WEBVTT - Unionization Threatens US Restaurant Profits 0:00:00.160 --> 0:00:02.920 Welcome to Chopping It Up, Episode six. I'm your host, 0:00:03.000 --> 0:00:05.640 Michael halens In, your restaurant and food service analyst at 0:00:05.640 --> 0:00:12.120 Bloomberg Intelligence. Today I'm joined by Riley Logison and Jonathan Sack. Uh. 0:00:12.160 --> 0:00:15.160 This is part two of of last week's discussion about 0:00:15.600 --> 0:00:20.680 the fast Act and unionization of the restaurant industry. Um. So, 0:00:20.720 --> 0:00:23.400 as I mentioned last week, Riley as a shareholder and 0:00:23.560 --> 0:00:27.120 chair of the Global Restaurant Industry Group at Greenberg Greenberg 0:00:27.200 --> 0:00:30.760 tro rig tongue twister there, and Jonathan is also a 0:00:30.760 --> 0:00:34.440 shareholder at the firm. Uh. You know, thanks for your time, gentlemen. 0:00:36.000 --> 0:00:41.080 Thank you make great to be here. Alright. So, uh, 0:00:41.240 --> 0:00:44.599 with the US approval of labor unions now it's seventy one. 0:00:45.080 --> 0:00:47.400 I was just reading that it was the highest point 0:00:47.520 --> 0:00:52.720 since nineteen sixty five. We have a very union friendly administration. Uh, 0:00:52.840 --> 0:00:57.080 we're seeing unions unionization efforts increase across the country. You know, 0:00:57.160 --> 0:01:00.280 restaurants are low margin, uh, and their employe these have 0:01:00.360 --> 0:01:03.400 historically fought back against unionization. They have not been a 0:01:03.480 --> 0:01:08.160 very easy group to organize. So why are they targeting 0:01:08.280 --> 0:01:12.479 targeting this industry so aggressively? Aggressively and and why are 0:01:12.480 --> 0:01:15.920 they targeting Starbucks and Chipotle, two companies you know that 0:01:15.959 --> 0:01:18.440 we cover that have a long history of treating their 0:01:18.440 --> 0:01:23.560 employees better than most of their peers. Well, there is 0:01:23.680 --> 0:01:29.000 a there is a very um significant uptick in n 0:01:29.120 --> 0:01:33.760 l RB union election filings across the country and across industries, 0:01:34.480 --> 0:01:37.200 and that that includes restaurants. The in a in a 0:01:37.240 --> 0:01:41.839 well reported statistic, the n l r B M reported 0:01:41.880 --> 0:01:45.639 earlier this year that union election filings are up fifty 0:01:45.720 --> 0:01:49.320 seven percent over a six month period relative to the 0:01:49.400 --> 0:01:54.560 year prior. UM that statistic came out in March or 0:01:54.600 --> 0:01:56.800 maybe April around then. I would think that I would 0:01:56.800 --> 0:01:59.120 think that that number is it has gone up a 0:01:59.160 --> 0:02:05.600 lot um and driven driven largely by restaurant industry UM 0:02:05.280 --> 0:02:10.280 in l RB elections that UM that that uptick, it's 0:02:10.280 --> 0:02:13.400 it's much more acute as in areas of the country 0:02:14.200 --> 0:02:17.800 like the South and the Rocky Mountain states and industries 0:02:17.960 --> 0:02:22.200 like restaurants that that historically have been more resistant to 0:02:22.760 --> 0:02:26.600 UH to unionization. UM. We think there's a number of 0:02:26.680 --> 0:02:29.720 factors that are driving this, that are driving this trend. 0:02:30.680 --> 0:02:34.760 One UM the social justice demonstrations over over the past 0:02:34.840 --> 0:02:38.840 past two years around me Too and blm UM made 0:02:38.880 --> 0:02:43.799 more popular the notions of protests and challenging the status quo, 0:02:44.400 --> 0:02:48.680 particularly among among younger segments of the population UM that 0:02:48.840 --> 0:02:52.480 historically have comprised the bulk of UM restaurant the restaurant 0:02:52.480 --> 0:02:57.960 industry workforce. President biden Um campaigned in part on strengthening 0:02:58.120 --> 0:03:02.240 organized labor. He has delivered on that promise UM in 0:03:02.280 --> 0:03:07.480 one way by appointing former former union officials to the 0:03:07.520 --> 0:03:09.799 top posts that run that run the n l R 0:03:09.880 --> 0:03:12.880 b UM. Yeah, and then there's then there's a lot 0:03:12.919 --> 0:03:15.240 a lot of it is driven by the pandemic UM 0:03:15.280 --> 0:03:17.679 and as we and as we emerged in where to 0:03:17.760 --> 0:03:22.839 have a post pandemic nation, So frontline workers who had 0:03:22.840 --> 0:03:24.920 to who had to had to show up to the 0:03:24.919 --> 0:03:29.000 workplace every day, feel feel undervalued. That's what they're That's 0:03:29.000 --> 0:03:32.200 what they're reporting. At least as UM as they're higher 0:03:32.240 --> 0:03:35.760 paid office employees worked from home and and earned a 0:03:35.760 --> 0:03:38.000 lot more money while while working from the safety of 0:03:38.040 --> 0:03:41.640 their home during the pandemic. A lot of the frontline workers, 0:03:41.680 --> 0:03:45.040 including in restaurants, report that they that they have not 0:03:45.200 --> 0:03:49.880 benefited or shared in need in the country's economic economic 0:03:49.960 --> 0:03:53.240 success and growth over the past several years. UM and 0:03:53.240 --> 0:03:57.120 this is all all culminated in an effort that to 0:03:57.120 --> 0:04:02.600 to make union organizing cool. UM their Time magazine recently 0:04:02.720 --> 0:04:05.920 named the Amazon labor union leaders Chris Smalls and and 0:04:06.000 --> 0:04:09.839 Derek Palmer to their one hundred most Influential People list 0:04:09.880 --> 0:04:14.400 of Also on that list are are our household name 0:04:14.480 --> 0:04:19.640 celebrities Mary J. Blige, Pete Davidson, UM Sarah Sarah, Jessica Parker, 0:04:20.440 --> 0:04:24.400 well known popular politicians. UM and it quoted the quoted 0:04:24.520 --> 0:04:28.800 Mr Mr Smalls as UM as saying as saying making 0:04:28.800 --> 0:04:31.800 it cool to organize as as one of as one 0:04:31.800 --> 0:04:35.000 of his goals. UM And So that's so there's a 0:04:35.080 --> 0:04:38.839 number of social factors probably others too, that are contributing 0:04:38.839 --> 0:04:43.080 to the contributing to this uptick in in union organizing. 0:04:43.680 --> 0:04:49.320 And then economically there's very high inflation, labor shortage, supply 0:04:49.440 --> 0:04:52.200 chain issues that have that have been UM that have 0:04:52.240 --> 0:04:58.080 affected restaurants significantly. Those are all causing UM employee employees 0:04:58.080 --> 0:05:03.320 to to do more with us. Yeah, and Mike, you know, 0:05:03.720 --> 0:05:06.400 it's been really hard to be a restaurant employee during 0:05:06.400 --> 0:05:10.880 the pandemic across the entire country with staffing shortages. UM 0:05:10.920 --> 0:05:13.440 it's been hard to be a restaurant owner and operator 0:05:13.560 --> 0:05:16.839 as well, and everybody has been required to adjust. But 0:05:18.440 --> 0:05:22.560 the staff being shortages at restaurants, and especially why are 0:05:23.200 --> 0:05:26.120 some of these businesses being targeted. They are the better employers. 0:05:26.160 --> 0:05:28.080 They are those that have been known for for treating 0:05:28.120 --> 0:05:30.680 employees better. And these are in place I want to stay. 0:05:30.839 --> 0:05:33.039 They want to work there, They don't want to go 0:05:33.120 --> 0:05:36.720 somewhere else. But as as Jonathan said, you know, they 0:05:36.720 --> 0:05:39.640 feel that they should be treated better. And the organizers 0:05:39.640 --> 0:05:42.600 behind this, as we talked about, you know, the last 0:05:42.640 --> 0:05:45.160 week's episode with with the Fast Act, they've been very 0:05:45.200 --> 0:05:48.159 smart and savvy. So they're they're hitting the right notes 0:05:48.360 --> 0:05:51.120 at the right time with the right audience under the 0:05:51.200 --> 0:05:54.800 right circumstances. And you know that's why we're seeing this 0:05:54.800 --> 0:05:58.760 this very unique and significant change from what we had 0:05:58.800 --> 0:06:03.320 ever experienced previously. Yeah, that's an interesting point, right, Like 0:06:03.360 --> 0:06:06.000 Starbucks and Chipotle are almost the victims of their own 0:06:06.000 --> 0:06:08.680 success in that way that that you know that they 0:06:08.720 --> 0:06:11.520 have employed, they have had, you know, an employee base 0:06:11.600 --> 0:06:14.400 that has stuck around that they've treated well, and they 0:06:14.520 --> 0:06:18.920 um you know, contribute to college tuition and give better 0:06:18.960 --> 0:06:22.000 benefits than their peers, and so employees do stick around 0:06:22.000 --> 0:06:25.880 in an industry where employees tend to be very very transitory, 0:06:25.920 --> 0:06:28.599 and they don't want to pay dues historically because they figure, 0:06:28.640 --> 0:06:31.600 you know, this is just a very short term gig 0:06:31.680 --> 0:06:34.160 for me, right, and my John can touch on this, 0:06:34.240 --> 0:06:38.960 but that's a precise reason why they're targeting these employers 0:06:39.120 --> 0:06:42.159 as opposed to who you might think franchise fast too, 0:06:42.240 --> 0:06:46.160 because you know, on how you unionize a location, you know, 0:06:46.320 --> 0:06:49.360 it requires John will tell you an employee vote, and 0:06:49.520 --> 0:06:52.080 if employees aren't around, they're not gonna be their vote. 0:06:52.120 --> 0:06:54.520 But for those employers what people have been there for 0:06:54.560 --> 0:07:00.240 a long time and want to stay they are. Yeah, 0:07:00.240 --> 0:07:02.720 it's interesting and another point to uh, you know the 0:07:02.720 --> 0:07:05.680 fact that the left um you know, you mentioned this 0:07:05.760 --> 0:07:08.400 last week, Riley, that that um, you know, some of 0:07:08.400 --> 0:07:10.440 these groups have been playing the long game, right, and 0:07:10.520 --> 0:07:13.520 so part of it is the left UM has done 0:07:13.520 --> 0:07:17.240 a good job of controlling the culture, right, so you know, 0:07:17.320 --> 0:07:21.920 putting union organizers on Time magazine, right, and like by 0:07:22.280 --> 0:07:25.960 by controlling a lot of the um messaging out of 0:07:26.000 --> 0:07:28.840 these media outlet's, it's definitely become an advantage for them 0:07:29.000 --> 0:07:34.680 and they're they're weaponizing it absolutely. UM. So what do 0:07:34.760 --> 0:07:37.600 you too think about the Starbucks? About Starbucks efforts so 0:07:37.720 --> 0:07:43.880 far to head off unionization at that chain, well, UM, 0:07:44.000 --> 0:07:46.920 you know they're they're not working particularly well as the 0:07:47.040 --> 0:07:51.840 as the numbers suggests. There's my account is about two 0:07:52.640 --> 0:07:56.840 Starbucks locations have voted to unionize. And that's that's in 0:07:56.920 --> 0:08:02.840 addition to the approximately three and forty more locations where 0:08:02.880 --> 0:08:06.120 the where the union. UM it's mostly Workers United, which 0:08:06.160 --> 0:08:11.200 is a Service Employees International c i U affiliate UM 0:08:11.280 --> 0:08:15.040 has filed for has voled for more votes at other stores. UM. 0:08:15.160 --> 0:08:17.280 And you know that that's all since since about late 0:08:18.320 --> 0:08:21.679 so UM a very remarkable play, a very remarkable pace 0:08:22.480 --> 0:08:25.720 for UM. For for this to have happened just just 0:08:25.800 --> 0:08:28.880 at one employer alone. UM. You know it's it is 0:08:28.920 --> 0:08:32.880 difficult to stem the tide of labor organizing once it 0:08:32.960 --> 0:08:37.880 is underway. And UM, as as Riley alluded to, UM, 0:08:37.920 --> 0:08:40.600 there's you know, there's there's a couple of reasons why 0:08:40.640 --> 0:08:45.400 that's why that's difficult. One is the UM the under 0:08:45.440 --> 0:08:49.160 the n l RB's election process, UM, the union first 0:08:49.160 --> 0:08:52.440 needs to gather gather authorization cards from thirty at least 0:08:52.440 --> 0:08:56.720 thirty percent of the employees it's trying to trying to organize, 0:08:57.160 --> 0:08:59.959 and then it files it files a petition for election 0:09:00.000 --> 0:09:03.000 and based on those cards, and then once that petition 0:09:03.080 --> 0:09:08.200 is filed, the the election happens. Happens pretty quickly with 0:09:08.280 --> 0:09:11.640 then within a matter of weeks weeks or maybe a 0:09:11.679 --> 0:09:13.720 little bit longer than in some cases, but but usually 0:09:13.800 --> 0:09:17.200 usually pretty quickly. So once that once that petition is filed, 0:09:17.600 --> 0:09:20.680 there's not a lot of time for for the employer 0:09:20.760 --> 0:09:24.679 to change employees hearts and minds um And then legally, 0:09:25.240 --> 0:09:30.080 the the n l r A significantly limits employer's ability 0:09:30.200 --> 0:09:35.840 to change wages, benefits, scheduling practices, and and other and 0:09:35.880 --> 0:09:38.800 other working conditions that may have caused employees to organize 0:09:38.800 --> 0:09:41.920 in the first place. Once the employer is aware of 0:09:41.960 --> 0:09:45.120 the is aware of the union campaign, the law generally 0:09:45.120 --> 0:09:48.360 makes of them awful um for employers to try to 0:09:48.679 --> 0:09:54.880 improve or worsen um wages as an effort to influence 0:09:54.880 --> 0:09:57.640 how employees might feel about a union or my or 0:09:57.720 --> 0:10:02.440 my vote in an election, which all underscores that that 0:10:02.440 --> 0:10:06.360 it is important for employers to act um promptly and 0:10:06.480 --> 0:10:10.920 to act now before before they haven't acted organizing drive underway. 0:10:12.640 --> 0:10:15.679 And it was interesting because Starbucks, you know, they raised 0:10:16.720 --> 0:10:23.120 their wages for their employees in non unionized stores, and uh, 0:10:23.200 --> 0:10:24.680 you know, I guess if you want to have any 0:10:24.720 --> 0:10:28.200 comments about that strategy, I mean, the union kind of 0:10:28.320 --> 0:10:30.480 countered pretty quickly. I was like, oh, we agree to 0:10:30.520 --> 0:10:34.400 that as well, So you know, why can't you, um, 0:10:34.440 --> 0:10:37.200 you know, issue raises across the system, you know. Um, 0:10:38.080 --> 0:10:41.560 I thought that was a curious, uh, a curious way 0:10:41.559 --> 0:10:45.920 to kind of combat it. And and I thought, you know, um, 0:10:45.960 --> 0:10:49.840 you know, the unions had a good answer to it. Yeah, 0:10:49.880 --> 0:10:54.080 I mean at Starbucks and at other other employers, both 0:10:54.120 --> 0:10:57.800 within and outside of the restaurant sector. It's you know, 0:10:57.800 --> 0:11:02.200 there's there's the standard standard age, old issues that that 0:11:02.280 --> 0:11:05.720 employees and union site as reasons why why union is necessary. 0:11:06.120 --> 0:11:12.360 Better pay, more predictable scheduling, better benefits. But it's UM 0:11:12.480 --> 0:11:14.080 and that this ties into what I was what I 0:11:14.120 --> 0:11:17.840 was discussing earlier about the UM about the rise of 0:11:18.040 --> 0:11:21.800 about how social justice movements plated into the the current 0:11:22.120 --> 0:11:25.680 what we're seeing currently. Uh, it's an employee. Employees site 0:11:25.679 --> 0:11:29.920 that they want a seat at the table, and um, 0:11:29.960 --> 0:11:34.040 you know, once once collective bargaining with the employers underway. UM, 0:11:34.200 --> 0:11:39.080 the unions have no ability to require require the employer 0:11:39.160 --> 0:11:42.480 to agree to the union's proposals. But one thing that 0:11:42.559 --> 0:11:45.439 a union can do under the under the n l 0:11:45.600 --> 0:11:48.640 r A as as it's set up currently is UM 0:11:49.080 --> 0:11:50.880 is that they can provide a seat of the table 0:11:51.040 --> 0:11:54.600 because the law does require the employer and the union 0:11:55.200 --> 0:11:57.960 UM to sit down, to sit down and negotiate in 0:11:58.000 --> 0:12:01.400 good faith. So it does it and give employees a 0:12:01.440 --> 0:12:08.480 mechanism to voice their concerns to management directly. Thanks for 0:12:08.520 --> 0:12:12.760 that and Starbucks brought up but election tampering recently? Is 0:12:12.800 --> 0:12:16.360 this a real concern for restaurant chains? And uh? If so, 0:12:16.440 --> 0:12:20.959 what can be done to fight it? Well? So the NLRB, 0:12:21.679 --> 0:12:24.920 it is supposed to be neutral when it is administering 0:12:24.960 --> 0:12:29.800 elections and when investigating unfair labor practice or ULP charges, 0:12:29.880 --> 0:12:33.439 which are which are allegations that the n l r 0:12:33.520 --> 0:12:37.079 A has been violated. The problem is that the same 0:12:37.160 --> 0:12:42.520 agency that investigates alleged misconduct UM also acts as the 0:12:42.559 --> 0:12:47.960 prosecutor and its judges are also within the NLRB. And 0:12:48.160 --> 0:12:52.000 the n lrb's top positions are our political appointees. So 0:12:52.520 --> 0:12:58.480 under Trump, the board members were UM majority majority um 0:12:58.679 --> 0:13:03.240 at majority management side backgrounds. And under under President bide In, 0:13:03.280 --> 0:13:08.199 the n l RB's top positions are are predominantly held 0:13:08.200 --> 0:13:13.760 by individuals who had significant union side experience. So you know, 0:13:13.840 --> 0:13:16.319 this is the this is the structure that Congress set 0:13:16.360 --> 0:13:20.440 up when it enacted the n l RB um um 0:13:20.480 --> 0:13:24.559 about ninety years ago. But that structure makes the agency 0:13:24.640 --> 0:13:29.000 highly prone to allegations of favoritism um and and in fact, 0:13:29.040 --> 0:13:31.520 it does make it hard for the agency to be 0:13:32.200 --> 0:13:35.200 to be in fact neutral, much less maintained that maintained 0:13:35.200 --> 0:13:41.080 that position credibly to the public. You mentioned, um, the 0:13:41.200 --> 0:13:45.360 allegations in the in the in Starbucks recent letter, So 0:13:45.480 --> 0:13:49.400 Starbucks alleges that n l RB agents in certain of 0:13:49.400 --> 0:13:54.680 the agency's regional offices engaged in in quote, highly improper 0:13:54.760 --> 0:14:00.360 and systemic conduct that that, according to Starbucks, tipped tip 0:14:00.400 --> 0:14:02.760 the scales in favor of unions when the agency was 0:14:02.800 --> 0:14:06.200 administering mail ballot elections. So and we can get to 0:14:06.559 --> 0:14:08.840 discuss what the implication of the mail ballot election in 0:14:08.840 --> 0:14:13.080 a minute. But the allegations more specifically included u n 0:14:13.160 --> 0:14:17.679 LRB agents coordinating with with unions to arrange for voting 0:14:17.720 --> 0:14:21.320 to happen in n LRB offices, giving the union but 0:14:21.400 --> 0:14:27.160 not the employer, confidential information UM in real time as 0:14:27.200 --> 0:14:29.600 to as to how the votes were coming in. So 0:14:29.680 --> 0:14:32.000 were they were they were they for the union or 0:14:32.000 --> 0:14:35.160 for the employer, um, which which then then allows the 0:14:35.400 --> 0:14:38.760 allows the union to UH to target it's it's its 0:14:38.840 --> 0:14:43.680 campaign efforts while while voting is underway. So those are 0:14:44.240 --> 0:14:47.760 those are They're just allegations at this point. But um, 0:14:47.800 --> 0:14:50.760 you know, if if true, it would, um, you know 0:14:50.800 --> 0:14:54.280 it would it would really seriously undermine the n l 0:14:54.360 --> 0:14:57.400 RB's ability to claim that that it is in fact control, 0:14:57.800 --> 0:15:02.560 particularly in in is voted, one of the most highly 0:15:02.600 --> 0:15:09.120 publicized union union efforts in recent history. So, um, you know, 0:15:09.160 --> 0:15:13.080 in a mail ballot election, Um, well, so the mail 0:15:13.120 --> 0:15:17.000 ball elections are not the are not the presumptive election. 0:15:17.520 --> 0:15:21.280 The presumptively appropriate form of n RB election is an 0:15:21.280 --> 0:15:25.600 in person election. UM. In an in person election, there 0:15:25.640 --> 0:15:29.880 are a number of safeguards that the that the n 0:15:30.000 --> 0:15:34.200 LRB has in place. It's a pretty pretty sterile voting conditions. 0:15:34.440 --> 0:15:37.520 There are the n LRB sets up sets up voting 0:15:37.520 --> 0:15:40.200 boosts UM that look a lot like how we how 0:15:40.240 --> 0:15:43.080 we all vote in state and federal elections come November. 0:15:44.080 --> 0:15:48.280 Both sides have a few observers there to monitor the process. UH, 0:15:48.320 --> 0:15:51.800 and the employers and union representatives have to steer clear 0:15:51.840 --> 0:15:55.640 of the voting area. There's no electioneering, and campaigning near 0:15:55.640 --> 0:16:00.200 the voting area is not allowed in a mail ballot election. UM. 0:16:00.240 --> 0:16:02.960 You know, there is no there's no voting area. UM. 0:16:03.080 --> 0:16:05.960 Many of those many of those of the safeguards that 0:16:06.000 --> 0:16:09.600 existed in personal election don't don't apply in an n 0:16:09.680 --> 0:16:13.760 l RB UM mailbell election. So that that means that 0:16:13.800 --> 0:16:18.160 there's more opportunities for for both for unions and employers 0:16:18.200 --> 0:16:22.440 as well as other employees to pressure employees to vote 0:16:22.480 --> 0:16:27.560 one way or the other. It's interesting. I think most 0:16:27.600 --> 0:16:30.320 people were hoping that that we've heard the end of 0:16:30.560 --> 0:16:35.800 mail in ballots, but apparently that that's not the case here. UM. 0:16:35.840 --> 0:16:39.320 You know, we've written a bit that automation and refranchising 0:16:39.360 --> 0:16:42.600 are are two ways that restaurant chains can kind of 0:16:42.800 --> 0:16:46.400 head off unionization efforts. Is UM, can you maybe talk 0:16:46.440 --> 0:16:49.720 about these two a little bit and maybe UM tell 0:16:49.760 --> 0:16:53.280 us what else they can do to to um limit 0:16:53.400 --> 0:16:58.920 unionization in their chains. Well, UM, automation is a is 0:16:58.920 --> 0:17:01.080 a good point, and we talked a bit about how 0:17:01.760 --> 0:17:04.960 last week, how the fast Act could lead to an 0:17:04.960 --> 0:17:09.520 increase in into automation. UM. You know, McDonald's has done 0:17:09.560 --> 0:17:14.680 a lot on automation historically, it might be ahead ahead 0:17:14.720 --> 0:17:17.320 of some of the other fast food industries and in 0:17:17.359 --> 0:17:21.639 adopting that that form of production UM, but you know, 0:17:21.680 --> 0:17:26.040 automation hasn't hasn't really caught on that much throughout the 0:17:26.280 --> 0:17:30.760 throughout the restaurant sector, particularly particularly in middle and higher 0:17:30.880 --> 0:17:34.560 end and higher end restaurants. So there's there there is 0:17:34.760 --> 0:17:39.720 a good likelihood that that automation will will increase as 0:17:39.720 --> 0:17:42.360 a result of what we're what we're seeing now, both 0:17:42.359 --> 0:17:47.320 in terms of increased unionization UM, rising labor costs related 0:17:47.359 --> 0:17:49.920 to related to the Fast Act and and just to 0:17:50.560 --> 0:17:53.280 just rising labor costs in general as a result of 0:17:53.600 --> 0:17:58.240 inflation and and and other labor shortage and other factors UM. 0:17:58.280 --> 0:18:02.120 So that there are a number of things that that restaurants, 0:18:02.359 --> 0:18:05.679 UM and and other employers can do to try to 0:18:05.680 --> 0:18:08.320 to try to reduce the likelihood that their employees will 0:18:08.359 --> 0:18:13.920 turn to a union because, as I mentioned, UM employees 0:18:14.160 --> 0:18:17.399 site in addition to better wanting better pay and benefits. 0:18:17.840 --> 0:18:20.119 They cite UM wanting to have a seat at the 0:18:20.160 --> 0:18:25.080 table UM as as a reason for unionization. So one 0:18:25.119 --> 0:18:29.000 thing that employers, including restaurants can do is to ensure 0:18:29.040 --> 0:18:33.359 that upper management has mechanisms in place to learn of 0:18:33.440 --> 0:18:38.360 employees concerns UM in real time. And you know, those 0:18:38.400 --> 0:18:42.160 concerns could be interesting interest in unions, or it could 0:18:42.160 --> 0:18:45.479 be just complaints about wages, scheduling or or other practice 0:18:45.560 --> 0:18:48.960 or other practices. Uh. You know, it's important for decision 0:18:49.000 --> 0:18:51.600 makers to have to know what's going on in the 0:18:51.600 --> 0:18:54.960 ground uh in order to be able to address address 0:18:55.000 --> 0:18:59.520 those issues before before they before they metastasize UM in 0:18:59.560 --> 0:19:03.080 a similar of make make employees feel heard UM. You know, 0:19:03.800 --> 0:19:07.560 employers don't need a union to h to give employees 0:19:07.600 --> 0:19:11.600 a voice. So communicate with employees and and ensure that 0:19:11.600 --> 0:19:17.040 that employees employees feel comfortable communicating with you. Communication communication 0:19:17.080 --> 0:19:20.880 really does need to be a two way street, UM, 0:19:20.920 --> 0:19:22.240 and a lot of that, a lot of that has 0:19:22.280 --> 0:19:26.199 to do with a lot of responsibility falls on on 0:19:26.320 --> 0:19:30.399 frontline managers. So ensuring that front line frontline managers in 0:19:30.440 --> 0:19:35.320 the restaurants are comfortable talking with employees about sensitive workplace 0:19:35.400 --> 0:19:38.960 issues like pay for instance, So that so that when 0:19:39.000 --> 0:19:43.120 other sensitive workplace topics come up, like unions, there there's 0:19:43.160 --> 0:19:46.960 already a strong relationship in place. Employees feel comfortable talking 0:19:47.000 --> 0:19:51.280 to talking to their manager about about sensitive topics, and 0:19:51.359 --> 0:19:56.360 managers feel comfortable, um, talking with employees about about unions. Um. 0:19:56.400 --> 0:19:59.720 It's it's important to have that muscle memory already built 0:20:00.200 --> 0:20:03.760 before there's before there's an active organizing campaign because you know, 0:20:03.800 --> 0:20:07.520 as I mentioned once, um, once an election, once an 0:20:07.520 --> 0:20:11.600 election is scheduled, um, the ability to try to change 0:20:11.600 --> 0:20:16.600 hearts and minds becomes becomes rather limited. I would say 0:20:16.600 --> 0:20:21.160 for refranchising, Mike, Uh, that's an option, but it's essentially 0:20:21.280 --> 0:20:25.200 putting the problem in somebody else's pocket. So uh, some 0:20:25.560 --> 0:20:28.200 brands are looking at that as a strategy. Uh, not 0:20:28.240 --> 0:20:31.200 necessarily a bad one, because we're not seeing as much 0:20:31.240 --> 0:20:34.320 activity at franchise locations. Most of it, at least for now, 0:20:34.400 --> 0:20:38.600 has been focused on company on locations. So it can shift, 0:20:38.960 --> 0:20:43.520 uh the issue to a franchise, but it doesn't necessarily 0:20:43.600 --> 0:20:46.919 solve the able all issue. Yeah, and potentially you know, 0:20:46.960 --> 0:20:49.000 you might get less for a refranchise store at that 0:20:49.000 --> 0:20:51.919 point if if the purchaser has the factor in the 0:20:51.960 --> 0:20:55.120 potential for unionization. UM. And the point you made John 0:20:55.160 --> 0:20:58.359 about McDonald's it was a great one. I mean, they've 0:20:58.400 --> 0:21:00.639 spent a lot of money over the last few years 0:21:00.960 --> 0:21:05.480 implementing kiosks, UM, implementing back of the house technology that 0:21:05.560 --> 0:21:10.280 reduces the amount of steps so an intern it reduces 0:21:10.320 --> 0:21:12.479 the amount of employees you need in the kitchen. And 0:21:13.280 --> 0:21:15.760 I think we're going to see these things become more 0:21:15.840 --> 0:21:19.879 ubiquitous U in California and UM. You know what we 0:21:19.920 --> 0:21:22.679 saw with server handhelds, which now have been rolled out 0:21:22.720 --> 0:21:26.000 across the country. UM. You know they allow at a 0:21:26.040 --> 0:21:29.080 full service restaurant, they allow a server to handle five 0:21:29.160 --> 0:21:32.960 tables instead of three, so it reduces flate labor on 0:21:33.000 --> 0:21:36.560 the floor. And you know, five, six, seven years ago, 0:21:36.600 --> 0:21:39.320 these things were very expensive and when uh you were 0:21:39.359 --> 0:21:42.800 paying a server just a few dollars in a tipped wage, 0:21:42.920 --> 0:21:46.359 it didn't make sense. But in Seattle and a l A, 0:21:46.520 --> 0:21:51.360 in places that had you know, twelve plus minimum wages 0:21:51.920 --> 0:21:55.520 years ago, that that's where UM, that's where they were 0:21:55.520 --> 0:22:00.000 implemented first. But over time the technology gets cheaper UM 0:22:00.080 --> 0:22:03.159 as wages rise. UM. In all the cities that the 0:22:03.320 --> 0:22:06.280 r O I starts to make more sense. So, um, 0:22:06.280 --> 0:22:08.520 it just it just makes sense that automation is going 0:22:08.560 --> 0:22:13.040 to be probably the most used tool to to kind 0:22:13.040 --> 0:22:18.320 of um pushing themselves against unionization. Yeah, and Mike a 0:22:18.400 --> 0:22:21.080 real life example. I live in the city of Portland, Oregon, 0:22:21.240 --> 0:22:24.159 which is one of the most challenging markets in the 0:22:24.200 --> 0:22:27.680 country in which to operate a restaurant one or more expensive, 0:22:28.600 --> 0:22:31.199 and automation has really taken hold at a number of 0:22:31.240 --> 0:22:35.320 locations where you'll see you know, toast for example, uh, 0:22:35.600 --> 0:22:39.320 ordering everything from your phone through a toast system with 0:22:39.440 --> 0:22:44.000 a very limited staff, no actual table service, just uh, 0:22:44.080 --> 0:22:47.440 you know, bringing and buzzing um. And you know, all 0:22:47.480 --> 0:22:53.000 these efforts to reduce labor uh and utilized technology to 0:22:53.080 --> 0:22:57.480 maintain profitability. So uh, I think there's the business is 0:22:57.480 --> 0:23:01.480 going to evolve to to serve live. I think what 0:23:01.560 --> 0:23:04.360 we lose from that, though, you know, is the hospitality 0:23:04.440 --> 0:23:07.080 aspects and jobs and the other things that are so 0:23:07.119 --> 0:23:10.520 important because the jobs that are being lost here the 0:23:10.560 --> 0:23:14.680 restaurant industries employee for some of the most important people 0:23:14.680 --> 0:23:19.879 in the country, those at the bottom of the income 0:23:19.960 --> 0:23:22.600 levels who really need the jobs more than anyone, and 0:23:22.640 --> 0:23:25.399 It's an industry that provides a pathway for opportunity to 0:23:25.440 --> 0:23:29.560 everyone and has for decades, and to see that being 0:23:29.800 --> 0:23:34.120 reduced or eliminated by these policies is really hard hard 0:23:34.160 --> 0:23:37.280 to take. And the team uh, and young adult unemployment 0:23:37.359 --> 0:23:40.840 rates in the state of California, you know, in Brooking 0:23:40.840 --> 0:23:44.360 says to study there are significantly higher than anywhere else 0:23:44.359 --> 0:23:46.480 in the country. You see the same in every state 0:23:46.920 --> 0:23:50.320 you know that has implemented these policies. With increasing wages 0:23:50.359 --> 0:23:53.760 and unionization efforts, the doors to opportunity are being closed 0:23:53.920 --> 0:23:56.240 to a lot of people. And that's we see the 0:23:56.280 --> 0:23:59.800 consequence of that. We see people not working, we see 0:24:00.080 --> 0:24:02.960 you know, more crime, we see more other other issues 0:24:03.000 --> 0:24:06.040 that all these cities are dealing with. So hopefully come 0:24:06.119 --> 0:24:08.159 since prevails and you get to a place, you know 0:24:08.160 --> 0:24:12.840 where restaurants continue to be a path for opportunity for everyone. Yeah, 0:24:12.880 --> 0:24:17.119 it's it's uh, it definitely is is uh unfortunate in 0:24:17.160 --> 0:24:20.639 some ways, and there's there's always unintended consequences right to 0:24:20.680 --> 0:24:26.240 any um policy pushes, policy changes and things of that nature. Uh. 0:24:26.280 --> 0:24:28.560 You know, Riley, last time we spoke, you suggested that 0:24:28.680 --> 0:24:31.600 unions could come for Chipotle next. So don't get a 0:24:31.640 --> 0:24:35.040 big head, but it was a very prescient call. So 0:24:35.400 --> 0:24:37.320 is it safe for me to assume that unions are 0:24:37.359 --> 0:24:39.560 going to prefer to organize that companies that own a 0:24:39.600 --> 0:24:41.760 majority of the restaurants. We kind of touched on that already. 0:24:42.160 --> 0:24:44.320 And Uh, I guess what else? What else are they 0:24:44.359 --> 0:24:48.240 looking for? Uh? In the target? Well, I think it's 0:24:48.280 --> 0:24:52.200 it's uh Jonathan mentioned earlier. Uh, you know, the ability 0:24:52.240 --> 0:24:56.120 to unionize uh, a location they don't want to Unions 0:24:56.119 --> 0:24:57.960 don't want to spend their time or effort and trying 0:24:58.000 --> 0:25:00.800 to unionize a location where the emloyees are not going 0:25:00.800 --> 0:25:05.200 to be there through the voting process. Uh. It makes 0:25:05.280 --> 0:25:09.480 much more sense to focus on locations where uh, you know, 0:25:09.560 --> 0:25:11.880 with a good employer, where employees have been there, where 0:25:11.880 --> 0:25:14.720 they want to stay there, and get them to rally 0:25:14.800 --> 0:25:17.320 around the sales pitch that the unions are making to 0:25:17.440 --> 0:25:21.800 them and those not to say that franchise locations camp 0:25:21.800 --> 0:25:25.080 because there's a lot of terrific franchised restaurants out there, 0:25:25.960 --> 0:25:29.440 but focusing on you know, the big names like they 0:25:29.480 --> 0:25:32.399 have been Starbucks, ri Pteley, and and we'll be seeing 0:25:32.640 --> 0:25:36.160