Soaring food and labor costs are making U.S. restaurant operators are increasingly pessimistic about business conditions.
Forty-six percent of U.S. restaurant operators say business conditions are worse now than three months ago, according to a new National Restaurant Association survey, and 85 percent said their restaurant is less profitable than it was in 2019. Eighty-eight percent of operators said their total food and beverage costs are higher than 2019, while 65 percent said their total occupancy costs are higher than three years ago, NRA said in a press release.
As a result of higher food costs, a majority (91 percent) of restaurant operators said they have had to raise menu prices, while 65 percent have changed menu items.
The impact of higher food costs is being felt among restaurant guests. Of those who are eating less seafood at restaurants, 60 percent said it was due to higher prices, according to Datassential data provided to SeafoodSource earlier this year.
Plus, 80 percent of operators say their total utility costs are higher than 2019, while 94 percent of operators say their other operating costs (supplies, etc.) are higher than three years ago.
“Consumers are watching prices rise faster in grocery stores than they are in restaurants and see an increased value in spending their food dollars in restaurants. However, the moderate menu price increases aren’t balancing the surging input costs and this is forcing operators to cut hours, change their menus, postpone expansions, and reduce third-party delivery,” NRA President and CEO Michelle Korsmo said.
In addition to rising food costs, 65 percent of restaurant operators took on new loan debt to continue operating during the first two years of the COVID-19 pandemic.
“For many operators who received EIDL loans, the deferment period for payment will soon end and it will be an overwhelming challenge for a majority of them to begin repayment right now,” Korsmo said.
Of the operators who have not begun loan repayment, only 23 percent said they will be able to make principal and interest payments, according to the NRA survey. Another 46 percent expect to be able to pay the principal, but not 30 months of accrued interest, Korsmo said.
Most restaurant operators do not expect a return to normal business conditions soon. Twelve percent of operators said they believed it will be 7 to 12 months before business conditions return to normal for their restaurant, while 41 percent think it will be more than a year.
An additional 29 percent of operators said business conditions will never return to normal for their restaurant.
Photo courtesy of Antonio Gravante/Shutterstock
