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Lenny Rosenberg, an acclaimed restaurant owner, examines the restaurant industry’s inflation crisis

© Lenny Rosenberg

Now that restaurants are finally getting back on their feet and operating at full capacity for the first time in over two years since the pandemic began, we must contend with another unseen foe: inflation.

It’s a domino effect that Lenny Rosenberg, the restaurant industry’s Michael Jordan, has figured out.

For years, we assumed that raising the minimum wage would result in food inflation across the board, but that was nothing compared to the devastation that the pandemic has wreaked on America’s economy, particularly eateries.

The domino effect operates as follows:

The unusual pandemic unemployment, which paid everyone more to stay at home than to work, has wreaked havoc on the restaurant industry, causing inflationary difficulties that no one saw coming. Due to a lack of help, many business owners have had to cut back on hours and pay fee workers, but they have been able to negotiate 10-20% raises across the board to maintain the few employees they have. Because of the rising labor costs, we have no choice but to boost menu prices by 10-20%. Which, of course, is passed on to our customers, the consumers.

Due to a labor shortage, there is a significant backlog in receiving supplies from overseas, resulting in a shortage of restaurant food and restaurant supplies.

Due to a shortfall at the supplier’s end, the supplier has no choice but to boost restaurant pricing. As you can see, restaurants are suffering from a double whammy of rising labor expenses and rising food costs, with no end in sight.

July was the seventh month in a row that employment increased, resulting in a net gain of 1.3 million jobs in the first seven months of 2021. However, as has been the case for some time, the number of dining and drinking establishments is decreasing. Despite stable mobility, the industry is still about a million jobs short of pre-pandemic levels. In fact, 8% lower.

Despite rising off-premises activity and pent-up desire for dining in and reconnection, many businesses’ sales are substantially above their 2019 levels.

According to the National Restaurant Association’s most recent survey, attracting and keeping personnel is the top difficulty for 75 percent of restaurant owners. The percentage was 8% in January. The June/July figure is the highest in over 20 years of monthly tracking by the Association.