Throughout the country, local restaurants have been running into obstacle after obstacle since March of 2020. And while it can be tempting to feel like the pandemic is over, for many local business owners, that light at the end of the tunnel hasn’t arrived yet. Effects of the pandemic are still being felt constantly by restaurant owners. From huge increases in ingredient prices (some prices doubling over the course of a few months), to difficulty maintaining consistent staff, to some ingredients fully disappearing from shelves. All of these issues present new and challenging problems. Unfortunately, many excited customers are unaware of the challenges their local eateries are facing and might be confused when menu items come down, prices go up, or hours are inconsistent.
What Caused Ingredient Shortages
Almost every b2b supply chain was disrupted for months on end during the pandemic. These disruptions have led to an aftershock so to speak. During 2020, there was a huge decrease in labor because so many places had to shut down. As restrictions were lifted, restaurants came back at the same time as restaurant supply chains. Suddenly millions of customers were flooding to restaurants, while millions of owners were going to restaurant depots only to find prices for common ingredients doubling if not tripling.
These price hikes are due to the most fundamental law of economics: supply vs demand. Because both restaurants and supply chains reopened at the same time, the demand skyrocketed while the supply couldn’t recover fast enough. Chicken has been a particular challenge. Chicken prices have doubled per pound in a matter of months. Restaurants can’t simply double what they charge which means not making a profit. Because of this many restaurant owners find themselves making very difficult decisions. How do you handle it when the main ingredients for your menu are either missing from the shelves or have skyrocketed in price? This is also coming at a time where staffing issues are also creating huge problems for restaurant owners.
How Ingredient Shortages Affect Menus
Restaurant owners are finding themselves stuck in hard catch 22 situations. If they have to pay increased rates for ingredients, they either have to stop making certain menu items or increase the prices. Both options can quickly cause a decrease in sales. Another issue is that restaurants are struggling to make a profit. Running a restaurant during good economic times is difficult. After 2020 it is becoming more and more challenging.
Most restaurant owners would tell you that weekend profits have to pay for weekday losses. Many restaurants struggle to break even on a Tuesday night, but sales made on a Friday can help cover that. The new issue is that these increased ingredient cost margins have decreased profits throughout the week. Many restaurant owners have had to close certain days, shorten hours, or find other solutions to handle the fact that they are not gaining a wide enough profit margin between the cost of the ingredients and their sales.
What Does the Future Look Like For Local Restaurants
Unfortunately, there isn’t a clear and defined end in sight for restaurant owners. While local business owners have proved time and time again to be resilient and to find creative solutions for these issues, they are still going to need to rely on community and local government support in order to meet these challenges.
