Forty-three percent of Connecticut restaurant owners said business conditions were worse than three months ago, as inflationary pressures continue to drive the price of goods up, according to a recent study by the Connecticut Restaurant Association.
Prices are rising faster in grocery stores than in restaurants, which means consumers are seeing increased value in spending food dollars at restaurants – at the same time as restaurants are seeing lower profits, said Scott Dolch, president and CEO of the Connecticut Restaurant Association.
In June, a survey by the National Restaurant Association found that 43% of operators thought conditions would worsen in the next six months – the highest level of pessimism since 2008.
About 95% of a restaurant’s sales revenue goes toward food, labor, and operating costs, the Connecticut Restaurant Association said. Wholesale food prices increased 16.3% in the last 12 months, but menu prices only rose 7.6% during the same period, according to the U.S. Bureau of Labor Statistics.
As a result, 85% of Connecticut operators said their restaurants were less profitable than in 2019, the Connecticut survey found. Nearly the same number, 84%, said their total food and beverage costs were higher than in 2019.
“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,” Dolch said.
Debt is also a factor. During the first two years of the pandemic, 65% of restaurants took on new debt, including loans through the Paycheck Protection Program, the U.S. Small Business Administration and the private sector.
Dolch said the deferment period for payments will soon end, and it will be an “overwhelming challenge for a majority of them to begin repayment right now.”
Restaurants are still struggling to replace employees who left during the pandemic and have not returned.
Despite the overall industry adding 74,000 jobs in July, 59% of Connecticut operators reported not having enough employees to meet customer demand, according to the survey. Also, 75% of operators said they would likely hire additional employees during the next six months, and 80% said they had job openings that were difficult to fill.
“We know that many people have been reconsidering their careers recently, and we hope that they will look seriously at the industry,” Dolch said. “Restaurants have good-paying jobs available at every experience level for people from every background. And these jobs provide the skills necessary to be successful in any career, and in life.”
Visit www.ctrestaurant.org for more information about the survey.
