The Labor Issue

Labor has always been a principal issue for restaurants and retailers. The last two years have cast a spotlight on the challenges involved in managing personnel and the missteps made along the way. Chipotle has been pushed into the forefront of these discussions with a recent settlement with New York City. An investigation found that the company violated employee rights by denying them use of sick leave and failing to give staff advanced notice of schedules among other infractions. The $20 million settlement will pay 13,000 employees and it is the largest fair workweek settlement in the U.S. according to NYC Mayor Eric Adams. Uncomfortable questions have been raised about the state of employees in retail and restaurants and there is clearly still work to be done.

The working conditions and lack of protections like sick leave entered the public eye during the beginning of the pandemic in 2020. Since then, many companies have made strides to shore up these deficiencies, yet it has not been enough. Industries already known for high employee turnover have been faced with a labor shortage that has not seen a turning point yet. The calls for higher wages and better benefits have strained companies still trying to deal with supply chain and inflation issues. However, the Chipotle settlement should serve as a cautionary tale for downplaying the labor issue until it is too late.

Some companies believe that the solution to the labor shortage lies in technology. Automation and advancements have been a great boon during the pandemic. Ordering kiosks, mobile-checkout, and curbside pick-up have reduced the strain on and need for employees. McDonald’s, the largest fast-food chain in the U.S., has been a leader in innovation; however, not even they believe that technology will turn back the labor shortage. It is not cost effective for every location to be completely automated, and it certainly wouldn’t arrive fast enough to cure the current situation. There will always be a human component and it pays to invest in those employees.

Restaurants and retail stores need to survive, and they need their employees in order to thrive. Chipotle has implemented several changes in order to avoid this situation from happening again and others should be paying attention too. There is no one size fits all solution to this problem, yet a combined focus on employees and technologic innovations will help navigate these troubled waters.