Food & Drink

Taco Bell Commits To A $15-An-Hour Minimum Wage At Company-Owned Restaurants

The Great Resignation is in full swing and the quick-service restaurant segment is smack dab in the middle of the movement.

For major chains, that’s creating quite a predicament. Consumers are spending more and sales are up, but money continues to be left on the table as operators trim hours or turn off digital ordering capabilities because they simply don’t have enough employees to fulfill orders.

As such, Taco Bell today announced new recruitment and retention strategies, including increasing the average minimum wage to $15 an hour across company-owned restaurants by mid-year 2024 and rolling out a new leadership program, called The Entrepreneur, aimed at developing general mangers with an earning potential of up to $100,000.

Though a recent Moody’s report noted restaurants will be forced to increase wages to attract the staffing they need, Taco Bell isn’t stopping at higher wages and earning potential. The company is also working with Guild Education to offer free undergraduate degrees.

Notably, this initiative is also available in company-owned restaurants, which may create an asterisk given that the system is 93% franchised.

That’s not to say these moves won’t have impact, however. Taco Bell’s system has plenty of synergy and the company has been known to follow franchisees’ leads for menu and restaurant model ideation. If the company can find a way to maintain its stores’ strong economics with these initiatives, it can better create a blueprint for its franchisees to do the same.

It may even provide learnings for Taco Bell’s sister chains at Yum Brands

YUM
–KFC, Pizza Hut and The Habit Burger Grill.

At the very least, it puts Taco Bell in a new consideration set for employees who seem to have more leverage after nearly two years of work deemed essential. Taco Bell joins Starbucks–which announced a new hourly wage floor of $15 in October–and Chipotle, which boosted its average hourly earnings to $15 in June. Neither of those chains have franchised locations, so they’re able to be a bit more aggressive here. And in doing so, they’re setting the pace for this new normal and employee expectations have changed accordingly.

In fact, foodservice wages recently hovered near $16 an hour for the first time ever, according to the Bureau of Labor Statistics. Those expectations are also inspiring a deeper labor union discussion in the industry. Regional chain Burgerville recently negotiated a union contract, for example, while Starbucks workers in Buffalo also just voted to join a union. The discussion is just getting started, and since Buffalo’s vote, additional Starbucks cafes in the Boston market have filed for a union.

There’s no telling where this may lead, but we do know the food and beverage industry has one of the lowest union densities in the U.S., with 1.2% of workers unionized compared to the private sector average of 6.3%–meaning there is a lot of potential for the movement to grow.

Consequently, we’ll likely start to see more chains proactively adopting employee-centric initiatives and those initiatives will extend beyond just wages. Foodservice employees have indicated they’re also leaving the industry because of a lack of flexibility, harassment and health and safety concerns.

Flexibility is certainly important, which is why McDonald’s

MCD
is rolling out child and elder care benefits, for example, while also increasing hourly pay and offering tuition coverage. The harassment, health and safety piece may be a bit trickier to navigate. For its part, Taco Bell is offering complimentary therapy sessions for corporate employees in restaurants and at its headquarters.

The company is also targeting a wider recruitment pool, joining the Tent Coalition for Afghan Refugees to provide refugees with immediate job opportunities. The Tent Coalition is part of the broader Tent Partnership for Refugees, which works with more than 30 million refugees who have been displaced from their home countries.

Taco Bell today also announced some of its progress on racial equity, including the appointment of its first-ever chief equity, inclusion and belonging officer, Katrina Thornton. Further, the chain said it has increased racial diversity in its marketing campaigns and is implementing new programs to produce “equity, fairness, inclusion and belonging inside the company” as part of its $100 million “Unlocking Opportunity” commitment announced last year.

Additionally, Taco Bell reiterated its work with Beyond Meat to develop and introduce plant-based alternatives. Parent company Yum Brands announced a strategic agreement with Beyond Meat in February to innovate such products across its brands, and that work is underway, though reportedly one test has already been canceled.  

On the animal protein side, Taco Bell announced it is working to reduce antibiotics in its U.S. and Canada beef supply chain by 25% by 2025.

Finally, Taco Bell is testing recyclable and compostable packaging in the San Francisco market and intends on expanding that test in the new year. The company said it is also incorporating more recycled content into its packaging and has diverted over 10,000 hot sauce packets from landfills through its TerraCycle program, announced in September.

Such sustainability efforts are becoming more important for brands as consumers increasingly demand such stewardship. One recent study found that nearly 80% of people are more likely to purchase a product that is considered environmentally friendly, for example, and Datassential CEO Jack Li said companies’ efforts to help fight climate change will be critical in the coming year.


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