Wednesday, July 14, 2021

Just because funds and people are coming back to restaurants, it doesn't mean troubles are over

It’s taken a while, but restaurants in Wisconsin and the rest of the country are finally getting their targeted stimulus support.
“For those who received it, it’s a big shot in the arm,” said Wisconsin Restaurant Association President and CEO Kristine Hillmer in an interview. “For those who didn’t, it’s going to be tough.”…

In total, 5,871 businesses in the state applied for $994.6 million in funding from the Restaurant Revitalization Fund. But just 2,095 of those applicants received a total of $379.3 million, according to the SBA figures provided to by Hillmer.

On the national level, over 278,000 applicants sought more than $72 billion from the fund, and around 101,000 received more than $28 billion in funding. The SBA also retracted awards for 2,695 applicants nationwide who had initially been told their applications were accepted, Hillmer said.
Now, it’s plausible that all applicants didn’t need the money and were just taking a shot to get more funding (because why not?), but there certainly were a lot of losses that these business owners needed to make up due to the COVID world.

And now that consumers feel confident enough to go back out to eat, restaurants are facing higher costs in both labor (because they can’t find enough/pay enough to replace the workers laid off in 2020) and on supplies, as was laid out in an in-depth article in the Journal-Sentinel this week. In addition to a lack of waitstaff or meal preparers, the J-S article describes restauranteers struggling to find or afford items to make meals with.
"We’ve had to take some things off the menu we’ve had since Day 1; we’ve had to re-engineer some things," said Andrew Miller, the chef and co-owner of seafood restaurant Third Coast Provisions downtown. Because lobster prices have doubled, the $21 side dish of lobster mac and cheese would have become prohibitively expensive. So, off it came...

Wagyu beef, prized for its marbling, is available only sporadically, Miller has found. The price of the most sought-after beef cuts or cuts that aren't in abundance on cattle, such as tenderloin and hanger steaks, have increased 200%, he said.

"We’ve been pretty select in what we’re bringing in until things kind of calm down," Miller said. "When we talk to our distributors, they don’t see that happening any time soon."

Meanwhile, Narr, of Triciclo Perú, said, "Nope, I’m not going to pay four times the price for a case of wings."

Sometimes, ingredients just aren't available when the restaurant needs them. It can be a matter of suppliers and producers not being able to ship the products — not enough forklift drivers to load the trucks and not enough truck drivers to transport the goods, for instance.
These cost pressures for eating and drinking places was certainly borne out in today’s Producer Price Index report. Take a look at the recent jumps in prices paid for meat products and well as grains, fruits and seed-based items.

And on the staffing side, you see the problem when businesses make mass layoffs instead of furloughs or work-shares, and a strong recovery kicks in a few months later. It becomes hard to find enough people to bring back to match the businesses’ needs.

Some of these restaurants quoted in the article have mentioned that they will have to raise prices to make up some of the difference (if they didn’t do so already during the COVID era to make up for decreased business and extra sanitation needs). as “food away from home” rose by 4.2% in the last 12 momnths vs only 0.9% for “food at home”.

As I’ve said before, even with reopenings, we aren’t going to see things return to a pre-COVID normal, which will make for an uneven and often-disruptive rest of 2021. And nowhere does that seem more evident than in a restaurant industry that took a big hit in 2020, and is still adjusting to the changed situation in this year.

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