Cameron Mitchell, CEO of Cameron Mitchell Restaurants, told CNBC on Wednesday that unruly diners have cost his business $ 750,000 a year on top of the supply chain snare and rising inflation that has already damaged his bottom line.
“We never spent a dollar on security in our restaurants before Covid, and now we spend about three-quarters of $ 1 million a year on security to protect our managers and staff from some unruly guests that happen in our restaurants,” Mitchell said. on “Squawk Box”, adding that even though there is only a “small percentage” of unruly diners, they still affect staff safety.
Mitchell compared disorderly diners to unruly passengers on planes, which have caused a record number of disruptive and violent incidents for U.S. airlines this year. CMR is an independent and privately owned restaurant company that operates 40 restaurants nationwide from Beverly Hills, California to New York City.
Tensions between patrons and staff, particularly over Covid’s security guidelines, have haunted companies over the past two years. Mitchell said he believes the unruly diners his staff have encountered are driven by “rage in general.”
“It’s hard for managers. And then they’re dealing with short staffing. Then we have the rising costs and supply chain problems,” Mitchell said. “Our people are constantly struggling to get products in, etc., that we need, so it’s very challenging for our daily operations out there,” he added.
Food prices rose 7% in January from a year earlier, according to data from the U.S. Bureau of Labor Statistics. Rising costs and labor shortages over the past year have also been a challenge for restaurants. The National Restaurant Association expects it will be a year or more before conditions begin to stabilize for the eateries.
Mitchell said his restaurants have felt the impact of the higher costs. “It’s the highest cost of goods I’ve ever operated in, 42 years in the restaurant business. For example, cost of goods last year was 29.6% of sales, this year 33% of sales so far. That increase of 3.4% costs affects our bottom line seriously, “he said.
He added that while labor costs have risen around 13% overall, his workforce has almost returned to normal levels since he got a hit last year due to the omicron wave.
The restaurateur said he expects to raise prices this year to compensate for the cost, and hopes to continue the trend of increasing sales to levels his company saw in 2019 before the pandemic.
“We can not price our way out of this, but with the increase in sales, if we get back to where we were with our price increase, we can not maintain our profit margin,” Mitchell said. However, he added that the company “can still make a pretty good profit during the year.”