Inflation is Straining Restaurant Operations
Sharp increases in food and labor costs are having a dramatic impact on restaurants’ bottom line.
- Wholesale food prices are up nearly 13.2%.
- The typical small business restaurant run on a 3-5% pre-tax margin. Food and labor costs are the two most significant line items for a restaurant, each accounting for approximately 33 cents of every dollar in sales.
- Other expenses – including rent, utilities, and other direct operating costs – generally represent about 29% of sales. For the vast majority of restaurant operators, these three categories are making up a larger share of sales than they did before the pandemic.
Latest Economic Indicators
88% of operators say their total food costs (as a percent of sales) are higher than they were in 2019. Wholesale food prices are up 13.2% over 12 months ago and labor costs rose 15.1% December 2020 to December 2021. In August, government data showed menu prices rose 8% in the last 12 months, leaving a large gap between food costs and what restaurant owners are charging.
Read the Association’s Chief Economist’s analysis of the latest employment, food costs, and menu prices below.
Restaurant job growth improved in October
Eating and drinking places remain nearly 800,000 jobs below their pre-pandemic employment peak.
Restaurant jobs remain below September 2019 levels in 49 states and DC
Forty-four states saw restaurant employment levels decline between August and September.
Rising food costs and supply chain issues are creating challenges
More than 9 in 10 restaurant operators experienced supply delays or shortages of key food or beverage items in recent months.