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  • Continued Restaurant Sales Pressure in May

  • The bad news just continues for restaurants as sales continue to stay under pressure, according to a new Black Box Intelligence report

    It's a mess-of-a-report showing continued labor and sales pressure.  Costs are going up, sales are not, and restaurants will be going out of business.  It's basic math. 

    The cost structure continues to rise and politicians continue to find new regulations and laws to pass (minimum wage increases, soda tax, etc...).  What most don't realize is this is a direct assault on small business, NOT big business.  They are forcing business to gain more market share just to survive when most would argue that a good economy is when a small business can open up with the least amount of capital and survive on the smallest amount of market share.  That's a pretty logical and fair definition.  Big business has the large budget to survive and bring their cost structure down or hold off from closing their doors longer than the rest.  That independent restaurant with a passionate owner, but smaller budgets tends to die off first.  If you ever play no limit poker, you know that the person with the most amount of chips to start has a huge advantage over everyone else and unless that person has no idea how to play, the probability is they will win decisively.  The person with the most amount of money usually isn't foolish with it. 

    Restaurants will die off as more market share is now needed to survive.  The weakest independents will die off.  The weakest mom and pops will die.  Then, that market share goes to the remaining independents until they are suffocated.  Finally, those will be pressured and ultimately give that market share to their big business competition.  That will be a concerning day as big business controls everything, against the rules of capitalism.  All these new regulations, mandatory wage increases, etc...all that does is drive more income inequality based on Econ 101, but it provides a temporary boost while the changes filter through the economic system.  The vast majority of people understand this, but because too many vote based on "feel good politics," it will continue to get worse as these proposals continue to pass else you're evil for going against it. 

    In order for independent restaurants to survive, they must learn how to build their brand inside the restaurant and more importantly online.  They must learn how to actually grow their catering department (larger transactions offset high labor costs).  Survival of the fittest is happening right now and restaurants nationwide are dying off until the market rebalances.  Independents continue to die off first during this rebalance. 

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