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Higher Food Costs and Labor Shortages Expected to Cut Into Restaurant Earnings

  • Shares of publicly traded restaurant chains fall after disappointing earnings report
  • Trend reflects broader challenge in food and beverage industry as restaurants cope with supply and labor challenges
  • Recent survey from the National Restaurant Association shows that nine out of 10 restaurants have experienced recent delays or shortages in key food and beverage items

Summary by Dirk Langeveld

Restaurant earnings have been shrinking as food and beverage companies cope with a shortage of workers and other issues.

Shares of several publicly traded restaurant chains are declining after disappointing earnings report. Analysts suggest that factors such as labor shortages, inflationary costs, and higher costs for food and wages resulting from these trends are to blame.

  • Challenges have forced restaurants to take steps such as limiting the number of orders they are able to handle, cutting hours, or trimming back menu items
  • A recent National Restaurant Association poll shows that 95 percent of restaurants have experienced delays or shortages in key food or beverage items in recent months
  • In a September survey from the association, 85 percent of restaurants said their profit margin was lower than it was before the COVID-19 pandemic
  • Nearly two-thirds of restaurants said they were less profitable in September than they were in June

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