In the best of times, restaurant owners operate on thin margins. Now rising costs are making it even harder for independent eateries to survive. Jenna Petersiel, owner of Chilmark Tavern on Martha’s Vineyard in Massachusetts, spoke to CBS MoneyWatch about how she keeps her business afloat. This interview has been edited for length and clarity.
How has this painfully high bout of inflation affected your business?
Jenna Petersil: Inflation wise, the cost of goods for me on Martha’s Vineyard has always been high. So when it goes up like it is right now, it’s really hard for us to adjust our prices to reflect a proper profit margin.
I always feel like, “Oh my god, am I taking too much money? Is what I’m charging right now worth it?” For me, the biggest challenge around that is the expected customer acceptance. How much can we charge for food without people thinking they are being ripped off?
As you struggle to raise your menu prices, can you remain profitable given how much costs are rising?
We never charge enough here. Chilmark is a dry town so we are BYOB and most restaurants make all their profit on alcohol and are lucky if they break even on food. We have to make money from food to cover all expenses. I find myself stuck in this place where it’s like, “How high can we go until it’s just not good anymore?”
Economic growth has slowed sharply this year and there is a risk of recession. How does this affect you?
I live in a constant state of fear. It’s always “What’s the concern this week?”
As for recession fears, it seems my customer base is kind of recession proof. But I find that customers who used to come two to three times a week dine here a little less often. I don’t know if it’s diet based, age or COVID or recession fears. I don’t ask them, but I would like to.
COVID-19 is still around. Have there been cases among your employees?
I was fully staffed and expected to be overstaffed, which is a miracle in this market. Then a little over a month ago our sous chef and line 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, then I tested positive for COVID and the entire kitchen staff tested positive for COVID the next day. We were all sick and closed for another week. This was the first COVID illness we have had in the restaurant since COVID happened.
We had to close even though we had 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 feels awful. We lost the two weeks before the Fourth of July, which are usually great weeks for us.
We usually have a 24-hour cancellation policy, but people say, “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 understaffed, but that’s not a problem for you. what is your secret
Right now, what’s important to me is making sure our kitchen staff is well paid and appreciated. Sometimes that actually takes precedence over making sure the restaurant is profitable because it’s hard to watch people work 16 hour days in a 110 degree hot kitchen and not make enough money. I don’t want to be that boss – push people to their edge.
I think it happened by word of mouth that I am good to work with and a nice employer. I’m always looking for a dishwasher. I think this will be forever for the rest of the time in restaurants. One will always be looking for a dishwasher – it’s not a fun job.
So what is your biggest challenge right now?
The cost of goods and maintenance on top of that. Also, utility costs, especially here on Martha’s Vineyard, have gone up. Electricians, plumbers, refrigerator repairs cost a lot more than before.
Even though my costs have gone up, I haven’t increased my 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 everything that goes into it.
Are you a small business owner dealing 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]