Kevin Bazner, A&W Restaurants CEO, joins Yahoo Finance to discuss the labor challenges for restaurants and the industry’s efforts to attract new workers.

Video Transcript

JARED BLIKRE: Welcome back to Yahoo Finance Live. I'm Jared Blikre. The labor shortage is hitting a lot of industries, including the restaurant industry. And we have the CEO of A&W Restaurants here to discuss how this is affecting your particular business. And Kevin Bazner here. Kevin, let me ask you. We've been talking about the labor shortage for months now. And can you give us an overview of your restaurants? We were talking over the break. I understand you have over 500 here in the US. So you have a pretty good picture, boots on the ground, of what's going on.

KEVIN BAZNER: Yeah, no, exactly. In this, for us, the labor issue really started before the pandemic. The pandemic has accelerated it a bit, but, you know, we were under pressure with gig economy. We were under pressure in our industry with gig economy warehouse jobs, the Amazons of the world and everyone else that's followed, and particularly through COVID and so much at-home delivery.

So we were already-- I mean, I was on record two years ago in saying that when the minimum wage was the talk of the town and rising minimum wage and everything else, and I said at the time that minimum wage was not the issue. Availability of labor was the issue. And our need to be more competitive in terms of wages overall-- and that includes benefits and really culture of the organization-- was really something we needed to focus on in the industry.

And the pandemic has just put a finer point on it. I would agree with your previous guest with Brian, in terms of, you know, that there's still a lot of uncertainty out there. This recovery is getting more drawn out than we had hoped, perhaps, in some cases, expected. But we're starting to see, perhaps, a plateauing of the challenges in the labor market. But it's certainly here to stay, and we're going to have to deal with it as an industry. And I think we are.

JARED BLIKRE: Well, we talked to a number of business owners here every day, along with C-suite executives, about the incentives that they've had to provide to workers to get them to sign up, signing bonuses of sorts, higher wages. How are you addressing the labor shortage? And does it vary across the US state by state? Any insights into the geographic dispersion there?

KEVIN BAZNER: Yeah, it does vary across the country. We have a lot of exposure in the Upper Midwest. And smaller towns seem to be somewhat less affected than the coast, for example, and your large metropolitan areas. And you're right. I mean, referral bonuses, retention bonuses that we've been using throughout the course of the last year, and now that's working its way into the base pay. We've taken-- across the country, we've taken 10 15% increases in terms of our wages in order to get people to service the restaurants.

And we counter that with somewhat higher menu prices and, you know, and using technology to leverage-- leveraging technology to get a little bit more productivity. So, again, this is an adjustment we have to make as an industry. It's not over yet. But, you know, the hero pay that we were using, and many industries were, have worked their way into the basic weekly paychecks.

JARED BLIKRE: And I'm just wondering. You mentioned using technology. We've seen McDonald's and other quick service restaurants really apply some new technologies not only in robotics, but also artificial intelligence with the drive-thru system. Any of this that you're working on as well?

KEVIN BAZNER: Well, you know, we're obviously paying attention to everything that's going on in the industry. Clearly, McDonald's and others, the larger brands, are leaders in this. And while we're not necessarily playing directly in artificial intelligence, it starts to bleed into everything that we do. A lot of what we're doing with technology is putting more of the ordering, whether it's tablets, whether it's QR codes, whether it's kiosks, although those the jury's out as to whether they've outlived their time, self-ordering kiosk, is putting more control in the hands of the consumer for the ordering process-- online ordering, et cetera.

And that takes-- you know, that does take a fair bit of pressure off of the stores in terms of labor that they have to deploy to take orders. So that's really more where we're focused on and heavily in the drive-thru, because as a result of COVID and now the delta variant and still a good segment of the population that is cautious, if you may, we have a high percentage-- continue to have a high percentage of our business going through the drive-thru, which, in itself, is more labor efficient for us as an industry.

But, you know, so we're still finding the balance. I think there's still a lot of uncertainty out there. And frankly, as a brand, as many brands in our segment are doing in the QSR segment, we're doing quite well. I mean, the consumer is understanding of the labor challenges. And the consumer is understanding that at least in this past 18 months or so, that, you know, they're expecting to pay a bit higher prices. That's not going to last forever.

We're planning as we go into, you know, 2022 to things to be normalizing a bit, getting back to sort of normal price increases. And really looking through our supply chain is the other area that our business is pressured for the same reason, for-- because of labor. And we just think that if we get through the holiday season and the seasonal hiring, and we get into the first quarter, if not the second quarter of next year, I think we're going to have a much better idea of the future. But we think the future looks bright for our industry and for ourselves as a brand, quite frankly.

JARED BLIKRE: And we're going to have to leave it there. But thank you for joining us here. Kevin Bazner, A&W Restaurants CEO.