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Editor’s Note: We have surveyed our readers about their business every autumn for the past nine years, and each year we learn more about how their restaurants are faring. As we have in past years, we followed up the survey with interviews with some respondents. This article is based on the survey and those interviews.
By Ed Avis
Marco Perez and his partners Juan Perez and Jose Carbajal opened Maya Mexican Restaurant in Homewood, Alabama in 2018, and added a second location in Alabaster, Alabama about a year later. Naturally both restaurants suffered somewhat when Covid first hit, but they had developed such a strong clientele that the restaurants actually grew during those challenging years.
“Both restaurants are doing really good now,” Marco Perez says. “Homewood is going a little better because it’s on a corner of main streets. The Alabaster restaurant is a little slower, because it’s a little hidden and you have to know it’s there.”
Despite the success of his restaurants, Perez is facing the challenges that most restaurant operators see these days – rising costs and brutal competition for employees.
Marco Perez, Tim Dwyer, Juan Perez
“I think overall we’re fine,” he says. “I think once we get back to 100 percent normal everything will be alright.”
Perez’s mood – mostly satisfied but tempered by challenges – is common among operators of Mexican/Latin restaurants at the moment, based on the el Restaurante reader survey held in early October. About 63 percent of respondents to the survey reported that their business is up in 2023 so far compared to 2022. Nearly 13 percent reported business is flat, and 25 percent said their business is down.
Employees are Biggest Challenge
Finding and keeping good workers has been a serious challenge for most restaurants for years, especially since Covid. However, our survey showed that the problem may be easing somewhat. In 2022, 78 percent of respondents to our survey said that finding employees was harder than normal; only 55 percent reported that in the 2023 survey. Furthermore, 19 percent of respondents said they have had no problem recruiting employees, compared to 12 percent who said that last year.
Staff at Greengo's Cantina
Elizabeth Milburn, who helps run Greengo’s Carribean Cantina, which has two locations on the Virgin Islands, said they “struggle a little bit” to find new employees, but their retention level is strong.
“The people who come to work for us, stay with us,” says Milburn, who is a chef and develops the menus for the restaurants, which are owned by her son, Adrian Hale, and his partners. “The first guy we hired as a dishwasher 11 years ago has stayed with us and is now a chef.”
Milburn believes her retention is good because the restaurant trains employees well and allows them to advance. “I’ve told them all: ‘If you want to progress and move up, you can. I’ll train you.’”
But other restaurant owners interviewed for this story said finding employees is quite difficult. Linda Rivas, owner of Henry J’s Taco House in Des Moines, Iowa, says finding midday shift employees is most difficult for her restaurant, which celebrated its 50th year in business earlier this year.
“I’ve had pretty good luck with high school kids who work part time,” she reports. “They are pretty good about saying, ‘Can I have such-and-such a night off for the football game?’ But trying to find older daytime workers who want to do these kinds of jobs, and who are dependable, is tough. We’ve always had an issue with that.”
Perez says one employee issue he has faced is that many workers simply don’t want to put in the long hours.
“A lot of the younger cashiers and other staff don’t want to work 40 hours a week at a restaurant,” he reports. “They want to do more like 15 to 25 hours. They don’t want to do any more than that.”
Naturally, paying more helps. According to the Bureau of Labor Statistics, average wages for restaurant workers have climbed 21 percent since 2020, reaching a projected $18.99 per hour in November.
But there are limits to how much an operator can increase pay, of course.
“Raising pay has helped, but I think during Covid a lot of employees stopped trusting the restaurant business as much,” Perez explains. “They saw how we had to close down and they lost their jobs. So now some want more pay than we can afford. I had one guy who wanted to make more than the owner does. I said, ‘Dude, I can’t do that.’”
Our survey revealed that raising pay is the most common tactic for attracting and keeping workers -- 88 percent of respondents have raised pay this year. Offering flexible schedules also helps; 69 percent of respondents did that. About 22 percent added other benefits, and only 3 percent did nothing at all to attract employees.
Perez offers more flexibility to his employees, he says. For example, if someone wants to work a double shift to get in more hours at one time, or if a dinner shift employee wants an afternoon shift instead, he accommodates that.
Costs Going Up
The second major challenge facing independent Mexican restaurant owners is increasing costs. Eighty-one percent of respondents to our survey said food costs are up this year, compared to just 6 percent who reported that they have dropped. However, these numbers have improved since last year’s survey, when 100 percent of respondents said food prices were up.
The survey asked people to identify specifically what has gone up, and meat, chicken and cheese led the list. Several respondents also noted that paper products are “crazy expensive.”
Lettuce was one produce item that many restaurant owners singled out as costing more than usual.
“Lettuce is always up and down,” Rivas says. “Plus the quality has been a problem lately. Sometimes I have a terrible time getting lettuce I can use because the heads are teeny tiny or they’re brown. It’s just been a bad growing season for lettuce.”
Rivas says she tries to manage the situation by increasing menu prices or reducing quantities, but there’s a limit to that. “It’s just a struggle,” she says. “You can’t overcharge customers, yet everything we buy keeps going up. We can cut quantities to a degree, but you can only do that a little because people expect things to be the way they always have been. If they’ve been coming in for years, they expect it to be the same.”
Milburn says prices of all ingredients are higher for her restaurants in the Virgin Islands than they are on the mainland, but lettuce is especially ridiculous – it hit $14 per head last December!
Milburn copes with the high food costs by keeping waste to an absolute minimum.
“We try not to waste anything,” she says. “For example, when we get in the chiles, we use them on the tacos, and whatever trim is left over we put into bags and every few days we use that to make fresh salsa. So basically our salsa is cheap. Nothing is wasted.”
Of course it’s not just food costs that have gone up – other expenses are jumping, too. For Perez of Maya Mexican Restaurant, utilities costs are especially painful this year. “Our trash and power costs are especially bad,” he says. “Our trash has doubled from $300 a month to $650 a month, so more than doubled. And our utilities kill us.”
Good Mood Despite the Challenges
For the most part, the restaurants who replied to our survey and our follow-up questions seem to be feeling good about the business. Perhaps that is because Covid was such a tremendous challenge for most restaurants that those who survived now know that they can get through anything.
Greengo’s is a good example of that. Not only did the restaurant live through Covid, but it also survived a hurricane in 2017.
“Once we got over the hurricane and the pandemic, things started to settle down,” Milburn says. “We have a large following of locals, and the cruise ships come in all winter.”
Innovation has helped Greengo’s thrive. For example, they have a “Tequila Club” that rewards customers for trying many of the 375 different kinds of 100 percent agave tequila they stock. Once a customer has tried 80 different tequilas, they get a T-shirt and discounts on various items.
“It’s a big deal to be on the top of the Tequila Club,” Milburn says. “It’s posted at the bar so everyone knows, and everyone makes up fun names to be in the club.”
The restaurant also features a small merchandise store that sells tequila by the bottle and other items related to their menu, and about two years ago they opened a hand-made tortilla factory using prepared masa that supplies the restaurant and the store.
“We opened the tortilla factory because previously we had to order tortillas from the mainland, and by the time they got here they were moldy or dry,” she reports. “Now we make corn and flour tortillas every day but Sunday.”
Innovating, keeping employees happy and trimming waste has been a winning formula for Greengo’s. Perhaps the ultimate sign that business is solid for the restaurant is that they are betting on the future: They are opening a Mexican seafood restaurant, Salty Senorita, later this year.
Ed Avis is the publisher of el Restaurante.
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