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Inflation or recession, either way the state of the U.S. economy today leaves few Americans untouched when it comes to the need to tighten our belts and re-think our business processes. Nowhere is this fact more evident that in the restaurant industry. As Restaurant Owners, we’re poised and ready to please our Customers, and when they’re experiencing financial stresses, the runoff will inevitably trickle down hill to us. Let’s examine some of the economic changes we’ve experienced in the United States recently that directly affect our revenue:

* Energy costs have steeply risen.
* Inflation rate is at a 17 year high.
* The high price of crude oil has increased transportation costs, directly effecting the cost of food.
* Though the price of oil is coming down, commodities costs continue to rise.
* Grains being used to produce bio-fuels is adding to the sharp rise of food prices.
* The largest foreclosure rate in the history of our Country is affecting the emotional moods of our Customers.
* Consumers are hanging on to their money, so they aren’t going out to eat as often as they once did.
* Consumers are looking for consistent, or reduced, prices when they do make purchases (or dine out).
* Development costs for new restaurants have increased significantly due to everything in the development process process being affected by high fuel costs and inflation.
* With immigration tightening at U.S. borders, we’re concerned about a reduction in the availability of labor in our workforce as well as a rise in labor costs.

A great example of the restaurant climate today can be found in New Jersey. With over 23,000 restaurants for patrons to choose from, and approximately 80 percent of new restaurants failing in the first 3 years, restaurant owners, including restaurant franchise owners, are streamlining everything from labor costs to portion sizes in efforts to stay “afloat”.

Food co-ops and Farmers Markets are enjoying a rise in popularity. Although established mainly for non-commercial use (restaurants normally have all food-stuffs delivered), there’s a new interest in the health and cost benefits of supporting locally grown and produced food resources. (more…)