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How Are Businesses Handling Inflation, Supply-Chain Issues, and Labor Shortages?

By Rachel Warren and Toby Bordelon – Oct 28, 2021 at 9:00AM

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A Motley Fool member shares their experience with two well-known name brands.

From soaring inflation to supply shortages to workers quitting their jobs en masse, employers are facing a uniquely challenging climate in which to operate. In this segment of Backstage Pass, recorded on Oct. 15, Toby Bordelon responds to a member's comments about how businesses in their area have been handling this environment. 

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Toby Bordelon: We've got a couple of comments here from ProShopGuy on the inflation stuff we're talking about. I want to read these real quick. He says, first one for an antidote, he was buying Sherwin-Williams (SHW 2.47%) paint recommendation. I believe, I think it's still a recommendation Stock Advisor. He looks at the receipt and sees a 4% supply-chain charge.

That's interesting. I've seen surcharges. I remember, when fuel prices were pretty high, you'd see a fuel surcharge in your airlines ticket, or I think rental companies. You would see these fuel surcharges for a lot of companies. The thing about a surcharge is, I guess, maybe offers hope is that as a surcharge, so you can believe it's going to go away when things come back down [laughs] versus building up.

We're just raising our prices because of supply-chain issues -- that's never going away. Like once you stick through a price increase, that's on the bottom line, that's there forever. He talks about in California, they had a local minimum-wage increase. The transition was difficult, but In-N-Out has the highest wages for pass-through. They're getting the best employees. Taco Bell service levels suffered.

I think of what we see, if you're not paying your employees, the ones who can get jobs elsewhere are going to leave, but also just not getting enough people to staff a whole shift, and that's a problem. Like you can have the best worker in the world but there are only two of them, and when you need five people, you're not having to get the quality of service that your customers expect.

Yes, they've raised prices between 5% and staffing issues, that true. Oh wonder of wonders, you pay people more and all of a sudden, you stop having issues. 

Rachel Warren: This is deeply shocking.

Toby Bordelon: That's probably a solution some people are going to have to pursue. 

Toby Bordelon has no position in any of the stocks mentioned. The Motley Fool recommends Sherwin-Williams. The Motley Fool has a disclosure policy.

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