A recent survey indicates that nearly half of Michigan restaurants are less profitable now versus three months ago, and as the colder months settle in, things may get worse.
Many Michigan business owners reported a deterioration of profitability during the past few months, with 49% of respondents saying their restaurant is less profitable now than it was three months ago, according to the results of a survey released by the Michigan Restaurant & Lodging Association. Only 12% of respondents said their restaurant is more profitable now than it was three months ago.
The survey found 43% of Michigan operators reported that business conditions for their restaurant are worse now than they were three months ago. Only 15% said business conditions improved during the past three months.
Overall, 22% of respondents reported a same-store sales decline between August 2020 and August 2021. In addition, 61% of respondents said their sales volume in August 2021 was lower than it was in August 2019, with only 29% reporting higher sales compared to August 2019.
The Delta variant has negatively impacted the restaurant industry in recent weeks, as well, the survey noted, with 58% of respondents reporting that their restaurant experienced a decline in customer demand for indoor on-premises dining in recent weeks because of the increase in coronavirus cases.
Among the survey respondents, 17% said they think it will be seven to 12 months before business conditions return to normal for their restaurant, while 55% said they think it will be more than a year. An additional 17% of respondents said business conditions will never return to normal for their restaurant.
“As we approach Michigan’s fall and winter seasons and see consumer trends move away from in-person dining due to colder weather outdoors and concerns about the Delta variant, the recoil impact to the restaurant industry will be harsh, swift and very concerning,” said Justin Winslow, president & CEO of MRLA. “Less than one in three operators are doing better than they were pre-pandemic with business conditions being worse now than they were three months ago."
"These trend lines tell us that we are moving away from a desperately-needed resurgence as we approach the winter season," he added.
Also at issue for the hospitality industry is the lack of employees. The survey indicated that 87% of Michigan operators say their restaurant currently does not have enough employees to support its existing customer demand.
Of operators that are understaffed, 54% reported that they are currently more than 20% below necessary staffing levels and 89% reported that they are more than 10% below necessary staffing levels.
When asked about costs, 90% of those surveyed said their total food costs, as a percent of sales, are higher than they were prior to the COVID-19 outbreak. Only 2% said their food costs make up a smaller proportion of sales.
In addition, 83% of respondents said their total labor costs, as a percent of sales, are higher than they were prior to the COVID-19 outbreak, while only 10% said their labor costs declined as a percent of sales.
“It’s important to remember as we return back to our offices, our family gatherings and other business as usual settings, that the impact of this virus and lack of state and federal support are still threatening the viability of our community restaurants,” Winslow said.
The survey was conducted Sept. 7-15 by the National Restaurant Association and included responses from 4,000 restaurant operators nationally.
The above data reflects Michigan-specific responses extracted from the NRA survey, with 131 Michigan operators represented in the results.
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October 05, 2021 at 05:04PM
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