More than 100 restaurant owners responded to a recent Texas Restaurant Association survey about the rising costs of doing business in the state. Overall, most are seeing wholesale supply pricing, labor, and other costs rise since January 2021.
According to preliminary data from the Bureau of Labor Statistics, wholesale food prices trended sharply higher in April for the fourth consecutive month. Driven by the recent growth, average wholesale food prices are 6.9% above their year-ago level in April. Additionally, major commodities registered significant price increases, including:
- Beef - Up 14.5%
- Pork - Up 9.6%
- Fresh Fruits - Up 9.3%
- Processed Poultry - Up 5.4%
- Dairy Prodcuts - Up 3.2%
Based on the recent survey of Texas restaurant operators, 100% have seen their supply costs increase, 93.58% have seen labor costs increase, and 66.06% have seen other fixed costs, including rent, property taxes, and insurance increase.
In response, 11.93% indicated they do or sometime do add an extra fee to customer bills, while 77.06% have not.
Naming conventions differ between those who have added extra fees:
- 47.6% call it a "service fee"
- 9.52% call it a "wellness fee"
- 33% answered "other," with most indicating it's a to go charge
For menu prices, 60.19% said they have increased menu prices since January 2021, while 30.565 indicated they have not yet increased menu prices but plan to. Of those who have increased their menu prices, 57.14% have raised them by 6-10%, 30% have raised menu prices by 1-5%, and 10% have raised prices by 11-15%.
Nationwide, according to the National Restaurant Association, consumer spending in restaurants was up in April, but it was still $1.3 billion below pre-pandemic levels and our analysis shows that 13 months into the pandemic, restaurant and foodservice sales are down $290 billion from expected levels. Restaurants are still down 1.7 million jobs (or 14%) below its pre-coronavirus level.
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