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. Some Restaurant Owners have even formed their own Food Co-ops with other Owners in their area! Although this isn’t the solution to all of the problems we face, it may be the first one in a long list of things we must consider that will help us avoid large increases in our menu prices, because the shorter the distance our food travels, the less it costs us.

As we develop our new restaurant locations, GREEN is a new consideration, and for good reason! As energy prices continue their steep rise, we must build and equip our establishments in such a way that our bottom line can withstand not only current rates, but the energy price increases that are sure to come. We CAN continue to build and operate our Franchise Restaurant Businesses to sustain a good profit margin, and to contribute to a greener America. Perhaps a new class of consultants, a new style of developer, and a renewed commitment to excellence is called for today. Clearly we must work much harder and much smarter than ever before.

Charles Alario, has developed, owned, and operated Franchise Restaurants for more than 2 decades! As a seasoned, experienced Franchise Restaurant Owner he’s a qualified Expert in his field. Today, Charles is the owner of 11 restaurant franchises with 15 more in various levels of development. He’s a wealth of information and is ready to share that wealth with his FRO Member family. Visit his website Franchise Restaurant Owners and see how a membership at Franchise Restaurant Owners will help you increase your bottom line.