The CEO of a smoothie chain with 1,000 stores says his best-performing cafes are the ones that pay staff the most

• The CEO of Tropical Smoothie Cafe says his best-performing cafes are the ones that pay the most.
• A crippling labor shortage has forced companies, including Tropical Smoothie Cafe, to raise wages.
• The labor shortage had left left some franchisees losing sleep, Charles Watson told Insider.

The CEO of a smoothie chain that's set to open its 1,000th branch next month says its best-performing stores are the ones that pay the highest wages.

"Our franchisees that run the best cafes and have the best hospitality and the best people, they pay more. It's pretty simple that way," Charles Watson, CEO of Tropical Smoothie Cafe, told Insider.

Many restaurants, hotels, and stores - typically with entry-level, hourly-paid, and customer-facing roles - are struggling to find workers. Some business owners have blamed the labor shortage on supplemental unemployment benefits and have said that "nobody wants to work anymore."

But workers say low wages and poor working conditions are causing them to rage quit. Many are leaving the hospitality and retail industries in search of higher pay, better benefits, and more flexible jobs.

Watson said that some of Tropical Smoothie Cafe's franchisees had raised their wages to attract more workers.

"We are suffering from the labor shortage as bad as anyone else," Watson told Insider. Some of his franchisees were working in their cafes and losing sleep because of their struggle to find workers, he said.

"It's punishing for our franchisees and our operators," he said.

Read more: How a tiny food-tech startup persuaded industry heavyweights like Chick-fil-A and Taco Bell to rely on it to fight a labor shortage

Some chains, such as Rush Bowls and Island Fin Poké, say that the small footprint of their stores means they've managed to largely avoid the effects of the labor shortage because they need fewer staff.

Tropical Smoothie Cafe's locations are on average 1,600 square feet, with seating for between 20 and 30 customers, Watson said. This is less than half the square footage of the average freestanding McDonald's restaurant.

But despite their smaller size, Watson's cafes still need between six and 12 staff members at peak time because of the high volume of customers he said. His cafes mainly serve smoothies, but food accounts for around 35% of sales, meaning there's a big lunchtime rush, he said.

More companies in the retail and hospitality industries have been forced to raise wages as they scramble to find workers. The national average wage for nonsupervisory restaurant staff reached $15 an hour for the first time in May, according to data from the Bureau of Labor Statistics. Restaurant chains including McDonald's, Chipotle, and Starbucks have all said they'll raise wages.

Some companies that have raised their wages have seen a spike in job applications. The CEO of restaurant chain &pizza told Insider that there isn't a labor shortage - just a shortage of businesses willing to pay a decent wage.

Do you work in the restaurant industry? Got a story? Email this reporter at gdean@insider.com.