COLUMBUS, Ohio (WCMH) – With rising food and labor costs, 70% of Ohio restaurants and hospitality businesses who participated in a recent survey said they plan to increase their prices in the second quarter of 2024.
The Ohio Restaurant and Hospitality Alliance regularly conducts “business impact polls'' that garner responses from around 100 to 200 restaurants and hospitality businesses spanning across all regions of Ohio, according to President and CEO John Barker. The most recent poll was conducted May 7-31.
The association, which represents the approximately 25,000 restaurants in Ohio, began doing the business impact polls during the pandemic in 2020 to collect data about the state of the industry and inform elected officials.
“We're the seventh biggest state in terms of number of restaurants and restaurant sales,” Barker said. “We do everything from helping [restaurants] with their business needs, helping them get health insurance, workers comp, learning technology and we represent them at the statehouse in Washington, D.C.”
The poll found that 92% of businesses reported food costs were higher during the first quarter of 2024 compared with first quarter of 2023; 38% reported a price increase of 5%, 29% reported a 10% increase, 19% reported a 15% increase and 6% reported more than a 15% increase. Eight percent of businesses said food costs remained the same.
Similarly, 96% of businesses reported the cost of labor is significantly higher in 2024. Fifty-two percent reported a 5% increase, 30% reported a 10% increase, 10% reported a 15% increase and 4% reported an increase of more than 15%. Four percent of businesses said the cost of labor has not increased.
A majority (60%) of restaurant and hospitality business operators also said their sales decreased or remained flat during the first quarter of 2024 compared with the first quarter of 2023.
With a majority of businesses experiencing rising operating prices and a decline or steady amount of sales, the poll reveals that 70% of business operators plan to increase their prices in the second quarter of 2024. Fifty-three percent are planning to increase prices by 5%, 13% are planning a 10% increase and 4% are planning to increase their prices by over 10%. Thirty percent of businesses said they would not increase their prices at this time.
Barker said the culprit for rising menu costs is inflation. Inflation for ingredients is up about 32% from the pandemic, he said, and restaurants have “don’t have a choice” but to raise prices.
“If you go back in history, a three-year increase on costs like that would be more like 6% instead of 32%,” Barker said. “They really have nowhere else to go other than to begin to adjust their menu prices, and they don't want to do that.”
Rising menu prices are not unique to Ohio, Barker said. Between May 2023 and 2024, the price of eating out increased 4%, according to the United States Department of Agriculture. Additionally, menu prices rose 0.4% at sit-down restaurants from April to May of this year.
In the state, there are efforts to increase the wage of those who receive tips, which opponents worry will add to restaurants' rising prices. Tipped workers currently make $5.25 hourly – Senate Bill 256 aims to raise that to $7.50 by 2028. Some groups are trying to fast-track a bigger increase: “Raise the Wage Ohio,” an initiative of the national organization “One Fair Wage,” is working to put an initiative on the 2024 ballot to end subminimum wages for tipped workers, raising their wage to $15 with “tips on top.”
One Fair Wage argues the subminimum wage is a source of gender and racial injustice, as tipped workers are 70% women and 43% people of color. The organization states tipped workers have struggled with twice the poverty rate of other workers and the highest rates of sexual harassment of any industry, because “they must tolerate inappropriate customer behavior to feed their families in tips.” However, Barker said tipped workers in Ohio overwhelmingly want to keep the current system.
“The average amount of money that a typical server makes in Ohio is $27 an hour,” Barker said. “So then we went out and asked servers and bartenders ‘how do you feel about this’ and 93% of them want to keep the current system that we have.”
The Ohio Restaurant and Hospitality poll found that a vast majority of businesses, 96%, are also reportedly opposed to eliminating the tipped wage.
