U.S. restaurants have been caught between minimum wage hikes and rising food material costs on one side and growing competition on the other, squeezing profit margins.
Recent financial reports showed a slowdown in restaurant revenues and a rise in labor and materials costs. These two trends have resulted in lower gross margins, disappointing industry investors.
“Rising labor and food costs continue to pressure profit margins. Notably, labor costs now consume 40 percent to 45 percent of gross sales, up from 30 percent to 35 percent,” Philadelphia-based restaurateur Aaron Anderson told The Epoch Times via email.
Chipotle is a good case in point of the problem the industry has been facing recently. The popular Mexican restaurant chain reported annual sales growth of 13 percent in the third quarter, below the 18 percent growth in the second quarter….