Some Starbucks, Chipotle sites cut hours, limit seating over omicron

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Diners are feeling a sense of déjà vu as restaurants are again selling food for takeout only, closing dining-room seating or shortening hours as the Omicron variant of Covid-19 spreads.

Chains such as Starbucks Corp. and Chipotle Mexican Grill Inc. said they are temporarily limiting operations at individual stores or regions as they face labor shortages and a rise in Covid-19 cases. Other restaurant operators said more of their staff are testing positive for the coronavirus in the Omicron surge than during the growth of the earlier Delta variant and are voluntarily closing for stretches as a result.

“It’s one day at a time," said Flynn Dekker, chief executive of the Korean fried-chicken chain Bonchon Franchise LLC. The chain closed its flagship Manhattan location for four days recently after a handful of staff members tested positive, he said.

The Omicron variant is bringing back some practices and uncertainty from the early days of the pandemic that many Americans had hoped were behind them, from the resumption of virtual learning at schools to thousands of canceled flights. Some diners said they have a hard time knowing whether local restaurants and cafes will be open, leading them to eat more at home.

Nora Traviss, a professor from Keene, N.H., said she has recently found her local Starbucks closed early or only serving customers in the drive-through, resulting in lines of cars.

“I never know what to expect, so for now, I’ve just stopped going altogether," said Ms. Traviss, who said she has also faced recent closures of local gas stations during regular hours.

Starbucks and other restaurants said they have learned how to operate through the pandemic and have invested in the infrastructure to switch operations to delivery, drive-through or takeout as needed. Omicron, however, is still weighing on restaurant chains, with the Burger King restaurant operator Carrols Restaurant Group Inc., Shake Shack Inc. and Denny’s Corp. among the companies reporting weaker sales last month as the virus spread.

“No one is immune to it," Shake Shack Chief Executive Randy Garutti said at a recent investor conference. He said reduced hours, some temporary restaurant closures and office workers going back to working from home are expected to hurt the chain’s sales in its current quarter.

U.S. restaurant sales declined in the week ended Dec. 26 compared with the same period pre-pandemic, the first weekly decrease since last March, according to the restaurant analytics firm Black Box Intelligence.

Kura Sushi USA Inc. said earlier in January that Omicron cases among workers prompted the 35-unit chain to limit seating or operating hours at some of its restaurants, complicating its operations.

“It has had a meaningful impact on our sales," Kura Chief Executive Hajime “Jimmy" Uba told investors on the fallout from limiting dining rooms. The Irvine, Calif.-based chain said it expects the Omicron challenges to continue for several weeks.

Starbucks in early January switched all 19 stores in the chain’s Buffalo, N.Y., market to drive-through or pickup because of rising cases there, a spokesman said.

Baristas at a Starbucks store in Buffalo who recently voted to unionize walked out from work earlier this month over conditions that they said weren’t safe because of Covid-19. The walkout lasted for several days.

Starbucks said that the company exceeded federal Covid-19 guidelines for safety throughout the pandemic and that the chain allows store managers to make local operating decisions based on conditions, such as moving to takeout only, as in Buffalo.

The chain in early January shifted its Boston stores to takeout-only to prepare for the city’s proof-of-vaccination requirement for indoor spaces, he said. The company told employees late last month that it was experiencing more Covid-19 cases and exposures in its U.S. stores.

Some of Starbucks’s nearly 9,000 U.S. cafes have modified store hours or service as the chain focuses on the safety of its employees and customers, the company said.

Many restaurant owners headed into the recent Covid-19 case surge saying they didn’t have enough workers to fully operate. Nearly 7% of restaurant and hotel workers quit in November, with 920,000 employees leaving their jobs, the Labor Department said earlier in January. That was the largest total number of workers who quit of any industry category tracked.

Omicron has made the staffing situation worse, operators said.

Lindsay Mescher, owner of the Greenhouse Cafe in Lebanon, Ohio, said her staffing is increasingly erratic as more workers have been exposed to Covid-19 in the past few weeks. She limited her seating again in recent weeks, just six months after finally reopening her dine-in business following pandemic closures.

“At any given moment, I can find myself very short-staffed," said Ms. Mescher, who signed a letter to Congress advocating for more funds for independent restaurants last month.

The number of U.S. restaurants that are temporarily closed has been creeping up, hitting a recent peak of 2.4% of operators last month, according to Datassential, a food-industry market-research firm. Inadequate staffing is contributing to the temporary shutdowns, along with more permanent ones, Datassential said.

To help them survive the winter, independent restaurants are asking customers for support.

“At our current level, it is not a sustainable business model," wrote Chicago-based Uncommon Ground in a message to restaurant patrons in early January. “We don’t want to be the next restaurant to close forever."

Some consumers are willingly moving back to takeout ordering. A December survey of 752 Americans by Datassential found that 65% planned to increase drive-through, delivery and takeout ordering in response to the Omicron variant’s spread.

Others are eating at home more. Michael Mueller, an airline pilot from Louisville, Ky., said he used to get food at a nearby Chipotle several times a week for his family, but it limited service and then temporarily closed several weeks ago. “Costco shopping has saved the day," Mr. Mueller said.

Diners such as Betty McDonald said they just want their normal routines back. The mom of six from the San Diego area said she had come to look forward to a midday grande Peach Tranquility tea from Starbucks, but lately has found her local locations closed in the afternoons.

“It’s not the end of the world, but certainly disappointing," she said.

This story has been published from a wire agency feed without modifications to the text

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Will Costco Raise Prices for Its $4.99 Rotisserie Chicken? (Or Maybe Its Memberships)

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Costco last increased its membership price in 2017 and raising it may allow it to keep selling cheap rotisserie chicken.

Customers love Costco’s (COST) - Get Costco Wholesale Corporation Report $4.99 rotisserie chicken. Because of that, the warehouse club took the aggressive step of opening its own poultry farm back in 2019.

That facility produces about 100 million chickens per year – about a third of what the company uses. Now, however, amidst rising prices for chicken (and meat in general) and activist concerns about how Costco treats its chickens while raising them, the company may face pressure to raise the price of its rotisserie chicken above $4.99.

The membership-based warehouse club has kept the price of its rotisserie chickens at $4.99 since 2009. That’s an expensive move as it’s widely believed that the company loses $30-$40 million per year selling rotisserie chicken. That’s a relatively small number for the chain, but it’s one that will increase if the company has to spend more to raise chickens on its farm and prices for poultry rise in general.

Why Does the Costco $4.99 Rotisserie Chicken Matter?

Costco uses a membership-based model. Its business success requires the company to retain and add members at a steady clip. In many ways, what it sells in its stores serves as a membership retention tool since the company sells its items at very low margins compared to other retailers.

Something like a $4.99 rotisserie chicken drives members to visit the warehouse club’s locations. Basically, a member may visit because he or she wants a cheap meal option for dinner that night (and cheap chicken certainly fits) and, while there the member buys a bunch of other things.

It’s not the purchases that matter to Costco. Instead, each visit reinforces the value of being a member. That makes it more likely that the member will renew and that helps the company maintain its roughly 90% retention rate.

Because of that, Costco can afford to subsidize the cost of its rotisserie chickens and it will likely continue to do so. That $30-40 million loss may grow if the company addresses calls from various animal rights groups, including Mercy for Animals, to join the Better Chicken Commitment, “which sets ethical standards for poultry raising and processing,” Grocery Dive reported.

But, even pricier chickens likely won’t lead to a price increase on Costco’s $4.99 rotisserie chicken as management has been resolute in maintaining the price. It’s an optics issue where the goodwill matters more than the money (much like the company’s $1.50 hot dog and soda combo).

Keeping the rotisserie chicken at $4.99, however, does not mean Costco members won’t face a meaningful price increase.

Shutterstock

Costco May Raise Its Membership Price

Costco may hold the line on pricing in certain areas, but it has a consistent history of raising its membership price roughly every five years. The warehouse club last increased membership prices – by $5 for basic Gold memberships and $10 for Executive members – in 2017. Since it’s now 2022 that suggests that Costco will raise its membership price at some point this year.

Raising membership prices at the same rate it did in 2017 would bring in a lot more money than increasing the price of the rotisserie chicken by $1. Costco sells 300 million chickens and year and had 62.5 million, members at the end of its most recent quarter with 26.5 million of those members paying for pricier Executive membership.

So, here’s what price increase would bring in:

Raise the price of rotisserie chicken by $1: $300 million

Increase the price of Gold membership (36 million members) by $5: $180 million

Increase the price of Executive membership (26.5 million members) by $10: $265 million.

The total value of raising prices: $445 million.

When Costco raises its membership price it doesn’t happen all at once. Instead, it happens over a 12-month period as memberships come up for renewal.

Historically, Costco members have shrugged off these increases because they only happen every five years or so. When the company last raised membership prices in 2017, it had no meaningful impact on renewals.

An increase in the price of the rotisserie chicken would have an immediate impact and it would likely lead to negative feelings among the chain’s members. Raising membership later in 2022 likely would not lead to the same backlash.

Costco CFO Richard Galanti did acknowledge that his company has entered the time period where it expects questions on a price increase. He was asked about it during the chain’s first-quarter earnings call.

“And our only thought is we’ll probably start getting questions about now. So it’s still a while away. And – but we certainly feel good,” he said. “As I’ve said in the past, renewal rates – strong renewal rates and loyalty help that process – help that thought process. And we’ll see, but it’s still a little bit of time to think about it.”

Boulder County sheriff’s body cam videos show intensity of response to Marshall Fire

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BOULDER COUNTY, Colo. (KDVR) — The Boulder County Sheriff’s Office released several body cam videos of first responders’ actions in response to the Marshall Fire.

The fire sparked on Dec. 30 and burned more than 6,000 acres and nearly 1,100 homes across Louisville, Superior and unincorporated Boulder County.

In the videos, you can see deputies knocking on doors telling residents they need to leave their homes immediately, helping residents get out and deputies evacuating the Costco in Superior.

One video shows a deputy helping a woman get her dog and cats out and into the deputy’s vehicle. Another clip shows a deputy helping a resident corral a dog into the car to be taken to safety. The frantic scene of deputies yelling at customers at the Costco to head toward US 36 is intense and revealing of the impending danger and importance of time.

Winds up to 100 mph whipped the flames from the point of origin across Boulder County in a matter of hours.

A house on fire was the first structure Mountain View Fire Rescue crews tried to put out after receiving initial calls that it was “downed line.” The fire crew could not find a fire associated with the line, but eventually, they noticed a home that was burning down the road.

BCSO is still investigating the origin of the blaze and has searched the Twelve Tribes property on Eldorado Springs Road.

Walmart and Other Retailers Are Closing Stores and Limiting Hours Amid Surging COVID-19 Cases

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Before you head out on your next shopping trip, make sure to check the store’s hours first.

Retailers like Walmart and Macy’s are closing stores or adjusting hours due to surging COVID-19 cases.

Macy’s changed its store hours to 11 a.m. to 8 p.m Monday through Thursday for the remainder of January, Karina Frayter, senior director of corporate communications at Macy’s told Money via a written statement. Hours vary by location but most stores were originally open from 10 a.m. to 9 p.m. The store hours for Friday to Sunday were not changed.

“We will continue to monitor the situation and follow the CDC and jurisdictional guidelines as well as keep enhanced safety and wellness procedures in place,” Frayter added.

In December, nearly 60 Walmart stores and Sam’s Clubs were closed — each for a day and a half — for cleaning, Ashley Nolan, Walmart’s global communications senior manager, told Money in a written statement. The company plans to continue the program for as long as needed, Nolan said. Local news outlets have reported Walmart closures in January in states like Texas and Missouri.

Other retailers and chain restaurants, like Chipotle and Nike, have had to close locations because they don’t have enough people to keep them open, CNBC reported Friday. (Chipotle and Nike did not immediately respond to Money’s request for comment.) Also, when a Starbucks store is experiencing a temporary staff shortage, stores reduce hours on a store-by-store basis, according to a Starbucks spokesperson.

COVID-19 cases are once again surging in the U.S. But on top of concerns around employees contracting the virus, companies have been dealing with a labor shortage for months that has caused them to eliminate drug tests, speed up the hiring process and increase pay to attract workers.

Meanwhile, some stores, like Costco and BJ’s, are still offering special extended hours for shoppers age 60 and older, as well as health care workers and first responders, as part of an initiative that many retailers began offering earlier in the pandemic.

You may see your local stores adjusting their hours as well.

Businesses in downtown Colorado Springs are being forced to change hours as they face staff shortages and supply chain issues, Colorado Springs’ KRDO reported. Liquor stores in North Carolina are also changing hours due to labor shortages amid rising COVID-19 cases, according to the Charlotte Observer and CBS 17.

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U.S. grocery shortages deepen as pandemic dries supplies

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Jan 14 (Reuters) - High demand for groceries combined with soaring freight costs and Omicron-related labor shortages are creating a new round of backlogs at processed food and fresh produce companies, leading to empty supermarket shelves at major retailers across the United States.

Growers of perishable produce across the West Coast are paying nearly triple pre-pandemic trucking rates to ship things like lettuce and berries before they spoil. Shay Myers, CEO of Owyhee Produce, which grows onions, watermelons and asparagus along the border of Idaho and Oregon, said he has been holding off shipping onions to retail distributors until freight costs go down.

Myers said transportation disruptions in the last three weeks, caused by a lack of truck drivers and recent highway-blocking storms, have led to a doubling of freight costs for fruit and vegetable producers, on top of already-elevated pandemic prices. “We typically will ship, East Coast to West Coast – we used to do it for about $7,000,” he said. “Today it’s somewhere between $18,000 and $22,000.”

Birds Eye frozen vegetables maker Conagra Brands’ (CAG.N) CEO Sean Connolly told investors last week that supplies from its U.S. plants could be constrained for at least the next month due to Omicron-related absences.

Earlier this week, Albertsons (ACI.N) CEO Vivek Sankaran said he expects the supermarket chain to confront more supply chain challenges over the next four to six weeks as Omicron has put a dent in its efforts to plug supply chain gaps.

Shoppers on social media complained of empty pasta and meat aisles at some Walmart (WMT.N) stores; a Meijer store in Indianapolis was swept bare of chicken; a Publix in Palm Beach, Florida was out of bath tissue and home hygiene products while Costco (COST.O) reinstated purchase limits on toilet paper at some stores in Washington state.

The situation is not expected to abate for at least a few more weeks, Katie Denis, vice president of communications and research at the Consumer Brands Association said, blaming the shortages on a scarcity of labor.

The consumer-packaged goods industry is missing around 120,000 workers out of which only 1,500 jobs were added last month, she said, while the National Grocer’s Association said that many of its grocery store members were operating with less than 50% of their workforce capacity.

Produce shelves are seen nearly empty at a Giant Food grocery store as the U.S. continues to experience supply chain disruptions in Washington, U.S., January 9, 2022. REUTERS/Sarah Silbiger

U.S. retailers are now facing roughly 12% out of stock levels on food, beverages, household cleaning and personal hygiene products compared to 7-10% in regular times.

The problem is more acute with food products where out of stock levels are running at 15%, the Consumer Brands Association said.

SpartanNash, a U.S. grocery distributor, last week said it has become harder to get supplies from food manufacturers, especially processed items like cereal and soup.

Consumers have continued to stock up on groceries as they hunker down at home to curb the spread of the Omicron-variant. Denis said demand over the last five months has been as high or higher than it had been in March 2020 at the beginning of the pandemic. Similar issues are being seen in other parts of the world.

In Australia, grocery chain operator Woolworths Group , said last week that more than 20% of employees at its distribution centers are off work because of COVID-19. In the stores, the virus has put at least 10% of staff out of action.

The company, on Thursday, reinstated a limit of two packs per customer across toilet paper and painkillers nationwide both in-store and online to deal with the staffing shortage.

In the U.S., recent snow and ice storms that snared traffic for hours along the East Coast also hampered food deliveries bound for grocery stores and distribution hubs. Those delays rippled across the country, delaying shipment on fruit and vegetables with a limited shelf life.

While growers with perishable produce are forced to pay inflated shipping rates to attract limited trucking supplies, producers like Myers are choosing to wait for backlogs to ease.

“The canned goods, the sodas, the chips – those things sat, because they weren’t willing to pay double, triple the freight, and their stuff doesn’t go bad in four days,” he said.

Additional reporting by Praveen Paramasivam; Editing by Vanessa O’Connell and Diane Craft

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