Restaurant Operators Face Weaker Business Conditions and Growing Economic Pessimism
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Restaurant Operators Face Weaker Business Conditions and Growing Economic Pessimism

Restaurant Operators Face Weaker Business Conditions and Growing Economic Pessimism

The costs of goods for restaurateurs are going up and 46% of operators say business conditions are worse now than they were three months ago, according to a new survey  released by the National Restaurant Association.

“Running a restaurant is a balancing act requiring adaptation and innovation, two areas where restaurateurs excel,” said Michelle Korsmo, President & CEO of the National Restaurant Association. “And while operators are more pessimistic about the economy, they are working hard to continue to provide quality and value for customers.”

Approximately 95% of a restaurant’s sales dollars go to food, labor, and operating costs. While wholesale food prices have increased 16.3% in the last 12 months, menu prices have only risen 7.6% in the same period, and only 16% of operators report adding fees or surcharges to customer checks. As a result, 85% of operators say their restaurant is less profitable than it was in 2019.

  • 88% of operators said their total food and beverage costs are higher than 2019 and across the board, many other costs are up.
  • 65% of operators say their total occupancy costs are higher than 2019
  • 80% of operators say their total utility costs are higher than 2019
  • 94% of operators say their other operating costs (supplies, G&A, etc.) are higher than 2019

65% of restaurants took on new loan debt to adjust business models and continue operating during the first two years of the pandemic. Those loans were a mix of forgivable government loans, government disaster loans, and private-sector loans, according to the survey.

  • Paycheck Protection Program (PPP) loans were the most common — taken on by 59% of operators.
  • 48% of operators took on an Economic Injury Disaster Loan (EIDL) issued by the U.S. Small Business Administration or lending partner.
  • 31% took on a private-sector loan from a bank, credit card or other entity.

A majority of restaurants are still looking to fill positions — even in the face of a slowing economy. Despite adding 74,000 jobs in July, the new survey finds 65% of operators report not having enough employees to support customer demand and 84% of operators say they will likely hire additional employees during the next six months.

  • 19% of full-service operators say their restaurant is currently more than 20% below necessary staffing levels.
  • 21% of limited-service operators say their restaurant is more than 20% below required staffing levels.
  • 81% of operators say their restaurant currently has job openings that are difficult to fill.

The survey of 4,200 restaurant operators was conducted by the National Restaurant Association Research Group July 14- August 5, 2022.

Published: August 23rd, 2022

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