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Inflation becomes No. 1 issue for restaurants and other small businesses, study finds

Labor availability remains a key concern, but supply-chain problems rose to the top fear.

Soaring food and labor costs have turned inflation into the top concern of restaurants and other small businesses for a second consecutive month, with 90% reporting their pandemic recoveries have been impaired by galloping prices, according to new research.

“The one message small business owners would like legislators to hear loud and clear: “Fix the Supply Chain Problem… Now!”, reads the report from Alignable, an online network for small businesses.

About a third of the 3,430 small companies surveyed by Alignable reported that they’re paying at least 25% more than they did before the pandemic for supplies. Yet only 53% said they were able to protect margins by passing along the increases to customers.

Alignable indicated that supply-chain woes are a major reason for a rise in pessimism among restaurants since Oct. 30. A gauge of operator sentiments found that 33% of restaurants now fear they won’t be able to survive the fourth quarter.

The attrition is already starting, according to the data. The number of businesses within Alignable’s universe that were fully opened during early November dropped by 3 percentage points from the prior month, to 67%.

Though inflation emerged as the top perceived threat, the data show that finding enough staff remains a near-constant concern as well. Almost exactly two-thirds of Alignable’s respondents said recruitment remained difficult through the first nine days of November.

The findings on inflation underscore the challenge restaurateurs are facing in preserving margins. This week, the industry’s top two distributors—Sysco and US Foods—reported upswings of 13.5% and 11.5% in the price of their goods. The other member of the Big Three, Performance Food Group, said its costs had risen 11%, but did not indicate how much of that was passed along to customers.

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