Restaurants Remain Strained Going Into 2022 | Business

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The restaurant industry was one of the most highly affected by the COVID-19 pandemic. The Association of Restaurants of Puerto Rico (Spanish acronym, ASORE) shared results from 2021 and commenced 2022 with a hopeful, but realistic, outlook.

In the first 10 months of 2021, restaurant sales were 43% higher year-over-year compared to 2020, and 5.7% higher than the same period in 2019. This hint of recovery is relieving – in 2020, restaurant sales were down 20% compared to 2019, after harsh restrictions were put into place in mid-March 2020.

“The past two years have been about reaction, not planning. In the face of this extraordinary situation, it is imperative to learn more about the current state of the restaurant industry, which has suffered so much from the pandemic. It is also the right time to measure the future prospects for traders. Much has been said about the impact on the sector. With this report, we clearly see where we are and what are the expectations for the future,” said Mateo Cidre, ASORE president.

Gustavo Vélez of Inteligencia Económica compiled the report’s data by surveying 1,331 establishments on the island, of which 53 were chains. The survey took food and beverage establishments of all sizes into consideration, from bakeries to fine dining.

The Minimum Wage Effect

Regarding Puerto Rico’s minimum wage, which rose to $8.50 from $7.25 on Jan 1. 2022, responses were mixed. An estimated 30% of those surveyed replied that the minimum wage caused a reduction of hours and payroll, while 18% will be cutting benefits for their employees.

The most visible effect of the augmented minimum wage is seen in increased menu prices –80% of respondents had increased their prices as a result. Higher payroll costs, in addition to higher food prices, will make going out to eat more costly.

The National Research Association conducted a survey in Nov. 2021, where 91% of respondents replied that their total food costs as a percentage of sales are higher than pre-pandemic levels. As a result, profitability is down – 80% of respondents reported that their profit margins are lower than pre-pandemic as well. Other concerns of the industry include shortages and delays in receiving food and beverage items, as well as equipment and service items, dampened staffing levels, and the Omicron variant, which has made potential diners less inclined to eat indoors.

Recommendations From ASORE

ASORE concluded that the restaurant industry is far from being normalized, like many other economic sectors that are working in a hostile environment of heightened operational costs. The organization urges the governor and legislature to promote measures that will support the restaurant industry’s recovery –including a moratorium on measures or legislation that will further increase the costs of doing business, and reimplementing a public policy “work requirement”.

 



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