National Restaurant Association Releases Update on Current Industry Conditions; Michelle Korsmo Shares
WASHINGTON, DC - Many factors have combined to create ongoing challenges for restaurant operators. A recent report from the National Restaurant Association (NRA) cites soaring costs, pandemic debt, and rising employment levels have all contributed to the current conditions of the industry.
“Running a restaurant is a balancing act requiring adaptation and innovation, two areas where restaurateurs excel,” said Michelle Korsmo, President and Chief Executive Officer of NRA. “And while operators are more pessimistic about the economy, they are working hard to continue to provide quality and value for customers. Serving great food, providing exceptional service, and creating a memorable experience remains the foundation of every restaurant.”
A new survey released by the association, which evaluated 4,200 restaurant operators, states that 46 percent of operators say business conditions are worse now than they were three months ago. A prior survey states that 43 percent of operators think conditions will worsen in the next six months, which was the highest level of pessimism since 2008, a press release noted.
Food, labor, and operating costs are all increasing each month. While wholesale food prices have reportedly increased 16.3 percent in the last 12 months, menu prices have only risen 7.6 percent. As a result, 85 percent of operators say their restaurant is less profitable than it was in 2019.
“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,” said Korsmo.
The press release went on to note that during the first two years of the pandemic, 65 percent of restaurants took on new loan debt to adjust business models and continue operating.
“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,” said Korsmo.
In addition to these factors, operators are actively working to hire new employees. In the survey, 65 percent of operators report not having enough employees to support customer demand, and 84 percent say they will likely hire additional employees during the next six months.
To read the press release in full, please click here.
ANUK will continue to keep you informed as conditions change in the industry.