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So far, the financial earnings season has seen almost unanimous agreement from restaurant executives about what happened to their operations in the past few weeks. Despite their sales being great, an increase in infections caused them to have operations problems that affected both revenues and profits.
Yum Brands was no different Wednesday. But Habit, Taco Bell and KFC owner sees some green shoots that the worst is behind them and that operations will improve over the next few weeks.
Yums fourth-quarter earnings conference call on Wednesday featured CEO David Gibbs stating that it does feel as if we are moving to better places. He said that he spoke with chief operating officers from each brand, and that they were past the peak effect of omicron.
He stated that applications for team member positions are starting to rise again. We think that the challenges and the effect on our restaurant hours might slowly diminish over time.
Since several months, the restaurant business has been facing a shortage in labor. The industry demand has increased. However, the labor force is shrinking due to retirements as well as concerns about the pandemic. Evidence also suggests that many people have left the hospitality industry and won’t return.
The omicron variation caused a dramatic increase in infections in December, and January. This added to the concerns and caused an unprecedented level of disruption in the industry. Restaurant workers became ill with coronavirus and decided to stay home, leaving many restaurants short of staff.
Restaurants across the nation were forced to cut hours or close because they didn’t have enough employees. Starbucks and Papa Johns were so sorry for the problems that they even apologized directly to their customers
Yum Brands also experienced many of the same problems, executives stated. CFO Chris Turner stated that there was some reduction in hours for our brands during the fourth quarter.
He said that Pizza Hut was the most affected. The difficulty of obtaining enough drivers for delivery has been a problem for pizza delivery companies and other delivery companies, a phenomenon that has already caused problems for Papa Johns and Dominos.
Turner stated that the challenge of pizza has been well documented. It was particularly evident in January, when it was particularly prominent.
Turner said that the shorter operating hours had a significant but not insignificant impact on sales.
However, infections have dropped rapidly in the past few weeks. According to the New York Times’s estimates, the average infection rate for seven days is now below 240,000. This compares to a peak of more 800,000 in midJanuary.
Yum executives stated they believe things will improve. Turner said that the environment was at its peak two- to three weeks ago. The environment has improved dramatically in the last few weeks.
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