Labor issues, from shortages to strikes, are escalating and hurting corporate profits. The growing likelihood of further wage gains looming higher costs and slimmer margins, while also undermining the prospect of transitory inflation.
The latest news on the job comes from catering company Brinker International Inc. – the Dallas-based parent company of restaurant chains Chili’s and Maggiano’s Little Italy. The company owns, operates or franchises more than 1,600 restaurants in 29 countries.
Brinker’s shares fell 9.1% on Wednesday after its first quarter tax profit fell well below analysts’ expectations as it faces higher raw material and labor costs . Peer Chipotle Mexican Grill Inc., which is due to report on Thursday, also fell on Wednesday, as did other restaurant stocks.
“The COVID surge from August exacerbated industry-wide labor and raw materials challenges and impacted our margins and results more than we expected,” he said. Brinker CEO Wyman Roberts said in the statement. “We are responding to these COVID headwinds by focusing more on hiring and retention efforts, and working with our partners to further stabilize the supply chain environment. “
Brinker joins a variety of companies reporting profits with warnings over workforce issues, from JB Hunt Transport Services Inc., the nation’s largest long-haul trucking company, to JPMorgan Chase & Co., sa biggest bank.
Among the 23 S&P 500 companies that reported Oct. 4-15, work was a top concern, with double the number of companies discussing work compared to those reporting logistics and port congestion, according to a check. quoted by RBC strategist Lori Calvasina in a recent note.
“The dialogue with our major customers reveals both a tough job market and a pent-up need to increase inventory levels across the system,” JB Hunt said on his earnings call, adding that he was “not isolated from the work dynamics mentioned above. for our clients. The company has” reached record levels of need for company drivers in all segments as well as the openings that we have in our teams office and in the field ”.
On the JPMorgan call, CFO Jeremy Barnum said “workforce inflation is definitely a watch on us.”
Starting wages are also rising across the board, as a series of strikes unfold after years of little social unrest. Tractor maker Deere & Co. is seeing its first major union action since 1986, as striking grain mill workers hampered the actions of food giant Kellogg Co. The shift to growing employee power could undermine a growing pool of investors.
Felice Maranz, Bloomberg