David Burke, president of David Burke Hospitality Management, analyzes the cost of inflation for restaurants in “Claman Countdown.”
Restaurant stocks have had mixed returns this season, but one Iron Chef America alum reveals the “number one problem” that’s keeping prices high and overall profits low.
“The biggest challenge for us is managing labor costs,” chef David Burke said on Cramant Countdown.,“Wednesday”
“Depending on whether you’re in the city or the suburbs, there’s a lot of turnover and a lot of benefits that come with that,” he continued. “So labor becomes an issue, and it costs a lot of money to lose an employee for the amount of effort you put into training.”
According to April’s Consumer Price Index (CPI), a broad measure of the prices of daily necessities such as gasoline, groceries and rent, beef prices were up 7% year-on-year, vegetables were up 2.3% and sugar was up 4.3%. %, and seafood rose 7% compared to the previous year. , cheese and eggs declined by single-digit percentages.
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Additionally, stocks of food-related companies such as Dine Brands (Applebee’s, IHOP) and The One Group Hospitality (STK Steakhouse, KONA Grill) have fallen this week, while BJ’s, Cheesecake Factory, and Darden Restaurants have risen slightly.
Celebrity chef David Burked said labor costs are the “biggest problem” in the restaurant industry today. (Fox News)
Job growth also slowed in April as the hospitality industry cut back on hiring. Chef Burke pointed out how the restaurant business is not for the weak.
“There’s a certain sex appeal to the restaurant industry until you get into it,” he says. “When you actually get involved, you realize this is different from TV. It’s hard work. You’re on your feet all the time, it’s hard work. It’s also a lot of fun. And if you happen to like something, You get great satisfaction from doing it. “
Dine Brands CEO John Peyton explains how the company has succeeded even as inflationary pressures have squeezed dinner at popular restaurants like Applebee’s and IHOP.
But Burke said, “minimum wages continue to rise in different cities, especially for waiters and cooks. We don’t have a lot of minimum wage workers, we might have a few dishwashers. In any case. However, most of the chefs we hire earn more than that.” Wages and benefits, working hours and paid vacations all add up. ”
The chef and restaurateur says food supply costs fluctuate frequently, creating hidden costs, as most budgets focus on proteins such as beef, chicken and pork. .
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“Fish prices have come down a little bit, but meat prices are still high. Egg prices have surprisingly come down a little bit, but dairy products are still high, and milk and butter prices are high,” he said. “And some of the things that we don’t pay much attention to can sneak up on you, like cooking oils, seasonings, seasonings, herbs, produce.”
“It’s things like vegetables and fruits that don’t really cost a pound per pound,” Chef Burke added. “And then we have more lemons, more produce, more lettuce, more onions, so that’s caught up with us. We use them a lot, so these little things start to creep up on us. .”
