National Restaurant Association Reports Restaurant Operators Ending 2022 With Mixed Outlook; Hudson Riehle Shares
WASHINGTON, DC - 2022 was a year of both ups and downs for the industry, especially for those in foodservice. Uncontrollable pressures such as rising inflation forced supply costs to rise, making borrowing capital more difficult and increasing menu prices. According to the latest National Restaurant Association Business Conditions survey, the trifecta of higher food costs, labor costs, and energy/utility costs are now a significant challenge for a majority of operations.
“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.
ANUK will report on the latest updates in our industry, so stick around.
