bake - January/February 2023 - 27

The resources
When it comes to bringing your idea to life, do you
have all of the necessary resources available? Among
other things, this includes knowledge, skillset, finances
and labor. Do you know how to run a business? Do you
know how to create the product or source affordable
supplies? Do you have the money to keep the business
alive before it turns a profit? " Statistics show that 29%
of new businesses reportedly failed because of a lack of
finances. " These are all things to consider when starting
a business.
Uncontrollable pressures
2022 was a year of uncontrollable pressures for restaurant
operators: rising inflation forced supply costs up,
made borrowing capital more difficult, and forced them
to raise 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. "
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 - such
as utilities, occupancy, supplies, general/administrative
and repairs/maintenance - combine to represent about
29% of sales. A strong majority of operators say food,
labor and energy/utility costs are currently significant
challenges for their restaurant.
* 92% of operators say food costs are a significant
challenge
* 89% of operators say labor costs are a significant
challenge
In November, the Producer Price Index for All Foods
rose for the 18th time in the past 23 months, with 15
of those increases topping 1%. While menu prices also
increased 8.5% between November 2021 and November
2022, these increases are lower than grocery store prices
which increased 12% over the same period.
bakemag.com | JAN - FEB 2023 > 27
" 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.
Restaurants run on notoriously thin margins, so 50%
of operators expect to be less profitable in 2023, while
another 34% expect their profitability to remain the
same as it was in 2022.
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.
Harry Peemoeler,
senior instructor of
Bread and Bread
Studies at Johnson
& Wales, talks about
grain industry trends
during IBIE.
JOHN UNREIN
http://www.bakemag.com
bake - January/February 2023

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