Restaurants are feeling the squeeze after inflation reached its highest levels since 1982 in December.
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Guy Fieri is a restaurant owner, TV star, and star of a Super Bowl commercial, but even he's not immune to the pressures of inflation and labor in the food service industry.
"It's so difficult right now," Fieri, who owns more than 80 restaurant locations and concepts and 175 locations of virtual concept Flavortown Kitchen, told Insider in an interview.
The biggest challenges in the restaurant industry used to be fighting for a market share of business, making great food, and being consistent, Fieri said. Now, with the loss of much of the food industry's workforce and "costs going through the roof," it's harder than ever, especially in a business with the "smallest margins in the world," Fieri told Insider.
Fieri has taken some steps to help restaurant workers and operators over the last two years. He partnered with the National Restaurant Association in 2020 to raise nearly $25 million for the Restaurant Employee Relief Fund. Fieri also filmed additional episodes of his hit Food Network show, "Diners, Drive-Ins, and Dives: Takeout," where he reconnected with former guests on the show to learn how they were dealing with the pandemic. The show would air, and then "like 400 takeout orders would immediately come in," he told Insider.
2021 was a uniquely difficult year for the restaurant industry: US inflation was up 7% year-over-year in December according to the Bureau of Labor Statistics, the strongest inflation since 1982.
Labor costs increased, and many business owners say that they've been unable to staff restaurants. In some cases, owners even cite a lack of desire to work, while workers say they can demand better pay and benefits in the tight labor market. Chains including Chipotle and Starbucks have announced wage increases to attract and retain workers.
Turnover among restaurant workers is still elevated over pre-pandemic levels. In a Black Box Intelligence survey of 4,700 former and current restaurant workers from October, 15% said they'd left the industry in the previous year, and another 33% planned to leave.
Prices of many key ingredients shot up at the same time. Meat, poultry, fish, and egg prices all rose year over year, according to the BLS data. Pork prices rose 14.1%, their highest ever increase in BLS history, and beef prices increased a whopping 20.1%, and tortilla prices have also jumped.
Chicken, which is a staple in quick-service restaurants given the still-growing demand for chicken sandwiches and wings, also continued climbing. Chicken breast prices doubled last year, The Wall Street Journal reported.
The restaurant industry is resilient despite the odds, according to Fieri. The workforce is "bouncing back," he said, and pointed to the way operators across the country adapted to ghost kitchens and delivery when dining rooms were closed.
Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.
