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A new study by the National Restaurant Association found that the economy is disrupting service in the industry
Washington, August 18, 2022 /PRNewswire/ – Now that running a restaurant is a daily turn on Jenga®, operators are carefully pulling from their operating plans to expand new supports in a changing economy.
Restaurant inventory costs continue to rise, and according to a new survey released today by the National Restaurant Association, 46% of operators say business conditions are worse now than they were three months ago.
The finding follows a previous survey in which 43% of operators think conditions will worsen over the next six months, the highest level of pessimism since 2008.
“Running a restaurant is a balancing act that requires adaptability and creativity, two areas where restaurants excel.” Michelle KorsmoPresident and CEO of the National Restaurant Association. “And operators are working hard to provide quality and value to customers even as the economy becomes more pessimistic. Serving great food, providing exceptional service and creating an unforgettable experience remains the foundation of every restaurant.”
The findings of the new survey show how current economic conditions are disrupting the industry.
Rising costs are limiting restaurant operations.
Roughly 95% of a restaurant’s sales dollars go toward food, labor, and operating costs — all of which are increasing every month. Wholesale food prices have increased by 16.3 per cent over the past 12 months, while menu prices have increased by just 7.6 per cent over the same period and only 16 per cent of operators have added a surcharge or surcharge to customer checks. The result: profits are suffering. 85% of operators say their restaurants are less profitable than they were in 2019.
- In the new survey, 88% of operators said their total food and beverage costs were higher than in 2019, and there are many other costs across the board.
- 65% of operators say their total cost of living is higher than in 2019
- 80% of operators say their total utility costs are higher than in 2019
- 94% of operators say their other operating expenses (supplies, G&A, etc.) are higher in 2019.
“Consumers are seeing higher prices in grocery stores than in restaurants, and the value they spend on their restaurant dollars has increased. But modest menu price increases don’t offset rising input costs, and that forces operators to cut back hours, change their menus, postpone expansions, and third-party Reduce supply,” Korsmo said.
The epidemic debt has come, and the operators can not pay
In the first two years of the pandemic, 65% of restaurants took out new debt to adjust business models and continue operations. According to the new survey, the loan is a mix of repayable government loans, government emergency loans and private sector loans.
- Check Protection Program (PPP) loans were the most common – taken by 59% of operators.
- 48% of operators have taken out an Economic Injury Disaster Loan (EIDL) issued by the US Small Business Administration or a lending partner.
- 31% have taken out a private sector loan from a bank, credit card or other entity.
“For many operators who have received EIDL loans, the repayment period is due soon and for most of them, it is a very difficult challenge to start repayment now,” Korsmo said. “According to our recent survey, only 23% of operators who have not started paying loans said that they will pay principal and interest. Another 46% expect to pay the principal, but not the accumulated 30 months. Demand.”
Restaurants are gradually adding operations to return to pre-pandemic operating levels.
Most restaurateurs are desperately looking to fill positions despite the downturn in the economy. Despite adding 74,000 jobs in July, the new survey found that 65% of operators do not have enough staff to support customer demand and 84% of operators say they will hire more staff in the next six months.
- 19% of full-service operators say their restaurants are currently over 20% of required staffing levels.
- Twenty-one percent of limited service operators report that their restaurants are above 20% of required staffing levels.
- 81% of operators say their restaurant currently has job openings that are difficult to fill.
“Diners choose restaurants for the hospitality and experience they get at our tables, and we hire talented people to create that atmosphere. As many industries begin to slow down their hiring, our workforce continues to rebuild. The food industry has good-paying jobs. It’s open to people of all experience levels and backgrounds.” And these jobs provide the skills necessary to be successful in any career and in life,” Korsmo said.
The National Restaurant Association Research Group conducted the new Operator Survey of 4,200 restaurant operators. From July 14 – August 5, 2022. Find the Key Findings Report here.
About the National Restaurant Association
In the year Founded in 1919, the National Restaurant Association is the leading trade association for the restaurant industry, representing nearly 1 million restaurants and food service establishments and 14.5 million employees. With 52 state associations, we are a network of professional organizations dedicated to serving every restaurant in advocacy, education and food safety. We sponsor the industry’s largest trade show (the National Restaurant Association Show). Food Safety Training and Certification Program (ServSafe); Special Career Building High School Program (NRAEF’s ProStart). For more information, visit Restaurant.org and find @WeRRestaurants at TwitterFacebook and YouTube.
Source: National Restaurant Association
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