Imagine you’re a restaurant owner of a downtown fine dining BYOB. The pandemic has finally slowed and in a matter of a few months your business went from being unable to open its doors to now being free to welcome guests with just a mild suggestion to continue to wear masks. Mandates are lifted and foot traffic on your block increases as crowds return thanks to businesses going back to in-person office days. Things seem to be looking up!

Except for a few BIG challenges. First, there’s the labor shortage. You worry about having enough kitchen and front of house staff to cover all of your operating hours. You’ve raised per hour rates for some of your most valuable staff to keep them from jumping ship.

Then there’s the supply chain issues. Even if you have enough staff for the weekend, will your food and supply shipments come in on time? Will you have enough food or should you start cutting items from the menu? To top it all off, you’re feeling the squeeze between trying to keep your prices within a realistic range while attempting to afford the exceedingly high costs you’re encountering from your vendors.

Although the specifics might change, this scenario is being repeated throughout the close to one million hospitality businesses in the US. This includes restaurants, hotels, motels, resorts, theme parks and tourist destinations. Few are immune to the higher costs of operating in 2022.    


What’s the Current Environment for Hospitality Businesses in 2022?

In a comprehensive survey of the foodservice industry, The National Restaurant Association projected a $100 billion increase for sales in 2022. Yet when this figure is adjusted for inflation, it is still lagged against pre-pandemic numbers.

Surveying 3,000 operators from quick serve to fine dining in the last two months of 2021, the report found higher labor and food costs cutting into profits. In fact, three in four respondents reported that their business is in worse condition right now than it was three month prior. A similar quantity reported being short staffed.

90% of these foodservice businesses said that food costs have risen since before the pandemic, while 80% said that their profits are down. And an astounding 96% reported supply shortages.

The industry is also waiting on another lifeline. The National Restaurant Association is urging Congress to replenish the Restaurant Revitalization Fund, pointing to its own data that show half of restaurant operators that did not receive RRF grants from the $28.6 billion program feel it’s unlikely that they will stay in business beyond the pandemic without access. The group says $48 billion would resolve the 170,000 applications still pending for businesses with the Small Business Administration, which runs the program.


How is the Hospitality Industry Learning to Thrive through Inflation?

Controlling costs is essential to surviving and thriving in the current inflation environment. The hospitality industry is taking a multi-prong approach to navigating through increased cost. 

Controlling Labor Costs

The U.S. Bureau of Labor Statistics reported that compensation in the hospitality industry rose by 6.9 percent between September 2020 and 2021. That’s nearly double the increase from the previous twelve months. And there’s no sign of this upward trajectory slowing down.

The hospitality industry is responding to this challenge by attempting to eliminate inefficiencies in scheduling staff. Focusing efforts on better forecasting to predict popular times versus slower times can help to save on precious labor resources. Another strategy has been to add cross-training that gives employees the opportunities to learn new skills, while becoming multi-functional depending on the current needs of the business.

Minimizing Supply Costs  

Food costs are putting a major crimp in profits across the hospitality industry. To help minimize some of these higher costs, hospitality brands are conducting menu audits to cut down on extraneous ingredients. They’re also narrowing their number of vendors and consolidating their orders into less frequent deliveries. With rising gas prices, unnecessary deliveries can really eat into profit margins. It’s also worthwhile to take another look at portions, as customers today are more health conscious and can be turned off by enormous portions that cost the business big time.

Beyond food prices, there are other areas that can help trim the budget, including having a professional real estate tax expert assist with reducing a property’s tax burden, adding in more efficient LED lighting and working more with purchasing conglomerates for better pricing.

Adding New Profit Streams

While cost-cutting is always a smart response to inflation prices, adding additional profit streams can also be helpful. For the hospitality industry, this can mean making ordering and booking as easy as possible thanks to online ordering and QR code ordering. Restaurants can lean into  delivery (which continues to be a popular option with consumers) and expand their seating capabilities with outdoor dining parklets and alcohol-to-go. As consumers come back to larger gatherings and events, off-site catering and event hosting can become another avenue for additional revenue.

Making Economical Investments

While most hospitality businesses are focused on cutting costs wherever possible, they still need to upgrade and replace essential elements of their businesses. These capital investments are essential to maintaining the proper image, quality and customer experience. One of those essentials is employee attire. Natural wear and tear, style changes and staff hires demand new uniform purchases. Hospitality businesses will want to ensure they are getting value from their staff apparel investments, at the same time they demand high-quality fabric with durable construction that will hold up through the rigors of the business.

While 2022 continues to hold many challenges for the hospitality industry, from pandemic transitions to inflation wreaking havoc with cost control, the demand and interest from consumers has only increased. Savvy hotel, restaurant and resorts will be focusing on cutting costs while investing strategically in upgrades that improve their brand’s image and the experience of their customers. High-quality hospitality apparel remains one of these essentials that never goes out of style.