Small businesses face big challenges: inflation, recession and the 18-hour day

Small businesses face big challenges: inflation, recession and the 18-hour day

At the best of times, restaurant owners operate on thin margins. Now, rising costs are making it even harder for independent restaurants to survive. Jenna Petersiel, owner of the Chilmark Tavern on Martha’s Vineyard in Massachusetts, spoke with CBS MoneyWatch about how she keeps her business afloat. This interview has been edited for length and clarity.

Jenna Petersiel, owner of Chilmark Tavern, repairs a joint with a piece of kitchen equipment.

Jenna Petersiel

How has this painfully high inflation affected your business?

Jenna Petersiel. As for inflation, the cost of goods has always been high for me on Martha’s Vineyard. And so when it goes up like it is now, it’s really hard for us to adjust our prices to reflect an appropriate profit margin.

I always have that feeling. “Oh my god, I’m charging too much. Is it worth what I’m charging now?” For me, the biggest challenge around this is the expected customer perception. How much can we charge for food without people feeling ripped off?

Since it is difficult for you to raise your menu prices, can you remain profitable given how costs are rising?

We never charge enough here. Chilmark is a dry town so we are BYOB and most of the restaurants make all their profit from the alcohol and are lucky if they break even on the food. We need to make money from food to cover all expenses. I find myself stuck in this place where you say. “How high can we go before it’s no good?”

Economic growth has slowed sharply this year and there is a risk of recession. How does it affect you?

I live in constant fear. It always says, “What’s this week’s anxiety?”

As far as recession fears go, it kind of seems like my customer base is kind of recession proof. But I find that customers who used to come two or three times a week dine here a little less frequently. I don’t know if it’s diet based, age or fear of COVID or recession. I don’t ask them, but I would like to.

COVID-19 is still around. Have there been incidents in your staff?

I was fully stocked and expected to be staffed, which is a miracle in this market. Then a month ago our chef and cook were in a terrible car accident and one of them actually died.

Immediately after the accident, we were closed for five days. We reopened overnight and then I tested positive for COVID and the entire kitchen staff tested positive the next day. We were all sick and closed for another week. It was the first COVID illness we have had at the restaurant since the COVID incident.

We had to close even though we bought food, we had perishable food, but there was nothing we could do. We saved what we could and had to throw away a bunch of stuff, which is scary. We lost the two weeks leading up to the 4th of July, which are usually huge weeks for us.

We also usually have a 24-hour cancellation policy, but people say, “I can’t get in because I just tested positive for COVID.” I don’t know if they did or not, but I can’t say they are lying.

Many restaurants say they are understaffed, but that hasn’t been a problem for you. What’s your secret?

What’s important to me right now is that our kitchen staff is well paid and appreciated. Sometimes it actually takes precedence over the profitability of the restaurant, because it’s hard to watch people work 16 hours a day in a 110-degree kitchen and not make enough money. I don’t want to be that kind of boss.

I think it was through word of mouth that I did a good job and was a good employer. I am always looking for a dishwasher. I think the rest of the time in restaurants it will be forever. One will always be looking for a dishwasher, it’s not a fun job.

So what is your biggest challenge right now?

Cost of goods and storage thereof. Also, the cost of utilities, especially here on Martha’s Vineyard, has gone up. Electricians, plumbers, refrigerator repairs cost a lot more than they used to.

Even though my costs have gone up, I haven’t raised the menu prices that much because it just doesn’t feel right. Would you be comfortable paying $36 for a hamburger? It’s kind of worth it for what it’s worth.

Are you a small business owner coping with inflation and a slowing economy? If so, CBS MoneyWatch would like to hear about your biggest challenges and how you’re adapting your business. Please email [email protected]

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