Categories: Economic News

Restaurant operators endure weaker business conditions as economic pessimism grows

The National Restaurant Association’s new survey finds that the economy is disrupting service across the industry

WASHINGTON, August 18, 2022 /PRNewswire/ — Running a restaurant right now is a daily turn of Jenga®, with operators carefully pulling from the ground up their operating plans to support new supports in a changing economy.

Costs for the products restaurateurs need most have continued to accelerate, and according to a new survey released today by the National Restaurant Association, 46 percent of operators say business conditions are worse now than they were three months ago.

The finding follows a previous survey in which 43% of operators said they thought conditions would worsen in the next six months, which was the highest level of pessimism since 2008.

“Running a restaurant is a balancing act that requires adaptation and innovation, two areas where restaurateurs excel,” he said. Michelle Korsmo, President and CEO of the National Restaurant Association. “And while operators are more pessimistic about the economy, they are working hard to continue providing quality and value to customers. Serving great food, providing exceptional service and creating a memorable experience remains the foundation of every restaurant.”

The results of the new survey highlight how current economic conditions are disrupting the industry.

Rising costs are limiting restaurant operations

About 95% of a restaurant’s sales dollars go to food, labor and operating costs, all of which increase each month. While wholesale food prices have increased by 16.3% over the past 12 months, menu prices have only increased by 7.6% over the same period and only 16% of operators report adding commissions or surcharges on customer checks. The result: profits are suffering. 85% of operators say their restaurant is less profitable than in 2019.

  • In the new survey, 88% of operators said their total food and beverage costs are higher than in 2019, and generally many other costs have increased.
    • 65% of carriers say their total cost of ownership is higher than in 2019
    • 80% of carriers say their total utility costs are higher than in 2019
    • 94% of carriers say their other operating costs (supplies, G&A, etc.) are higher than in 2019

“Consumers are seeing prices rise faster at grocery stores than at restaurants and are seeing greater value in spending their money on food at restaurants. However, modest increases in menu prices are not offsetting rising entry costs and this is forcing operators to cut hours, change their menus, postpone expansions and reduce third-party delivery,” Korsmo said.

Pandemic debt is due and operators can’t pay

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

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

“For many operators who received EIDL loans, the grace period for payment will soon end and it will be an overwhelming challenge for most of them to start repayment now,” Korsmo said. “According to our latest survey, of the operators who have not started loan repayment, only 23% say they will be able to pay the principal and interest. Another 46% expect to be able to pay the principal, but not the 30 months of accrual . interest”.

Restaurants are slowly adding jobs to return to pre-pandemic employment levels

A large majority of restaurants are still actively looking to fill locations, even as they face the headwinds of a slowing economy. Despite adding 74,000 jobs in July, in the new survey, 65% of carriers say they don’t have enough employees to support customer demand, and 84% of carriers say they are likely to hire additional employees in the next six months .

  • 19% of full-service operators say their restaurant is currently more than 20% below required 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 hard-to-fill jobs.

“Diners choose restaurants for the hospitality and experiences they receive at our tables, and we hire talented people to create that atmosphere. While many industries are starting to slow their hiring, ours continues to rebuild our workforce . The restaurant industry has good-paying jobs available at all experience levels for people of all backgrounds. And these jobs provide the skills needed to succeed in any career and in life,” said Korsmo .

The National Restaurant Association Research Group conducted the New Operators Survey of 4,200 restaurant operators July 14 to August 5, 2022. Find a report of the key findings here.

About the National Restaurant Association

Founded in 1919, the National Restaurant Association is the leading trade association for the restaurant industry, which includes nearly 1 million restaurants and foodservice establishments and a workforce of 14.5 million employees. Together with 52 state associations, we are a network of professional organizations dedicated to serving all restaurants through advocacy, education and food safety. We sponsor the industry’s largest trade show (National Restaurant Association Show); leading food safety training and certification program (ServSafe); unique secondary vocational training program (NRAEF’s ProStart). For more information, visit and find @WeRRestaurants at TwitterFacebook and YouTube.

SOURCE National Restaurant Association


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