Small business faces big challenges: Inflation, recession and 18-hour days

In the best of times, restaurant owners operate on low margins. Now, rising costs have made it even more difficult for independent eateries to survive. Jenna Petersiel, owner of Chilmark Tavern on Martha’s Vineyard Island in Massachusetts, spoke with CBS MoneyWatch about how she keeps her business afloat. This interview has been edited for length and clarity.

How has this painfully high struggle of inflation affected your business?

Jenna Petersiel: As far as inflation is concerned, stuff has always been high priced for me at Martha’s Vineyard. And so when it goes up the way now, it’s really difficult for us to adjust our prices to reflect reasonable profit margins.

I always feel like, “Oh my god, I’m charging too much money? Is what I’m charging right now worth it?” For me, the biggest challenge around that is anticipated customer perception. How much can we charge people for food without thinking they are being cut?

Since it is difficult for you to increase the prices of your menu, are you able to remain profitable given how the costs are going up?

We never charge enough here. Chilmark is a dry town so we are BYOB, and most restaurants make all their profit from the wine and are lucky if they break even on the food. We have to earn money from food to cover all the costs. I find myself stuck in this place where it’s like, “How high can we go until it’s okay?”

The pace of economic growth has been very slow this year and there is a risk of recession. How is this affecting you?

I am constantly in a state of fear. It’s always, “What’s worrying about this week?”

As far as bearish fears go, it looks like my client base is bearish proof. But I see that the customers who used to come two to three times a week are eating here a little less frequently. I don’t know if it’s diet-based, because of age or COVID, or fear of recession. I don’t ask them, but I would.

COVID-19 is still around. Have you had any issues with your employees?

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

Right after the accident, we were closed for five days. We reopened for one night, then I tested positive for COVID and the entire kitchen staff tested positive for COVID the next day. We were all sick and we were off for another week. This was the first COVID illness we had in restaurants since having COVID.

Even though we had bought the food – there was perishable food – we had to stop, but there was nothing we could do. We saved what was left and had to throw away a bunch of stuff, which sounds awful. We lost the two weeks before the 4th of July, which is usually a great week for us.

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

Many restaurants say they are short of staff, but that’s not a problem for you. what’s your secret?

Right now, what is important to me is to make sure that our kitchen staff are well paid and appreciated. Sometimes it really takes priority over making sure the restaurant is profitable, because it’s hard to see people working 16 hours a day in a 110 degree hot kitchen and not making enough money. I don’t want to be that kind of boss – to push people over their edge.

I think it is through word of mouth that I am good to work for and a compassionate employer. I’m always on the lookout for a dishwasher. I think it will be eternal for the rest of the time in the restaurant. Someone will always be on the lookout for a dishwasher – this is no fun task.

So what is your biggest challenge right now?

Cost of goods and keep on top of it. Also the cost of utilities, especially here at Martha’s Vineyard, has gone up. Electricians, plumbers, refrigeration repairs are costing a lot more than before.

Even though my costs have gone up, I haven’t raised menu prices so much because it doesn’t feel right. Would you be comfortable paying $36 for a hamburger? It’s kind of like this for everything that goes into it.

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