With the restaurant industry still facing several post-pandemic pressures, 38 percent of operators are postponing plans for expansion, according to a new survey from the National Restaurant Association.
Expansion delays are just one of the difficult decisions operators are making to manage their profitability as they enter 2023. The industry is facing rising food prices, increased difficulty in borrowing capital, and higher energy and labor costs.
“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 now account for 33 cents of every dollar in sales, the association said. Other expenses — such as utilities, occupancy, supplies, administrative and maintenance — combine to represent another 29 percent of sales. Because of those cost increases, 50 percent of operators said they expect to make less profit in 2023.
Restaurants are pursuing several actions to make up the difference. According to the survey:
- 87 percent of restaurants increased menu prices
- 59 percent changed the food and beverage items offered on the menu
- 48 percent reduced hours of operation on days open
- 32 percent closed on days that normally open
- 38 percent of operators say they postponed plans for expansion
- 13 percent of operators say they eliminated third-party delivery
- 19 percent postponed plans for new hiring
For further analysis of the restaurant industry survey, please click here.