In the spring of 2020, the national unemployment rate reached a record high as many business were forced to shutter temporarily or scale back operations in response to the COVID-19 outbreak. These days, companies have the opposite problem -- they're struggling to hire, and in some cases, flexibility and benefits just aren't doing the trick.
The problem is particularly prevalent in the food services industry, where notoriously low wages have long been a problem. But if restaurants can't staff accordingly, they'll risk revenue losses. And extreme revenue losses could lead to closures.
That could, in turn, be a nightmare for real estate investors. If too many restaurants close down, not only will commercial landlords be left with vacancies to grapple with, but local property values could start to decline.
Meanwhile, one restaurant chain is having so much trouble meeting its staffing needs that it's willing to pay its customers to pick up their food rather than have it delivered. And it's actually a reasonable strategy given the state of the labor market, especially as it relates to the hospitality sector.
Domino's is practically begging for takeout
Domino's Pizza (DPZ 2.35%) has long prided itself on speedy delivery. In fact, the chain used to famously promise its pizzas in 30 minutes or less, or otherwise reward customers with their food at no charge.
Now, Domino's is practically begging customers not to order delivery. And it's making it worth their while by offering customers a $3 discount if they choose carry out over delivery through May 22.
The point of this promotion is to help the chain with its staffing shortage at a time when workers don't seem to be biting. The pandemic has caused a shift in workers' attitude, and now, low-income workers are pursuing higher wages and better working conditions as part of the Great Resignation. Not surprisingly, even larger chains like Domino's are having a difficult time retaining and hiring staff.
Not only is Domino's struggling to hire, but it's also feeling the blow of inflation. The chain recently tweaked its promotional menu to account for higher food costs.
Is Domino's in trouble?
While many restaurants struggled immensely during the pandemic, Domino's, like other pizza chains, enjoyed a steady stream of customers. Pizza, by nature, is a cuisine that lends well to takeout and delivery, and so at a time when customers were hesitant to enjoy in-person dining, pizza sales held steady.
But more recently, Domino's announced that same-store sales had fallen for the first time since 2011. And if its staffing woes continue, it could end up with some pretty bleak numbers as 2022 chugs along.
As such, incentivizing customers to pick up their own pizzas is a strategic move right now. Whether it's a sustainable longer-term ask is yet to be determined. If Domino's doesn't manage to meet its staffing needs and winds up resorting to shuttering locations, it could be a major blow to the shopping centers across the country that rely on the pizza giant to serve as a paying tenant.