The economy has a case of remote working. That’s the story of corporate America in its second-quarter earnings calls.
For some CEOs, all the problems their companies face inevitably come down to people signing up from home. As a result, if their business relies on a constant buzz from commuters, they struggle to adapt to the realities of extended telecommuting.
Bloomberg calls this the “Pret Index,” which tracks transactions at cafe chain Pret a Manger. Pret is known for its ubiquity on the lunch scene of New York’s and London’s financial districts, as well as having a significant suburban presence. It’s an ideal tool to measure how remote working is reshaping the daily commute – and the massive impact on business as a result.
As of July 14, transactions at Pret locations in business districts were 20% below their pre-pandemic rates; suburban locations increased by 120%. Stanford economist and WFH Research founder Nick Bloom summed it up: “WFH office workers are having lunch from home in the suburbs, cutting back on spending in the city center and boosting spending in the suburbs.”
Randy Garutti, CEO of Pret rival Shake Shack, told analysts Thursday that in Midtown Manhattan, “40% of our lunch diners just aren’t there yet…whether it’s metro mobility, tourism, and other things that just haven’t returned to where they were.”
While acknowledging that trends in Midtown retail traffic — such as the future of the workplace itself — are impossible to pin down, Garutti says he’s a “believer in the urban ecosystem.”
“We believe in those big huts that have run the company for so long, which are still deeply affected,” he added. “The advantage will be that there will be more returns in the office – we’ll see where that goes after this summer.”
It’s not just the fast-casual space, as Bloomberg reports. Fourth quarter net sales fell 5% at the health and wellness division of Clorox, a beneficiary of the early pandemic, which it believes is due to several factors, including the normalization of demand for cleaning products, low office occupancy and a tight labor market for cleaning professionals .
The message is clear: working remotely hurts profits, because too many companies are still ready for a 2019 world.
CEOs want to turn back the clock. Workers are not on board
As with previous attempts, comments like those from Shake Shack and Clorox are unlikely to influence happy remote employees. The number of employees interested in working completely in person has reached an all-time low, according to Slack’s latest Future Forum Pulse survey. Of the more than 10,000 knowledge workers surveyed around the world, only about one in five were willing to return to work.
Qatar Airways CEO Akbar Al Baker told Reuters last week, remote working is responsible for a summer of extreme staff shortages, delayed and canceled flights and lost luggage.
“It’s basically an epidemic in our industry,” he said furiously. “This all happened because people learned to make easy money working outside the home, and fewer people now want to come and do the work they were doing.”
New York Mayor Eric Adams has been a notable voice of opposition to remote work among local politicians, repeatedly saying that remote work is draining the city’s economy.
“It’s time to get back to work,” Adams said in February. “You can’t stay home all day in your pajamas, that’s not us as a city. You have to be outside, cross-pollinate ideas, interact with people.”
Even the president has weighed in; during his State of the Union address in March, Joe Biden said that “it’s time for Americans to get back to work and restock our great downtown.” For Garutti, that ideally means standing in line at Shake Shack.
The recession could end remote working, or cause employees to double down
Despite the huge tailwind that coworking spaces like WeWork have enjoyed this year, the recession may just bring offices back into the mainstream.
At least that’s what people with skin in the game think. Stephen Ross, the billionaire real estate investor behind New York’s Hudson Yards, said an economic slowdown could make people afraid of losing their jobs.
“Workers will recognize that if we go into a recession, or things get a little tighter, you have to do what it takes to keep your job and make a living,” he told Bloomberg. in June, suggesting some employees believe face-to-face communication with their bosses could save them from being fired.
On the other hand, a recession can only cause remote workers to dig their heels. “There is no doubt that a focus on profit over personal preferences will benefit remote working,” Gleb Tsipursky recently wrote. Fortune. “Instead of trusting their gut, [executives] will have to rely on the hard data of what makes the most financial sense for businesses.”
When it comes to productivity, as study after study proves, flexible working wins time and again.
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