2023 Restaurant Outlook: Anne Baker

Baker’s 2023 projection
Unless a recession arrives, most local restaurants, at least downtown, should see a year-over-year increase in sales of 5%-15% as people are more comfortable going out socially.

Prices for food consumed at restaurants have risen 8.5% over the last 12 months, as of November, according to the U.S. Bureau of Labor Statistics, as eateries raise menu prices to address the soaring costs for ingredients, labor and utilities. What did you experience regarding the cost of doing business in 2022?
The cost has overall increased in terms of all of those things. A hidden one that people don’t really think about that we’ve seen a large increase in is in insurance. Insurance companies maybe experienced a big hit in 2020 with a lot of disaster going on for many people, and they’ve come back with rates that have been quite large for us – at least 20% up (year over year) and that’s just for the restaurants with Civil [Kitchen] and Tinga [Tacos]. With Finnegan’s [Wake], at the bar level, I don’t know if it’s more of a fear of the risk and liability, but one of our insurances alone increased over 60%.

Has that forced you to implement price increases?
For the most part, we have not increased prices. With Tinga, we’ve had no menu changes since COVID hit in 2020. With Civil, we did one and that was back a year ago. We understand prices are increasing for everyone. But for us, even though the profit margins are lower, if we can keep people coming in and be busier that way, we can still make a fair amount and keep our customers. Obviously, being busier will help keep employees happy as well.

What about staffing challenges? What’s your hiring outlook?
Over this past year, we’ve really gotten back into normal staffing. I’d say for most small businesses, you’re always going to feel like you’re short-staffed. It’s just in the fact that we tend to personalize staffing more than, say, for example, a chain that would much rather just hire by the herds and kind of fit their schedules as they see fit. Whereas with small businesses and small restaurants, we tend to try and make sure we give everyone the optimum schedule that they need in addition to being able to accommodate any requests off. It’s a very complicated jigsaw puzzle whenever you are scheduling. I would say desperate could be the adjective that I would use for staffing (in 2021). If people even showed up to the interview, I didn’t care who you are, what you are, you were hired. Now, we’ve been able to be a little choosier and find people who are a better fit for the restaurant, not just for us, but for them as well.

Third-party delivery services, such as DoorDash and Uber Eats, played an important role in the industry during the coronavirus pandemic. Do you see them here to stay?
At this point, it is going to be around for a while. People, at the end of the day from what we’ve seen, they’re willing to pay for that convenience. If you go onto any of the third-party delivery sites, you’ll see a pretty hefty fee that you’ll pay for the convenience. I’m seeing this from people who live a block away from our restaurants because you can see where they’re delivering to. It’s not just the delivery service, though. I don’t have to physically walk in, as there are a lot of curbside deliveries, drive-thrus, pick-up windows, things like that are just becoming a lot more important for restaurants to have to adapt to in order to capture some of these people who are changing their habits. It’s kind of a necessary evil having that third-party delivery service because obviously they are national chains. We have DoorDash and Grubhub with both Civil Kitchen and Tinga Tacos.