Restaurant woes: Industry battles rising costs and labor issues | Business


TUPELO • Every day Fidel Cubillo starts work at 5 a.m.

With three restaurants to oversee – Cantina del Sol and two D’Casa locations – he makes sure they’re ready for the lunch rush and then dinner later in the day.

“I try to prepare as much as possible with the three sites because I don’t know if I’m understaffed or not,” he said. “So if they have to show up, they’ll be there at 9.”

But like other restaurateurs, Cubillo said getting enough help is a daily struggle, on top of everything else.

“Every day is a challenge,” he said. “Everything is up 15-20% and some employees even more. It’s hard to get your hands on anything. There are shortages on everything. Just to keep our doors open, I’m calling three or four companies different. And the prices are outrageous.”

A recent survey by the Independent Restaurant Coalition of 1,200 restaurants and bars in the United States showed the industry to be in dire straits, with nearly 60% experiencing declines of more than half of their activity in December.

Additionally, 46% of businesses reported an impact on business hours for more than 10 days that same month.

Operators who did not receive federal grants under the U.S. bailout are also taking on more debt, the survey found, with 41% of restaurant and bar owners taking out new personal loans to support their businesses since then. February 2020. Additionally, more than 1 in 4 restaurant and bar owners who have not received emergency funding have had to sell personal property to keep their business afloat since the pandemic began.

Meanwhile, the National Restaurant Association estimates that more than 90,000 restaurants and bars have closed since the start of the pandemic.

“I’ve never seen it that way in my 25 years in the business,” Cubillo said.

Facing headwinds

Bernard Bean, chief operating officer of the Eat With Us group, whose restaurants include Sweet Peppers Deli, Harvey’s, The Grill and Bulldog Burger, said while sales are strong across all brands, the company faces several winds opposites.

“There’s product cost, labor costs, supply chain issues, etc.,” he said. “In addition to the possibility of hiring, there are people with COVID, which multiplies the problem.”

Like many restaurants, labor constraints have affected Eat With Us’ ability to maintain regular hours at times.

“It’s created situations where we can’t open for a few days here and there because of COVID, which in turn is hurting sales,” Bean said. “It looks like COVID is going through the general population and also making its way into the industry.”

Kent Randle, owner of Kent’s Catfish in Saltillo, experienced a noticeable shift in his business due to the rise of the Omicron variant.

“Lately we’ve seen fewer people coming to eat in the dining room, but luckily that’s really picked up with our phone orders,” he said. “So we were able to catch up on that a bit.

On the expense side, his restaurant’s staple – catfish – is more expensive than ever. Although supply is not the problem, the problem comes down to the lack of manpower. Catfish processing plants are operating at only partial capacity and are unable to meet the continued high demand from restaurants and shops.

“I can’t really raise prices because you’ll lose customers,” Randle said.

Even the cost of cooking catfish has increased markedly.

“I have seven large fryers that I have to change the oil on a regular basis,” Randle said. “It costs me $400 more now than it did a few months ago. And it’s not like I can avoid it – you have to change that oil.”

The restaurant industry typically sees slim margins of 4-6%, and rising costs are cutting them even further.

“You can’t raise prices enough to pass the expense on to customers,” Bean said.

Need help (desperately)

The industry has been plagued by labor shortages for some time, and the pandemic has only exacerbated the problem.

“Staffing…I’ve never seen it so bad,” Cubillo said. “It’s just hard to get people to work. I’ve always liked to select the people I work with, but it’s so much harder now. I got a call this morning and I have to go back to Cantina because two guys didn’t arrive.”

Cubillo said owning a restaurant means vacations are rare and nearly impossible now.

“I just can’t right now, I can’t leave,” he said. “A week ago I was able to get half a day off because everyone showed up. And the thing is, it’s been going on for months. But it’s not getting better. I don’t know not what stage is… I would hire 12 people right now if they were available. I would like to have 24. But that’s not the case.

Jennifer Brignac, co-owner of Jo’s Cafe, said their business hasn’t been hurt during the pandemic as customers have multiple options through their food truck, physical location, meal prep plans or catering.

Getting enough help is Brignac’s biggest challenge.

“We struggle to find help that we can afford to keep, as well as getting them to show up,” she said. “We know everyone is in this situation. The people we have are good as gold – we just need more of them.”

Need more grants?

Last year’s US bailout provided federal funds to businesses, and the restaurant industry got help through the Restaurant Revitalization Fund.

The RRF closed its applications on May 24 last year with $29 billion to distribute. Restaurant owners have asked for $69 billion in aid.

According to the recent IRC survey, 28% of restaurants that have not received grants from the Restaurant Revitalization Fund are at risk of eviction, while only 10% of operators who have received RRF funds are at risk of eviction. be expelled. Forty-two percent of operators who have not received RRF subsidies are at risk of filing or have filed for bankruptcy, compared to only 20% who have received RRF subsidies.

Many industry players are calling on Congress and the Biden administration to add more funds to the program.

Bean, however, isn’t so sure more federal aid is the answer.

“Federal money has helped, but I don’t necessarily like it — I want open competition,” he said. “The big banks won’t learn their lesson until a number of them are wiped out. Restaurants have gotten help, and it’s helped a lot to stay open, but the long-term perspective is that the money will eventually run out. So what?”

Bean said he was particularly sympathetic to smaller, independent restaurants, which are at a much greater risk of closing in the current environment.

“I don’t want them to fail,” he said. “They help build community. I think the biggest threat is inflation, and if it doesn’t slow down it will be devastating to the industry.”

As for Cubillo, he expects the current challenges facing his industry to continue for the foreseeable future.

“I can see restaurants closing, with all the costs and issues going on,” he said. “And I don’t see that getting any better anytime soon.”


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