US restaurants see tough year ahead over food, wage costs

Bloomberg

It’s not going to get much easier for the restaurant industry.
After facing stagnant sales and weak customer traffic in 2018, US restaurants will encounter more headwinds this year, including rising food and wage costs, that may stall profit and hinder efforts to jump start growth.
Even the industry stalwarts are dealing with such issues in a fiercely competitive and increasingly crowded field.
Starbucks is shuttering some US locations amid over-saturation worries. McDonald’s, the world’s largest restaurant company, has been tweaking its value offering to stay relevant in the price wars and expanding delivery with Uber Eats to spur sales.
It wasn’t all doom and gloom this year. Amid a stock market rout, restaurant stocks fared better than the broader market, bolstered by a couple of standouts like Domino’s Pizza Inc and Chipotle Mexican Grill Inc.
Chipotle is beginning to recover following a string of food-safety issues that damaged the brand.
Americans are demanding delivery, and it’s forcing big chains to get into the game. That can mean costly technology investments. Revenue from orders through third parties is often shared, making it more difficult to turn a profit on digital customers. It also means delivery doesn’t necessarily make sense for low-cost items.
Challenges aside, it’s hard for restaurant chains to ignore a service that more and more customers are demanding.
Starbucks tried delivery this year in Florida with Uber Eats, and is now expanding it to almost a quarter of its domestic company stores.