Half-Full Restaurants Are Not a Good Sign for the Economy

This past weekend, we were hanging out with my brother and his family.  We decided to go to an early dinner.  We called three places around 4 o’clock or so.  None took reservations; all said the wait was forty five minutes or more.  We decided to go to the grocery store and cook at home.  Thank goodness for grills; my brother and I cooked everything.

One of the restaurants we called was across the street from the grocery store.  The parking lot was far from full. For giggles, we peaked in.  The restaurant was less than half full.  I asked why the wait was an hour.  The manager said, “We don’t have enough staff to fill the restaurant.  We have raised wages but we still have several open positions.  We can only seat to about half capacity.” 

I do not know much about the restaurant business.  I am pretty sure it is hard to make money filling half your capacity on a weekend when there is clearly demand for your products.  If the restaurant doubles prices to make up for the lost volume, I think many consumers will opt to eat at home.  That situation quickly becomes the death spiral for a business: lose volume, raise prices to offset the lost volume, lose volume due to high prices.  It quickly spins to a closed business.

We are in a labor market like no one has ever seen.  As I have written in the past, it is not normal for a business to turn away revenue.  That is happening across the economy, in the service sector, shipping, and manufacturing.  I hope our policy makers can figure out how to help turn the tide.   

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