Fortune’s Post

Gordon Ramsay saw losses at his U.K.-based, international restaurant business more than triple to £3.4 million ($4.3 million) in the year to August 2023, according to Companies House filings. The chef said businesses were “battling to stay afloat” amid sustained inflationary pressures that have hit already razor-thin margins in the hospitality sector. Ramsay’s restaurants, which include the chains Street Pizza and Street Burger as well as his three-Michelin Star flagship restaurant, increased revenues by 21% to £95.6 million ($119.8 million) in 2023, while gross profits increased to £47.4 million ($59.4 million). However, a wave of new restaurant openings and refurbishments last year hit the company’s bottom line. Read more: https://lnkd.in/eNqk4Jbf

Why are so many restaurants closing? I was recently asked to provide insight on the state of the restaurant industry and how “Connecticut restaurants are struggling financially because of the high cost of business, but trying their best not to pass the cost onto customers.” Before you comment about the rising menu prices, read on:

Denny’s to close 150 restaurants as restaurant chains continue to struggle The ubiquitous and popular diner chain Denny’s will close 150 locations by the end of next year amid declining revenue and changing consumer habits, the company announced Tuesday. Known for 24/7 service and a wide selection of menu items, the company behind the 71-year-old restaurant reported lower-than-expected earnings for the third quarter and has seen shares fall nearly 50% this year. About 50 locations are marked for closure in 2024, with about 100 more to be shut down in 2025, according to information the company released with its earnings report. The closures represent a 10% reduction in the number of locations the company operates. https://lnkd.in/gj7xREJm

The restaurant industry has been through a tumultuous time since the pandemic and it has weathered the storm and there is optimism that the tide has turned for the better. At the restaurant and finance and development conference the attendees were feeling cautious optimism regarding the current state of affairs. The article below from Restaurant Business Online provides clarity on the view restaurant operators.

5 takeaways from the Restaurant Finance and Development Conference #Financing Read more ⬇️

For restaurant concepts looking to open additional units I would suggest reading the article below from Modern Restaurant Management (MRM) magazine. It outlines what to research before you grow as well as how to hire and retain your staff during your expansion.

Headwinds and pain points: A survey of 600 full-service restaurant owners, CEOs, general managers, and area managers from across the U.S. reveals that despite continued headwinds and challenges, 94 percent of operators still have expansion plans for this year. According to TouchBistro's 2024 State of Restaurants Report, the top pain points that operators are facing this year are: -Inventory costs: 58 percent of those surveyed said this was their number one concern, and 60 percent of operators reported that all or most of their suppliers have raised prices this year. -Menu prices: In response to inventory cost increases, 67 percent of restaurateurs have raised their menu prices in the past year. -Staff turnover: While the staffing shortage has eased, with roughly 82 percent saying they were short at least one position, turnover rates remain at 28 percent for all full-service restaurants and 34 percent for brands with five or more locations. -Commission fees: 46 percent of operators added more off-premises ordering options to boost profits, yet nearly a quarter report paying more than 20 percent in commission fees for each order.

🍽️Restaurant world struggles? ⬇️It seems so as another batch of restaurant chains file for Chapter 11 bankruptcy protection, citing the pandemic as the beginning of their woes, followed by higher costs, including rent, labor and food costs, and cutbacks in discretionary spending. However, some in the industry point to changing consumer trends and the inability of some chains to effectively evolve and keep up with the times. (via CoStar) The list of restaurants recently filing for Chapter 11, most of which are sit-down restaurant chains, includes: ▪️Red Lobster ▪️Rubio's ▪️Tijuana Flats ▪️World of Beer ▪️Buca di Beppo 💸The costs and pressures of operating full service restaurants is very challenging, especially with new concepts opening and market share dwindling with not only full service openings, but fast casual, QSR and well operated local restaurateurs. The pressure on margins is real. Meanwhile, fast-casual chains such as Chipotle, Cava, Shake Shack , and others are seeing revenues rise. What do you think is at the root of the challenges restaurants are facing? 📍Read the CoStar article here: https://bit.ly/4dwbzYS

With economic uncertainty, smart investments can be a lifeline for staying competitive and improving operational efficiency. Invest where it matters most to set your restaurant up for long-term resilience.