Restaurant Doom & Gloom: Here's What CT Restaurateurs Say In New Survey

CONNECTICUT — Restaurant owners in Connecticut are serving up a main course of Gloom with a side order of Doom in the results of a new survey released Tuesday by the Connecticut Restaurant Association.

As the costs of goods restaurateurs need most have continued to accelerate, 43 percent of Connecticut operators say business conditions are worse now than they were three months ago.

This finding follows a June National Restaurant Association survey in which 43 percent of operators said they think conditions will worsen in the next six months, which was the highest level of pessimism since 2008.

Approximately 95 percent of a restaurant’s sales dollars go to food, labor, and operating costs — all of which are increasing each month. According to the U.S. Bureau of Labor Statistics, wholesale food prices have increased 16.3 percent in the last 12 months and nationally menu prices have only risen 7.6 percent in the same period. The result: Profits are suffering. Eighty-five percent of Connecticut restaurant owners say their restaurant is less profitable than it was in 2019.

In the new Connecticut survey, 84 percent of restaurateurs said their total food and beverage costs are higher than 2019. Across the board, many other costs are up: Compared to 2019 costs, 69 percent said their total occupancy costs are higher, 94 percent said their other operating costs are higher, and 86 percent said their total utility costs are higher.

"Consumers are watching prices rise faster in grocery stores than they are in restaurants and see an increased value in spending their food dollars in restaurants. However, the moderate menu price increases aren't balancing the surging input costs and this is forcing operators to cut hours, change their menus, postpone expansions, and reduce third-party delivery," said Scott Dolch, Connecticut Restaurant Association president and CEO.

Most restaurants in Connecticut (94 percent) are compensating by raising menu prices, and 68 percent have changed their menu. Nearly half (47 percent) are now closed on days they were once open, and 59 percent have reduced their hours. Over a third have postponed expansion plans.

For many dining establishments, the check for pandemic debt has been delivered, and the restaurateurs can't pay.

During the first two years of the pandemic, 65 percent of restaurants took on new loan debt to adjust business models and continue operating. According to new national data from the National Restaurant Association, the loans were a mix of forgivable government loans, government disaster loans, and private-sector loans.

• Paycheck Protection Program loans were the most common, taken on by 59 percent of restaurateurs.
• 48 percent took on an Economic Injury Disaster Loan issued by the U.S. Small Business Administration or lending partner.
• 31 percent took on a private-sector loan from a bank, credit card or other entity.

"For many operators who received EIDL loans, the deferment period for payment will soon end and it will be an overwhelming challenge for a majority of them to begin repayment right now," said Dolch. "The National Restaurant Association data shows that, of the operators who have not begun loan repayment, only 23 percent say they will be able to make principal and interest payments. Another 46 percent expect to be able to pay the principal, but not 30 months of accrued interest."

Even as restaurants struggle to make ends meet, they are scrambling to fill positions back to pre-pandemic employment levels. Despite the overall industry adding 74,000 jobs in July, in the new survey, 59 percent of Connecticut operators report not having enough employees to support customer demand, 75 percent of operators say they will likely hire additional employees during the next six months and 80 percent of operators say their restaurant currently has job openings that are difficult to fill.

The National Restaurant Association Research Group conducted a survey of 4,200 restaurant operators July 14- Aug. 5, 2022. Connecticut responses were compiled to produce the state findings.