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Financing

How operators can overcome thinning profit margins

A Deeper Dive: Jim Balis, managing director with CapitalSpring and CEO of the operator Sizzling Platter, joins the podcast to talk about the best strategies for dealing with rising labor and food costs.

How do operators overcome rapidly shrinking profit margins?

This week’s episode of the Restaurant Business podcast A Deeper Dive features Jim Balis, managing director with the investment firm CapitalSpring, to talk about the rising cost environment and how operators can overcome these problems.

Labor costs are soaring right now, with wage rates up more than 13% over the past year. But food costs are up even more, rising more than 16% according to federal data. Add in the higher prices for construction, equipment, real estate and interest rates and it’s difficult to improve profits. Menu prices are up 7.2%, not nearly enough to offset the higher costs.

In addition, a potential recession could push more consumers to shop on price, which may hurt operators’ ability to keep raising costs.

Balis is an operational expert and discusses strategies restaurants can use to offset the higher costs without simply raising prices. But he also talks about price strategy. And he talks about the technologies that could do the most to improve operations down the road.

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