Cameron Mitchell, chief executive of Cameron Mitchell Restaurants, told CNBC on Wednesday that unruly diners have cost his business $750,000 a year, on top of supply chain snarls and rising inflation that have already hurt his bottom line.
“We never spent a dollar on security in our restaurants prior to Covid, and now we spend about three-quarters of $1 million a year on security to protect our managers and our staff from some unruly guests that happen in our restaurants,” Mitchell said on “Squawk Box,” adding that while there’s only a “small proportion” of unruly diners, they still affect staff safety.
Mitchell likened disorderly diners to unruly passengers on airplanes, who have caused a record number of disruptive and violent incidents for U.S. airlines this year. CMR is an independent and privately held restaurant company, which operates 40 restaurants nationwide from Beverly Hills in California to New York City.
Tensions between patrons and staff particularly over Covid safety guidelines have dogged businesses over the past two years. Mitchell said he believes the unruly diners his staff have encountered are fueled by “rage in general.”
“It’s difficult for managers. And then they’re dealing with short staffing. Then we’ve got the rising costs and supply chain issues,” Mitchell said. “Our people are constantly scrambling to get product in, etc. that we need, so it’s very challenging for our day-to-day operations out there,” he added.
Food prices surged 7% in January from a year earlier, according to data from the U.S. Bureau of Labor Statistics. Rising costs and a short supply of labor over the past year have also posed a challenge for restaurants. The National Restaurant Association expects it to take a year or more before conditions start to stabilize for eateries.
Mitchell said his restaurants have felt the effect of the higher costs. “It’s the highest cost of goods I’ve ever operated in, 42 years in the restaurant business. By way of example, last year cost of goods were 29.6% of sales, this year 33% of sales so far. That 3.4% increase to the cost is severely impacting our bottom line,” he said.
He added that while labor costs are about 13% overall, his workforce has almost returned to normal levels since taking a hit late last year due to the omicron wave.
The restaurateur said he expects to increase prices this year to offset costs, and hopes to continue the trend of increasing sales to levels his business saw in 2019, before the pandemic.
“We can’t price our way out of this, but with the increase in sales, if we get back to where we were with our price increasing, we can not maintain our profit margin,” Mitchell said. However, he added the business can “still lead a pretty good profit over the course of the year.”
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