Rising costs have put many restaurant operators in an impossible position. They can cut expenses or raise prices. And with consumers facing their own financial problems, raising prices may simply cause more people to stay home.
“Total restaurant expenses jumped 36% since before the pandemic,” according to a July report from the National Restaurant Association (NRA).
The NRA explained how restaurants operated before the pandemic.
- Food and labor costs were the two most significant line items, each accounting for approximately 33 cents of every dollar in sales.
- Other expenses — such as utilities, occupancy, supplies, general/administrative, repairs/maintenance, and credit card processing fees — combined to represent about 29% of sales.
“That left a pre-tax profit margin of roughly 5% for a typical restaurant, which means significant cost increases were not sustainable,” the NRA reported.
That pressure is hitting consumers as well. The NRA also found that 36% of consumers reported spending less at restaurants than they had the previous quarter.
It’s a math problem that even celebrity chef Tiffani Faison, who won Season 3 of Food Network’s “Tournament of Champions” and serves as a recurring judge on “Chopped” and “Guy’s Grocery Games,” can’t solve.
Tiffani Faison closing her Boston restaurants
Sweet Cheeks, a barbecue eatery that has also been featured on Food Network, and its sister eatery Fool’s Errand will close later this year because Faison said the operating environment has become impossible to navigate.
She explained to Boston.com why she has decided to close both restaurants when their leases expire, with the last night of service being Nov. 24.
“Sweet Cheeks is my first baby, and this is one of the hardest decisions I’ve ever had to make,” she said.
More Restaurants:
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Faison made it clear, however, that it was simply too expensive to run the two restaurants.
“It is cost-prohibitive to have restaurants now,” Faison said. “Right now, we’re paying for fuel charges that are in addition to what we already pay because the Strait of Hormuz is closed and gas is heinously expensive. And we are paying tariffs on things that come from other countries. And then there are things that are just expensive anyway. The price of food has gone up. We pay a fair wage, and that is really hard to do.”
Faison is seeking a new location for Sweet Cheeks and still runs a number of other restaurants through her Big Heart Hospitality restaurant group, including Bubble Bath, Charming Gardener, Dive Bar, Tenderoni’s, Tigerbaby, and newcomer, The Temp Agency.
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Even celebrity restaurants are struggling
Faison noted that operating costs have forced other restaurants with strong reputations to close and called on Boston’s mayor, Michelle Wu, to help.
“For every building that’s built with housing in it, there’s a requirement that a certain percentage of that is affordable housing,” Faison told Boston.com. “Why is that not the same for first- and second-floor retail, for local restaurateurs and local business?”
She also placed some of the blame on customers.
“You have to come on a Monday night,” she said. “You can’t just come in one Saturday every couple of months and expect your favorite restaurants to survive. It’s not gonna work.”
Even Gordon Ramsay, one of the biggest-name celebrity chefs, shared that it’s a challenging operating environment.
“It’s been a really hard-fought year, but at the same time an exciting year, and in tough times it amazes me how strong and vibrant our industry is. It’s challenging out there, and businesses are battling to stay afloat, [amid] rising costs, rent, and food costs, multiple strikes. It’s a battle,” The Guardian reported.
Chris Bianco, a James Beard Award-winning pizzaiolo and restaurateur, commented on the expense of running a restaurant to Axios Phoenix in 2023.
“A disappearing workforce, astronomical food costs and expensive real estate are just a few challenges the industry’s faced with,” Bianco said. “The real cost of running a restaurant today isn’t what it used to be.”
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