Why One Restaurateur Believes Inflation Is Helping The Food Industry
Nearly three-quarters of Americans see rising inflation as their biggest worry, according to a May 2022 survey by Pew Research Center. Lagging nearly 20% behind is affordable health care (at 55%), with violent crime following close behind (54%). Since Pew's survey, inflation has remained around the same sky-high level. According to the latest Consumer Price Index (CPI) issued by the U.S. Bureau of Labor Statistics, the CPI for the year ended July 2022 was 8.5%.
Inflation is bad for the economy for numerous reasons, per The Street. These include the fact that inflation reduces consumer purchasing power and raises interest rates (which also reduces consumer purchasing power), and it wreaks financial havoc disproportionately on those depending on income. Still, as prices reach heights never before seen, some see an upside.
Restaurateur Danny Meyer, the founder of Shake Shack, is among the others who see inflation as leading to possible higher wages for workers, which could also attract more people back into the labor pool.
Let's not forget that inflation helps drive wages up
According to Deloitte USA, sustained price inflation like that which the United States is experiencing, "typically requires sustained wage inflation." And is there really anything more motivating to a reluctant labor supply than the potential of increased wages? That's essentially what restaurateur and Shake Shack founder Danny Meyer told CNBC host Jim Cramer, on an August 9 episode of "Mad Money" (via CNBC). Meyer said that inflation is sweetening the deal for our nation's restaurant workers, some of whom had been reluctant to return to work for any number of reasons, including disappointing pay rates, per CNBC.
Inflation has forced menu prices to skyrocket. That, in turn, means that the tip on a check will be higher than what it was a year ago. "If you do have a tipping model in your restaurants, servers are making more money than they've ever made before," Meyer stated (per CNBC). But even without a tipping model, it's still possible to reward workers by adopting a revenue-sharing model – which is what Meyer's company does for cooks who are not eligible for tips.
Unfortunately for consumers, American wages have not yet risen significantly throughout all industries, per Deloitte USA. Meyers said he recognizes that the majority of consumers are facing higher prices without wage increases, but business costs have "got to stop somewhere" (per CNBC).