Almost 40% of Popeyes restaurants have closed their dining rooms early because of the labor shortage

• Some Popeyes restaurants have closed dining rooms to serve only through the drive-thru and takeout.
• Locations have also cut hours because of the labor shortage, according to CEO Jose Cil.

Almost 40% of Popeyes' more than 3,400 US restaurants have closed their dining rooms early to cope with a labor shortage, CEO of parent company Restaurant Brands International Jose Cil said in a Monday earnings call.

These Popeyes locations are operating in what the company calls reduced service modes. This means that at times they serve food only through the drive-thru, delivery, and takeout - and in some cases, just delivery and takeout, Cil said.

"We saw it [the impact of the labor shortage] in the context of reduced operating hours and services modes, especially around late night," Cil said during the call. Locations that have cut hours generally cut late-night times, with the average Popeyes now open one hour less per day compared to pre-pandemic levels. Cutting late-night hours isn't good for Popeyes' bottom line, because those orders tend to be larger than at other times of day, according to Cil.

With these latest earnings, Popeyes is saying what executives and analysts have recently said about McDonald's and Domino's, as well: sales are lower than they could be, because chains don't have enough workers to meet the demand.

Business owners across the industry say they're unable to find staff and in some cases even cite a lack of desire to work, while workers say they can demand better pay and benefits in the tight labor market. This mismatch has led to restaurants decreasing hours and closing dining rooms, throwing the fast food world into crisis.

According to a survey from the National Restaurant Association, 61% of fast-food restaurants, and 81% of full-service restaurants said that they decided to shut parts of dining rooms in August because they didn't have the workers to serve those areas. In the same survey, 75% of restaurant operators said finding staff was their single biggest challenge, and 78% said that they didn't have enough workers to handle business.

In the short term, Popeyes is creating working teams where successful franchisees who can share their staffing tips with other operators, Cil said.

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