Columbus, Ohio – Responding to the twin pressures of rising food costs and higher labor expenses, a remarkable 70% of Ohio restaurants and hotels revealed in a recent study intentions to hike their pricing in the second quarter of 2024. Reflecting a wide range of the sector, the poll, carried out by the Ohio Restaurant and Hospitality Alliance from May 7 to May 31, received opinions from 100 to 200 companies all around the state.
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John Barker, President and CEO of the Ohio Restaurant and Hospitality Alliance, emphasized the importance of these “business impact polls,” a practice that began in 2020 during the pandemic. Speaking with NBC4, Baker clarified that these polls enable to compile vital information to guide politicians and assist their members in negotiating business demands. With around 25,000 restaurants represented by the Alliance, Ohio ranks eighth in terms of restaurant sales and number of restaurants of all the states.
With 92% of companies stating greater food expenses in the first quarter of 2024 compared to the same period in 2023, the poll exposed a startling rise in prices. The way the increases broke out is instructive: 38% of companies witnessed a 5% spike in food prices, 29% saw a 10% rise, 19% saw a 15% jump, and 6% dealt with rises beyond 15%. Just 8% of respondents claimed consistent meal expenses.
Labor expenses also jumped; according to 96% of respondents, 2024 will show a notable prices increase. More than half of the companies (52%), said their personnel costs had increased by 5%; 30% said their increase was 10%; 10% said their rise was 15%; and 4% said their rise exceeded 15%.
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Setting a difficult economic backdrop for the sector, 60% of operators said either a decline or no change in sales volumes during the first quarter of 2024 compared to the previous year despite these cost hikes. As such, a substantial number of companies—70%—are likely to change their pricing policies. Of these, 4% are thinking of boosting prices by more than 10%, 13% want a 10% increase, and 53% want a 5%.
Barker linked the need for price changes to inflation, which has had a significant impact on ingredient costs.
“The culprit for rising menu costs is inflation. Inflation for ingredients is up about 32% from the pandemic, he said, and restaurants have “don’t have a choice” but to raise prices.,” Barker explained.
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Rising menu pricing reflect national trends in this sense. The United States Department of Agriculture estimates that dining out across the country grew by 4% from May 2023 to May 2024. Another layer of complexity is the continuous legislative debate over raising the pay for tipped workers, as those suggested in Senate Bill 256, which seeks to bring the tipped pay to $7.50 by 2028. Citing issues of gender and racial inequalities among tipped workers, a grassroots effort known as “Raise the Wage Ohio,” is advocating an even more steep climb to $15 per hour.
Despite these programs, Barker noted that most Ohio tipped employees prefer the existing pay structure based on poll results showing 93% of waiters and bartenders support keeping it.
“The average amount of money that a typical server makes in Ohio is $27 an hour,” Barker said. “So then we went out and asked servers and bartenders ‘how do you feel about this’ and 93% of them want to keep the current system that we have.”
The next several months will be crucial in deciding how successfully Ohio’s restaurant and hotel industry can adjust to the changing economic scene while preserving its service quality and customer happiness as it negotiates these financial constraints and legislative changes.
