How and Why Are Franchises Struggling With COVID?

Sep 24, 2021

As a whole, the restaurant industry has faced tremendous challenges due to the COVID pandemic. To the surprise of many, franchise restaurants have suffered just as much as smaller businesses. Some 20,000 franchises closed their doors in 2020.


Although experts projected a recovery in 2021 with the introduction of vaccines and government aid, the Delta variant has thrown a wrench into the works. This strain spreads faster and more easily than previous strains of COVID, leading to less spending and more workers calling in sick, further aggravating the already pronounced hospitality labor shortage.

restaurants and covid
A restaurant posts a sign indicating closure to the public


McDonald’s was on track to meet 100% reopening by Labor Day. However, with the Delta variant, corporate leaders of the fast-food chain recently instructed franchises to close their indoor seating in areas with heavy infection rates. Reuters reported that one owner had closed indoor seating at several of his McDonald’s franchises.


One owner of Subway franchises in South Carolina told Forbes that lack of business and workers caused him to close one of his restaurants. Among his other 23 franchises, hours and expansion had to be cut back significantly.


In Alabama and Georgia, KFC and Taco Bell had to start closing at 8 p.m. instead of their usual midnight closure due to workers becoming infected with the Delta variant, adding to their significant labor shortage.





Facing the Restaurant Labor Challenge

The great debate as to the cause and solution of the labor shortage continues. Some say it was caused by enhanced unemployment and government payouts, while others say it is due to workers changing industries, lack of childcare, and fear of getting sick.


While the likely cause of the lack of restaurant workers is a combination of factors, many franchises embrace creativity to draw workers back into the franchises. Some of the incentives owners are offering are signing bonuses and free appetizers. McDonald’s has increased wages and reported some relief as a result, and one of the franchises even offered $50 to each person interviewed.


There is still hope among the uncertainty, as businesses learn to adjust and get by in the best way possible. According to the International Franchise Association, there is a projected growth of 23,000 franchises, which is a rate of 3.5%. At this point, any increase is better than none. As the owner of a Your Pie franchise, a restaurant in Dublin, Georgia, said, “We gotta figure out a way to get through it.”