US restaurants face staffing struggles, commodity price hikes

Published on
June 24, 2021
Restaurants continue to grapple with staffing woes as pandemic restrictions ease.

Darden Restaurants’ sales spiked in its fiscal fourth quarter, but the overall restaurant industry continues to struggle due to ongoing effects from the pandemic, commodity price hikes, and a labor shortage.

Orlando, Florida, U.S.A.-based Darden Restaurants, which operates LongHorn Steakhouse, Olive Garden, Eddie V’s Prime Seafood, The Capital Grille, and many other chains, said its total sales for the fiscal fourth quarter jumped 79.5 percent to USD 2.28 billion (EUR 1.9 billion).

The hike was driven by a combination of a same-store restaurant sales increase of 90.4 percent and the addition of 30 net new restaurants.

"We had a strong quarter that exceeded our expectations as sales improved throughout the quarter," Darden Chairman and CEO Gene Lee said in a press release. "Over the last 15 months, we have made numerous strategic investments in our business, while streamlining our operations and improving productivity. Given the business transformation work we have done, and the demand we are seeing from the consumer, we are well positioned to thrive in this operating environment.”

However, Darden’s fiscal 2021 sales dropped 7.8 percent to USD 7.20 billion (EUR 6 billion), driven by a blended same-restaurant sales decrease of 7.8 percent and one less week of operations this year, partially offset by the addition of 30 net new restaurants.

Despite an influx of guests in restaurants throughout the United States, 39 percent of restaurant operators say they will not have the funds to cover their rent payments in June, according to Alignable.

“Unfortunately, restaurant owners find themselves in the middle of the labor shortage issue, so many owners tell us they can’t reach their revenue goals without the proper staff to handle an expected influx of customers. Of course, that affects their ability to pay full rent, as well,” Alignable said in a press release.

In addition, restaurants are raising menu prices at a much faster pace than historical rates due to both the labor shortage and the price increases they are facing, Bloomberg reported.

Prices for food away from home rose 4 percent in May, compared to May 2020 – the biggest hike since May 2009, according to Bloomberg.

“We are going to be paying higher prices in restaurants,” Technomic Senior Principal David Henkes told Bloomberg. “Part of the calculus right now is there’s probably some appetite of consumers to pay whatever because they haven’t been out for a while.”

Photo courtesy of BreizhAtao/Shutterstock

Contributing Editor



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