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Business at Restaurants Returns While Challenges Linger

NBCUniversal, Inc.

While business has been getting back on track, restaurant owners are still dealing with lingering effects of the pandemic such as increased food and labor costs.

Provender Hall opened its doors in the Fort Worth Stockyards in July 2020 and for the past year, owner Marcus Paslay said business has been doing well.

“Trajectory has up into the right. It’s been good. We’re busy now,” Paslay said.

Even so, Paslay noted restaurants are known to operate under a narrow profit margin. Like many others, his restaurant is shouldering inflated food costs and higher wages for workers.

“I think one of the biggest price differences we’re seeing is obviously labor. It’s almost double. Price of beef has gone through the roof,” he said. “We’ve slowly done a little, a couple of price increases. We’ve absorbed some of that. We’re passing along some of that, and it’s just kind of a gradual process we’ll have to keep monitoring.”

Michael Davis, a professor of economics at SMU’s Cox School of Business, said the challenges within restaurants are similar to what grocery stores are also experiencing. The entire supply chain is constrained, he said.

“If it’s hard to find truck drivers if it’s hard to find warehouse space, it’s expensive to fill up a delivery vehicle. All of those constraints, all of those costs are going to be passed on,” he said. “Fresh meat, things like that in particular have been going up a lot. It’s not the consequence of some greedy monster out there just trying to raise prices. It’s the fundamental law of supply and demand at work.”

A large majority of what is happening in the market is traced back to the pandemic and the government’s response to it, Davis added.

“We need wages to adjust to the point where people are willing to come back to work. The other thing we need though is this huge blob of spending to slow down. Remember that the government spent several trillion dollars stimulating the economy helping people through the pandemic,” he said. “There wasn’t a lot to spend money a year ago or a year and a half ago, so now we have this big rush of consumer spending. Until we get this equalization between the demand and the supply, and the supply depends critically on workers. Until that happens, we’re going to see what we’re seeing now.”

Melissa Stewart with the Texas Restaurant Association said some restaurants are increasing prices to offset costs for the time being. Others are also limiting menu items, but she also advised businesses that offer take-out to be aware of the supplies they are including with orders.

“Really think about what you’re dumping in that bag. Do your customers need plastic wear? If they don’t ask for it, maybe don’t give it. Make it an option,” Stewart said.

For now, business owners are asking for patience from their customers.

“Come into it with an open mind, a little bit. We all went through the shutdowns of COVID-19 and all that. It took a lot of open-mindedness and patience,” he said. “That continues now, just in a different way.”

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