US Restaurants Fighting a Rising Tide of Costs

Thursday, 13 Dec 2012 07:46 AM

By John Morgan

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The American restaurant industry appears headed for bumps in the road, including the costs of Obamacare, rising food prices and weak consumer pocketbooks.

Even as those obstacles appear, however, the National Restaurant Association (NRA) predicted sales would increase 3.8 percent in 2013 to more than $660 billion.

“The fact that the restaurant industry will continue to grow in an operating environment that presents substantial challenges is a testament to the essential role that restaurants play in our daily lives,” said Hudson Riehle, senior vice president of research and knowledge at the NRA.

Editor's Note: Use This Single Loophole to Pay Zero Taxes in 2013

The association said U.S. restaurants would employ 13.1 million people next year, representing 10 percent of the total American work force.

Healthcare reform is expected to put pressure on restaurants’ profitability. One-third of the typical restaurant’s sales are eaten up by labor costs, the NRA said, meaning Obamacare will challenge the “slim pretax profit margins of 3 to 5 percent on which most restaurants operate.”

Major chains such as Papa John’s and Olive Garden parent Darden are fretting publicly about the looming requirement to provide access to health coverage for all full-time employees, the Los Angeles Times reported.

Meanwhile, the sluggish economy and slow job recovery continue to hold the restaurant industry back, the NRA said.

“To be successful, restaurants need potential patrons to feel good about their economic prospects,” Jimmy Haber, a Los Angles restaurant executive, told the Times.

“The fiscal cliff will bring higher taxes, uncertainty in the workplace and fears of another recession, just to name a few of the effects,” Haber said.

In addition, the NRA expects wholesale food costs to continue to increase next year, and that recruitment and retention of restaurant employees will become a challenge as the total labor pool is becoming shallower.

Editor's Note: Use This Single Loophole to Pay Zero Taxes in 2013

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