Food Costs Lower Profits for NYC Restaurants, Report Shows
The 2023 “New York City State of Restaurants” Report released by TouchBistro reveals that restaurant sales in New York City, on average, have recovered to approximately 76 percent of pre-pandemic levels, which is on par with the national average. However, due to the rising food costs and other expenses, the profit margins of full service restaurants in New York City fell almost a point to 10.1 percent, which is .5 percent lower than the U.S. average of 10.6 percent.
“After contending with the worst of the pandemic, many restaurants had their sights set on a more successful recovery, but it’s been a mix of highs and lows,” says Samir Zabaneh, CEO of TouchBistro. “Now, as the restaurant industry enters another year characterized by economic instability and change, many restaurants are once again preparing to adjust the way they run their businesses. Restaurant guests are feeling the bite with higher menu prices, but restaurant owners are working hard to minimize the increases so it is not cost prohibitive for guests to continue to enjoy the dining venues and foods they love.”
The average menu price increase in New York City is 16 percent, which is just slightly above the national average.
New York City restaurants report spending 45 percent more on food costs on average compared to the year prior, which is about the same as the rest of the U.S. Across the nation, fresh fruits and vegetables have seen the biggest food costs increase, followed by meat and seafood.
Nearly all New York City restaurants (99 percent) say they are short staffed, with most operators saying they are short about six staff members on average. This is likely due to the city’s high turnover rate of 33 percent. Restaurants across the U.S. are experiencing a similar staff shortage issue (96 percent), though not quite as severe as in New York City.
The most in-demand roles in New York City are bartenders and managers, which is a bit of a shift from last year when servers and bartenders were the hardest to find. Bartenders continue to be hard to find across the rest of the U.S., but a shortage of line cooks has also become a problem.
Key New York City restaurant trends in the report:
Online ordering and delivery still going strong – Most New York City restaurants are doing more than a quarter (28 percent) of their business through online ordering. And while Uber Eats is the number one online ordering platform across the U.S., direct online ordering is the preferred solution for New York City restaurants.
Menu flexibility and modifications – Despite the rising cost of food, more than two-thirds of New York City restaurants have added items to their menus, including extended wine lists and adding more modification options.
Wages for staff increased – In addition to 55% offering higher wages, restaurants in New York City also spend $4,561 training each new employee, which is 15 percent higher than the national average.
Popularity of loyalty programs – New York City restaurants have embraced loyalty programs more than ever before. Now, more than two-thirds of the restaurants in the city offer a rewards program.
Social media engagement – Twitter and Facebook continue to be the most popular social media platforms for restaurant promotion. However, TikTok is on the rise as well and has actually overtaken Instagram in terms of popularity among restaurateurs.
The 2023 New York City State of Restaurants provides more in-depth insights that operators are using to succeed in this coming year. It can be downloaded for free at www.touchbistro.com/blog/nyc-state-of-restaurants-report. The national State of Restaurants report is also available for free download at touchbistro.com/blog/state-of-restaurants-report.
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