CASH IS KING for Locally-Owned Restaurants – Part 3 in Our Restaurant Series
By Ray Rodriguez
You are waiting for a seat at your favorite local’s spot. It’s great seeing so much activity after two years of closures, mask mandates, hand sanitizer, and wondering if “your place” will be around after the smoke clears. You did your part. You purchased takeout, curbside, and home delivery. You dined outside, often on makeshift structures or quickly assembled sidewalk tables. You tipped well.
Or perhaps you had reason to self-quarantine and are finally comfortable venturing back to your favorite spots? As normalcy begins to rise from under the Covid cloud, you and your local innkeepers walk together into an uncertain future. Brittany Bridwell, of the bustling Country Kitchen in Joshua Tree, speaks of a fine future. Now in her early 30s, she has waited tables since she was 17. Brittany and husband Travis parent 18 month-old twins and are expecting a girl in mid-April. They live on base where Travis is 10 years into his career as a Marine.
Brittany’s voice fills with excitement when she speaks of Country Kitchen. “It’s an amazing place, with a team that works well together and owners who truly care about each employee.” She joined Country Kitchen when they were only allowed to do takeout. Now, each seat is filled the moment it becomes vacant. Brittany has seen a wide variety of customer’s approaches to dealing with Covid, most interesting are the daily proclamations of returning regulars, “This is my first time out in months!” Along with returning diners, there are adjustments and concerns.
Pappy and Harriet’s chef, Chris Shurley, exclaims, “business has been gangbusters”. After 10 years at Pappy’s, Chris is quick to note, “we struggled for a time getting product. And while that passed, we still have trouble with some niche items, including mesquite for the grill, currently replaced by Red Oak. Beef prices skyrocketed, as have other items. We also had some labor issues, but we’re solid now. We streamlined our menu and moved to an a la carte menu to minimize waste and it worked well. Yes, we had to make some price increases on menu items – a move never popular with locals – but our adjustments kept prices much lower than they might have been.”
With a no reservation policy and a daily waitlist, Pappy’s and Chef Chris appear well placed for future success, even at the slightly higher ticket price demanded by inflation. Places with extraordinary clienteles seem to have found their stride. But does bustling mean profitable? Are local restaurants thriving just because they’re busy? Would busy places all be raising prices and risk customer discontent unless it were necessary? And what of the rest?
Never a high profit margin business, local restaurants average a 4-7 percent profit after all costs. Many costs are unseen by the public, including as many as 5 different types of insurances, accelerated rents, climbing utilities, and a 50% increase in labor costs over the past 5 years. Owners are reluctant to complain publicly. After all, it’s contrary to the spirit of “hospitality”. Confidentially, one hears repeated concerns of “working harder with less staff”, ”great sales, but new costs destroying profit”, “everyone is making money but the owners”, and “I’m afraid to raise prices more and I need to.”
While customers cannot control the impact of these costs, they can help in one important area. The rising use of debit and credit cards over cash transactions. As one owner asks, “Why cut a bank into every simple meal transaction?” For a small business the extra 3% or more banks are allowed to charge businesses to access customer’s money can equal the entire profit for a year. For every 1 million in topline sales, $30,000 is drained from skinny bottom-line profit, impacting owners, staffs, and community outreach. That’s a lot of baseball and soccer uniforms.
The push to minimize cash purchases in our society not only affects restaurants but comes at a huge cost to all locals. When extended to other local businesses, the amount of resources rushing from your community is many millions annually, and growing. A small sign behind the counter at C&S Coffee shop is a rare public plea to this mounting financial bleed on local businesses/communities. It reads, “Please tip in cash.”
If your favorite local-owned business – restaurant or otherwise – made it through the Covid gauntlet, please pay with cash.
Ray Rodriguez is a lifelong desert resident with 45 years in food and beverage.