is experimenting with autonomous delivery vans, partnering with Nuro to utilize their occupantless on-road delivery vehicle’s to deliver pizza.
The fast-food industry’s journey continues amidst ongoing challenges and transformative innovations. While labor shortages persist, employers remain resilient, focusing on strategies to retain talented workers, and harnessing the power of automation to redefine the fast food experience. The delicate balance between human expertise and technological advancements will continue to shape the future of this industry, ensuring a thriving, efficient, and satisfying fast food experience for customers nationwide.
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