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.