Restaurateurs Faced With Rising Food Costs and Lower Profit Margins Struggling to Keep Menu Prices Down

The 2023 "Los Angeles State of Restaurants" report released today by TouchBistro reveals that restaurant sales in Los Angeles, on average, have recovered to only 77.4% of pre-pandemic levels, which is about 3% higher than the national average. However, due to the rising cost of food and other expenses, the profit margins of full service restaurants in Los Angeles dropped to 9.4%, which is 1.2% lower than the U.S. average of 10.6%.

"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. While restaurant guests are feeling the bite of higher menu prices, restaurant owners are working hard to keep prices down so that it is not cost prohibitive for guests to continue enjoying the dining venues and foods they love."

Highlights from the 2023 Los Angeles State of Restaurants Report:

• The average menu price increase in Los Angeles is 15.6%, which is in line with the national average.
• Los Angeles restaurants report spending 50% more on food costs on average compared to the year prior, which is 7% more than the U.S. average. Across the nation, fresh fruits and vegetables have seen the biggest increase, followed by meat and seafood.
• Nearly all Los Angeles restaurants (95%) 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 27%. Though the turnover rate at Los Angeles restaurants is high, it is still better than many other areas of the country, like New York City where the average staff turnover rate is 33%.
• The most in-demand roles in Los Angeles are line cooks and prep cooks, which is a bit of a shift from last year when servers and bartenders were the hardest to find. Bartenders and line cooks are also increasingly hard to find across the rest of the U.S.

Key Los Angeles restaurant trends in the report:

• Direct online ordering is increasingly preferred ? On average, Los Angeles restaurants are now processing nearly a quarter (24%) of their sales through online ordering platforms. And while Uber Eats and GrubHub are tied for the most popular online ordering platforms in Los Angeles, direct online ordering through a restaurant's website is a close second, with 48% of operators preferring this type of solution.
• Expanded seating capacity ? Unlike restaurateurs in many other cities, 50% of operators in Los Angeles reported expanding the seating capacity at their venue (i.e. added patio space) to boost revenue.
• Staff training costs have increased ? Operators in Los Angeles reported spending an average of $4,414 training each new employee, which is about 11% higher than the national average.
• Popularity of loyalty programs ? Los Angeles restaurants have embraced loyalty programs more than ever before. Now, 81% of restaurants in the city offer a rewards program, which is an 11% increase from the year prior.
• Social media engagement ? Twitter and Facebook continue to be the most popular social media platforms for restaurant promotion in Los Angeles, with Twitter taking the lead. Instagram is third in terms of popularity among restaurateurs.

The 2023 Los Angeles 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 touchbistro.com/blog/la-state-of-restaurants-report. The national State of Restaurants report is also available for free download at touchbistro.com/blog/state-of-restaurants-report.

About The State of Restaurants Report

Now in its fifth year, the study was conducted by research firm Maru Matchbox on behalf of TouchBistro in September 2022. More than 600 full service restaurant owners and operators were surveyed across all 50 states with an added focus on six key cities: New York City, Los Angeles, Chicago, Dallas, Houston, and Miami. Survey results are accurate +/- 4% 19 times out of 20. Detailed findings are available at: Maru Public Opinion US.

About TouchBistro

TouchBistro is an award-winning restaurant management system that makes running a restaurant easier by providing essential front of house, back of house, and guest engagement solutions and POS, on one powerful platform. TouchBistro helps restaurateurs streamline and simplify their operations, increase sales, and deliver a great guest experience. For additional information, visit TouchBistro.com.