Hey, ever watched Shark Tank? That’s Kevin O’Leary for you. The restaurant scene has been a bit rough lately due to rising prices spurred by inflation, not to mention the pressure from the surge in home delivery services.
Recently, Red Lobster filed for bankruptcy, adding to the list of casualties in the food industry grappling with economic challenges like increased costs and fewer people dining out.
O’Leary emphasizes the need for businesses to adapt to these changing dynamics to survive the shifting economic landscape.
According to O’Leary, the inflation hangover from the pandemic is still lingering in America’s economic recovery. The disrupted supply chains from the COVID lockdown are still struggling, with food prices, especially proteins like chicken, beef, and seafood, shooting up by 30 to 40 percent over the past 36 months.
The pandemic and price hikes have reshaped consumer spending habits, with more people opting for at-home dining experiences. O’Leary pointed out that a considerable number of Americans, particularly those aged 60 and above, started ordering takeout using their phones for the first time in 2020, and this habit stuck.
With remote work persisting post-COVID, fewer people are heading out for meals or socializing with colleagues, impacting traditional eateries adversely.
O’Leary anticipates that many brick-and-mortar restaurants might have to shutter, declare bankruptcy, or relocate to more affordable locations due to changing consumer behaviors and financial constraints.
Given that wages have not kept pace with inflation, individuals are left with less disposable income for non-essential expenses like dining out, making it challenging for businesses in the hospitality industry.
O’Leary highlights the financial strain on the average American household earning around $68,000 annually, considering the escalating costs of essentials like transportation, housing, and utilities.
He concludes by noting the uncertainty about when, or if ever, prices will stabilize to ease the burden on consumers.