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00:00Talk to me about the inflationary environment you're seeing right now. How much of a problem is it. Do you see any sign of it dissipating. Clearly you have issues and food costs raw materials are going up the fastest rate I've seen it in my experience in the whole industry. And you know we look at our chicken prices were up almost 100 percent at one point. They have moderated down so they're only up about 50 percent. But is just a massive increase. We see that coming down somewhat. But the other factor you talked about is the labor. There's a labor shortage in this industry that's very clear. And labor rates have gone up at the highest rate probably in the last 30 years. Bill talked to us a little bit about the consumer demand for it are people actually checking the price tag when they come to your restaurants. Are they saying well maybe this is a little bit too expensive. We're not not going to have chicken today. What's your thought about that consumer pain threshold. Well the the sales in the fast food restaurants are through the roof. Last year was one of the best years ever in terms of growth. And you've had huge growth in fast food and fast casual. And people were ordering out and it was it was a boom year for the business. But you're clearly you have to increase your prices in order to cover the increased food costs and increased labor costs. And you're looking at. I thought I saw seven percent increases along the fast casual fast food industry for December versus year ago. Bill you've got people all over the place in different parts of the United States and Canada. How much differentiation are you seeing. Well we've only got a few stores in Canada but the business is surprisingly strong everywhere. We have a phenomenal product. It's the best tasting fast casual fast food I've ever tasted. And we've got a cult following. That's just phenomenal. Bill I'm curious about simply the supply chain issues here because we're hearing about them from from groceries to chip makers. How does this actually affect your business. It affects us in two ways. You've got intermittent shortages of all kinds of products from packaging to food supplies. Fortunately we never ran out of chicken or our basic products but you've got clear issues in terms of intermittent shortages of different products. And that's a challenge for the people in the stores. And then the other thing that you see is shortages and significant delays on the equipment for our new restaurants. We're opening a new restaurant every four or five days and it used to take six to eight weeks to get a fryer or a milkshake machine that takes now six months. So that has been an incredible challenge for us. We're working through it. We think that's going to come around over the next six eight months. Incredible you're doing store openings at that kind of pace. Bill what can you do to automate. What can you do to maybe alleviate some of the shortages you're seeing in terms of investing in capital goods. You talk about what is happening with fries and milkshake machines. What else can you invest in to make actually this whole process significantly simpler. It's a great question and what we see is technology is going to play a bigger and bigger role in the restaurant industry. I don't order from a cashier at Starbucks anymore. I go every day and I do it on my iPhone and that's how people are going to be ordering their food. I think the cashiers will be significantly less than five years and you won't see many cashiers. Ten years from now we will be automated. The younger generation order stuff on their iPhone. In terms of the back of the house and production I think you will see significant automation. You're going to see some robotics coming into place in the next five years. I think it will be significant in the next 10 years. So you have to automate these systems because you just don't have the workers.

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Inflation Hits The Restaurant Industry

Global food prices are at their highest level in 11 years, putting a strain on the restaurant business. Bill Phelps, Dave's Hot Chicken CEO, joined "Bloomberg Markets: America" with Kriti Gupta and Guy Johnson to discuss the trend. (Source: Bloomberg)

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