Why are restaurants failing in the economy?

[smahala1991]

The restaurant I worked at for almost two years shut down this morning with little warning to employees. I left there in October, but one of my waitress friends drove by to tell me they closed this morning and a Uhaul was hauling everything out.

[Aerissa_Jade]

They have a very low profit margin, if they make 10% profit that is considered good, but some restaurants only make half that.

I have a few extended family who run businesses, own them and they as the owner might only make 50 to 70k a year for their own salary while working 60+ hours a week.

I could see them getting tired of it, getting a job working for someone else, working less hours and thus shutting it down.

People often think small business owners make a lot of money, it simply is not true.

This is why rich people will do franchises, because if each store only makes 50 to 70k then having a dozen will finally make them rich but if one store gets too low to be considered profitable, they shut it down.

Often there is business loans that have to be paid back in the longer term, like a mortgage so it can take along time to pay those off too.

If demand for employees goes too high and you can't increase your wages because it would get customers to go else ware... then they could of shut down for that reason.

My company outsourced the support department because they couldn't afford higher wages because all the competitors had already outsourced, to increase starting pay would mean raising costs to customers which would drive them to the competitors.

[Jamie05rhs]

Yep! Simple economics. So many people don't understand this.

[Aerissa_Jade]

@Jamie05rhs I know, so many think anyone who owns a business is filthy rich.

[Jamie05rhs]

@Aerissa_Jade Well, that stereotype does exist for a reason. It's just that nowadays things are a bit different (for small businesses, that is).

[jennifer_bloom]

I think two major factors are that transportation costs to deliver food ingredients has risen with higher gas prices and the cost of food itself is higher because of inflation caused by CoVid created unemployment and government debt. The restaurant I used to visit every 4 - 8 months now costs 1.7 times what it used to cost us and I believe they give fewer opening appetizers to guests as well when you order the more expensive food. Their food also contains less spice then before since spice is expensive.

[FunkyMonkee]

Thanks to Joe's inflation and price hikes and the incredibly high price of gas now, because that stupid old fuck refuses to let us have the fucking pipeline Trump was gonna give us, everything is INSANELY expensive and nobody can afford to pay for shit anymore! We're a third world banana republic, now! The commie's running the country (into the ground) don't WANT US to have all the great stuff we had when Trump was in office!!

[OfMiceandMen]

I think it is the rising cost of living that's made it less affordable to spend the additional money it takes to go to the restaurant.

People are opting to stay home or when they are away making their own meals rather than going to the restaurant.

It is just somewhere people can cut back.

[NotTacocaT6969]

Because of rising food cost and cost of living, many restaurants are going to fail.


I’m being the full inside staff of a dominos by myself right now.


If I quit, that’s it for this store.

[Jersey2]

I agree. I just saw frozen scallops for a huge sum of money and wondered how restaurants can survive as the customers will only pay so much. Their costs are going up and they want to raise their costs but their customers won’t eat there enough with the high cost. So they close.

[exitseven]

Restaurants are notorious for going out of business. I have seen plenty of places that people just got tired of and all of a sudden they were gone. Covid messed up a lot of them too and some never recovered.

[TenderFantasy]

• Inflation sucks balls.
• There's a lot of competition in the restaurant industry. If you can see there's like a Subway or Jersey Mikes, McDonalds, etc etc. If you want food, even and especially fast food, you can choose from like literally 60 or more options!
• Some restaurants are mishandled. Yes, a lot of restaurant managers can be stupid or unwise.
• Bad luck.
• Pandemic not to mention.

[Stoner710]

Raising food costs, rising, inflation, economic stagnation, the fact that our dollar is slowly being replaced with the Wan as the global currency all of this is because we elected Joe Biden.

By the way, McDonald’s has stopped hiring. Even McDonald’s is gearing up for massive layoffs. What does that tell you about the state of things right now

[LiamJHayden]

Food and transportation cost increases, minimum wage increases, increases in general COLA, higher rents, mortgage rate increases, utility hikes, all mean that restaurants have to raise their prices and/or eliminate positions to stay afloat. Many can do neither and stay competitive, so they shut their doors.

[art84]

We had a BBQ restaurant close down it's doors last month after they couldn't come to an agreement with the building that they were renting. They ended up selling all of their equipment like the pits, refrigerators, etc and got out of the BBQ business. It only last a year after opening up last year and I never got to try out that restaurant.

[Jessica405]

People just do not have the spare cash to eat out as often. Happens in UK and in Netherlands.

[Nikki1989]

Most people can't afford to eat out.

[Paul09]

Well to begin with restaurants are expensive. And you have to tip! So the food and service better be amazing. It's expensive to run one and eat at one. Sometimes I wonder how some of these restaurants are still open , when food isn't even good. And you pay 10x the prove for what?

[bolverk]

In the current state of the economy/raise in food/fuel prices etc, few have the extra disposable income to eat out, From what I remember while living in the US dinning out was a common occurrence, while over here in the UK its not so common.

[NathanDavis]

bad management, as usual...

it's not the economy... that's just the fate of a lot of smaller businesses, only the smaller percent will prevail

[NamerOfStars]

Something like 90% of all restaurants fail in their first year, even when the economy's booming.

[Likes2drive]

Probably because food is getting so expensive and they can only raise it so much if they want to stay in business to have customers so it’s really hard for them to operate that way unless they are always busy and have good food and service

[Anonymous]

Because it is a luxury.

If you want security in this field you must make sure you are working for the rich as they always have the resources for such things.

[mark000h]

Biden has completely destroyed the economy.

[GoodGuyBreakingBad]

I think this is because of the bad service they give to people.

[Redstang88]

Restaurants have always been a very high risk endeavour. Very low profit margins, notoriously unreliable staff and flaky customer base.

[Titanic1912]

Robert Irvine has helped many restaurants find their problems and fix them. I don’t understand why they don’t contact him so he could help.

[Jamie05rhs]

Because the costs of operating the restaurant are too high that the owners can't make a profit. They can barely stay above water (if that).

[NostalgiaSenpi]

Not enough business to cover their costs and turn a profit. Many businesses fail, even in a better economy. It's nothing new.

[msc545]

Sorry to hear that. I think it is because of high costs and a lot of competition, and not much attention to making good food.

[gorydetails]

Costs have skyrocketed. For labor and materials.

[sage2021]

Or maybe the owner died!!

[smahala1991]

no it was a chain, it was underperforming

[MementoMori777]

Because there's too many of them

[KostasKouvalis]

They charge too much for their food