Staffing

The high opportunities in high-unemployment areas for expanding pizza brands

Although it seems like the pandemic will go on forever, the virus and its many restaurant challenges will eventually be a thing of the past. Is your expanding pizza franchise taking advantage of the opportunities that now exist for growth and success in the future, particularly those present in areas of higher unemployment?

Photo: iStock

September 23, 2020 by Lydia Fayal — Head of Grwoth, Workstream

Although the U.S. Bureau of Labor Statistics' latest month of data showed the unemployment rate fell to 8.4% in August, it remains a fact that this number is still well above the 4% and under levels that the U.S. was reporting up until the pandemic hit the nation in March. Typically, the hardest hit regions for unemployment are densely populated metropolitan areas, which not only have the highest numbers of COVID-19 cases to contend with, but a higher proportion of service-sector jobs that were immediately and profoundly impacted by the pandemic.

However, in times of crisis also lies opportunity. Among the brighter spots in the current economy are pizza brands like Domino's and Papa John's, where franchisees have seen increased business due in some part to their great positioning as delivery- and takeout-centric foodservice brands. In fact, on numerous occasions, these two brands alone have announced huge hiring waves, adding tens of thousands of employees nationwide.

For these reasons and many others, expanding pizza brand franchisees should think about expanding into geographical areas where unemployment is high. Here are four major reasons why that's a smart move:

More candidates = more available talent

The most obvious and compelling reason to expand into higher unemployment areas is that the labor pool not only increases in quantity, but quality as well.

In more stable economic periods, foodservice employees — particularly those in quick-service — move around a lot to enhance their pay and career opportunities. However, in the current economic climate, these workers will not only stick around longer, but the quality of workers will be higher as well.

In fact, many pizza brands suddenly have the opposite problem: too many applicants. Having to weed through hundreds, if not thousands, of resumes may be a chore (this is where a good automated hiring platform can pay dividends), but taking the time to staff quality individuals will make the hiring process much more turnkey as the new location launches.

Keep in mind that even in areas of high unemployment, franchisees can't rest on their laurels since some brands are still seeing high turnover due to area competition. That just drives home the point that the need for managers to treat them and pay employees as well as possible to retain their loyalty long term.

Generate community growth

Franchise owners who decide to open in an area with a high unemployment rate are bringing a much-needed boost to that region's economy, helping families who need an income source and job stability. While business is business, don't underestimate the extreme situations many areas of the country find themselves in at the moment. Providing a community with jobs can be a literal life-saver, just as worthy as providing donations to an area.

And a community's franchises really do drive job and economic growth. In fact, in 2018 franchising directly created 7.6 million jobs, and indirectly supported 13.3 million jobs. Considering a single pizza restaurant location could have anywhere from 30 to 50 employees, the addition of a new location in a struggling economy can directly impact the tide of financial distress.

Keep in mind that franchises have a better five-year success rate than other small businesses. This means creating job opportunities for the long haul, another important contribution to a high unemployment area -- especially when there is no clear end for the ongoing pandemic.

Help kids who need jobs

High unemployment invariably has a negative effect on the quality of teens' and young adults' lives. This is particularly the case because they have much less work history and skills to compete in the marketplace.

In recent months, the unemployment rate for those under the age of 25 were about three times higher than those in their 40s.

Gen-Z needs work, and franchises can be the answer right now.

Opening a new location in an area with high youth unemployment can be a lifeline to teens and recent college graduates who are looking for an entry point into the workforce. It's almost ironic that just two short years ago, there was a lack of teenagers working in QSR because they were either too busy or too educated for these positions.

Now, in the midst of the pandemic and economic uncertainty, working at a franchise can be an important step toward self-sufficiency in a dire economy.

For many young people, these jobs might also be the new structure and social outlet that they used to get from classrooms. With schools going virtual, working with others in a franchise job may be the only real-world interactions they get in a day.

Research has shown that young adults who work in quick-service, for instance, enjoy the social relationships they develop and appreciate the work skills they acquire. All this to say, providing a job for young adults goes much further than just monetarily.

Get in before the recovery

We already know that many pizza restaurants are doing big business during this pandemic, meaning that they are likely to survive this downturn and likely benefit from the economic recovery that will inevitably come. Now is the best time to enter into a market poised for growth, in order for pizza brands to reap the benefits when recovery happens. By opening a store in a depressed area, a franchisee may have access to inexpensive talent, building costs and even state and city incentives for bringing new business into town.

In essence, this move can be a smart investment for the future. With lower costs and decreased competition, a new franchise location can dominate an area much more easily than it could in a busier area. Once a secure foothold is established, it will be that much harder for any other business to dethrone your store.

We expect to see many franchise owners with the means to expand into areas with high unemployment during the next couple years. Will you take the plunge and take advantage of this unique time as well? Those that do will be rewarded with great success both in the short and long term.