Restaurant CEO Cameron Mitchell says his business has paid $750,000 a year in security costs since the pandemic. Add to that the problem of staff shortages, supply chain difficulties, and rising input costs.
Cameron Mitchell, chief executive officer of Cameron Mitchell Restaurant, told CNBC on Wednesday that unruly diners cost his business $750,000 a year. This is higher than both supply chain difficulties and rising inflation have hit his profit.
Mr. Mitchell said on “Squawk Box”: “We never had to spend a dollar on restaurant security before the Covid pandemic hit. “Like airlines…we have unruly guests. We never spent a dollar on security prior to Covid and now we spend about $750,000 on security to protect our managers and our staff,” he said. It must be added that, despite only a “small percentage” of rude diners, they still affect the safety of staff.
Mr. Mitchell linked these rioting diners to unruly passengers on board, who have caused a record number of incidents of disturbances and violence against US airlines this year. Cameron Mitchell Restaurant is a privately owned and independent restaurant that operates 40 restaurants with various names across the United States from Beverly Hills California to New York City.
Tensions between patrons and employees, especially over Covid-19 safety guidelines, have plagued businesses over the past two years. Mitchell said he believes the unruly diners his staff encounter is fueled by “general rage.”
“It’s difficult for managers. And then they’re dealing with short staffing. Then we’ve got the rising costs and supply chain issues,” Mitchell said. “Our people are constantly scrambling to get product in, etc. that we need, so it’s very challenging for our day-to-day operations out there,” he added.
Food prices rose 7% in January from last year, according to data from the US Bureau of Labor Statistics. Rising costs and a shortage of labor in the past year also pose challenges for restaurants. The National Restaurant Association expects it to take at least a year for eateries to start stabilizing.
Mitchell said his restaurants have been hit by rising costs. “It’s the highest cost of goods I’ve ever operated in, 42 years in the restaurant business. By way of example, last year cost of goods were 29.6% of sales, this year 33% of sales so far. That 3.4% increase to the cost is severely impacting our bottom line,” he said.
He added that while overall labor costs are up about 13%, his workforce has almost returned to normal levels since being hit late last year by the Omicron wave.
The restaurant owner said he expected to raise prices this year to offset costs. He also expects the upward trend in sales to continue to the levels he saw in 2019, before the pandemic hit.
“We can’t price our way out of this, but with the increase in sales, if we get back to where we were with our price increasing, we can not maintain our profit margin,” Mitchell said. However, he added the business can “still lead a pretty good profit over the course of the year.”