Inflation Is Back, Part 5: “The Cost To Run A Restaurant In New York City Is Unbearable”
By: John Rubino
GoldSeek.com
Tuesday, 1 May 2018
If you’re running a business and the price of one thing goes up, you can work around it by economizing elsewhere. But when everything – wages, rent, supplies, taxes – goes up simultaneously, you have a problem that can be solved one of only two ways: Raise prices or close up shop. That’s the dilemma apparently facing restaurants pretty much everywhere.
In New York City, they’re trying to split the difference by kind of raising prices but calling it something else:
City restaurant owners propose diner surcharge to offset rising costs
(Metro) – Amid rising rent, wage and food costs, New York City restaurant owners are urging city officials to allow them to institute a diner surcharge to offset such expenses that they say could be detrimental to their businesses.
“The cost to run a restaurant and employ people in New York City is unbearable for many full-service restaurants. If you want to support local restaurants and staff, allow us the option of using a clearly disclosed surcharge to generate the revenue to simply survive,” a coalition of more than 100 restaurateurs wrote to Mayor Bill de Blasio in an open letter that was displayed at City Hall Wednesday.
“As restaurateurs we are suffering, and our employees’ livelihood are being threatened, too,” the letter continued, and highlighted ways they’ve had to work around growing expenses, including laying off tipped employees, cutting hours, changing menus, closing restaurants “which will continue closing at an increasing rate” and raising menu prices, which “cannot come close to offsetting mandated wage increases and real estate costs.”
The issue is reaching a critical mass for restaurant owners as Gov. Andrew Cuomo mulls a potential minimum wage increase to $15 per hour for tipped employees, who currently make $8.65.
“We have been waiting in good faith, for two years, for our city to allow us to use a clearly disclosed surcharge. During that time, our business have been further damaged,” the coalition’s letter concluded.
The idea of soaring costs is new to young Americans whose experience is limited to the apparent (though often illusory) price stability of the past decade. But it’s both familiar and scary to folks who were around in the 1970s when “wage and price spiral” was a common theme in the media. Labor markets get tight, wages rise, businesses are forced to raise prices to pay their employees, customers see their cost of living rise and demand raises to compensate and so on, until price pressures in one sector spread to most others.
Here’s another example, from an industry that’s far removed from food service but facing similar pressures:
Airline Cost Of Maintenance May Rise Just As Labor Rates And Fuel Prices Are Also Increasing
The Rest…HERE
