Despite some of the pressures of the pandemic easing, 2022 still brought challenges for a variety of sectors, including foodservice. With inflation causing increased supply costs, borrowing capital becoming more difficult, and rising menu prices, restaurant operators had many hurdles to jump over, and according to the National Restaurant Association’s (NRA) latest Business Conditions survey, higher food, labor, and utility costs are now impacting operators’ outlooks for the year ahead.
“The restaurant industry is ending the year in an environment that’s the most typical since 2019,” said Hudson Riehle, Senior Vice President of Research for the National Restaurant Association. “Moderate but positive employment growth across the economy and elevated consumer spending in restaurants will allow the restaurant industry to kick off 2023 on a more optimistic note than the last few years, but operators remain braced for potential challenges in the new year.”
Operators continue to have to make difficult choices to manage their profitability—everything from reducing hours to postponing expansions and even eliminating third-party delivery. However, in the last 23 months, restaurants added nearly 2.2 million jobs.
Food and labor costs are the two most significant line items for a restaurant, noted the release, each accounting for approximately 33 cents of every dollar in sales. Other expenses—such as utilities, occupancy, supplies, general/administrative, and repairs/maintenance—combine to represent about 29 percent of sales. A strong majority of operators say food, labor, and energy/utility costs are currently significant challenges for their restaurants.
“In this kind of economic environment, typical operators don’t have much margin for error. With major input costs escalating, they can make changes to align with local consumer demand while realigning operations for longer-term growth,” said Riehle.
The National Restaurant Association Research Group conducted the new operator survey of 3,000 restaurant operators in November 2022. Check out the press release here, and a report of key findings here.
As 2023 gets underway, Deli Market News will share more updates from the foodservice sector.
