Small businesses face big challenges: inflation, recession and 18-hour days

At best, restaurateurs operate on low margins. Today, rising costs make it even more difficult for independent restaurants to survive. Jenna Petersiel, owner of Chilmark Tavern on the island of Martha’s Vineyard in Massachusetts, spoke with CBS MoneyWatch about how she keeps her business afloat. This interview has been edited for length and clarity.

Jenna Petersiel, owner of the Chilmark Tavern, repairs a connection to kitchen equipment.

Jenna Petersiel

How has this painful surge of inflation affected your business?

Jenna Petersiel: When it comes to inflation, the cost of goods to me on Martha’s Vineyard has always been high. And so when it’s going up like that right now, it’s really difficult for us to adjust our prices to reflect an appropriate profit margin.

I always think to myself, “Oh my God, am I charging too much money? Is it worth what I’m charging right now?” For me, the biggest challenge is the anticipated perception of customers. How much can we charge for food without people thinking they are being ripped off?

Since it is difficult for you to increase the prices of your menus, are you able to remain profitable given the skyrocketing costs?

We never charge enough here. Chilmark is a dry town, so we are BYOB, and most restaurants make all of their profits from alcohol and are lucky if they break even on food. We have to earn money from the food to cover all the costs. I get stuck in this place where it’s like, “How far can we go until this just isn’t ok 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 this week’s concern?”

As far as recession fears go, it seems like my clientele is kind of recession proof. But I find that customers who come two to three times a week dine here a little less often. I don’t know if it’s diet based, due to age or COVID, or recession fears. I don’t ask them, but I would like to.

COVID-19 is still here. Have there been cases among your staff?

I was full and planning to be overstaffed, which is a miracle in this market. Then, a little over a month ago, our sous chef and our cook had a terrible car accident and one of them died.

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

We had to close even though we had bought food – perishables – but there was nothing we could do. We saved what we could and had to throw away a bunch of stuff which is awful. We lost the two weeks leading up to the 4th of July, which are usually great weeks for us.

We also usually have a 24 hour cancellation policy, but people say, “I can’t get in because I just tested positive for COVID. I don’t know if they did it or not, but I can’t tell them they’re lying.

Many restaurants say they’re understaffed, but that wasn’t a problem for you. What is your secret?

What’s important to me right now is making sure our kitchen staff are well paid and appreciated. Sometimes that takes precedence over the profitability of the restaurant, because it’s hard to see people working 16 hour days in a 110 degree kitchen and not making enough money. I don’t want to be that kind of boss – push people over the edge.

I think word of mouth makes me fun to work with and a friendly employer. I’m still looking for a dishwasher. I think it will be forever for the rest of the time in restaurants. We will always be looking for a dishwasher – it’s not a fun job.

So what’s your biggest challenge right now?

The cost of goods and keeping control of that. Also, the cost of utilities, especially here on Martha’s Vineyard, has gone up. Electricians, plumbers, refrigeration repairs cost much more than before.

Even though my costs have gone up, I haven’t raised the menu prices much, because it just doesn’t work for me. Would you be comfortable paying $36 for a burger? That’s kind of what it’s worth for everything in there.

Are you a small business owner struggling with inflation and a slowing economy? If so, CBS MoneyWatch would like to hear about your biggest challenges and how you are adapting your business. Please email [email protected]

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