From the food you eat to the products you buy, rising inflation has seeped into the daily lives and budgets of Americans, regardless of their socioeconomic status. For small business owners, the tentacles of inflation are even more pronounced, leaving them precariously on the line between rising costs and the possibility of rising prices.
Data released earlier this week by the Bureau of Labor Statistics showed that the consumer price index, which measures price changes in a basket of commonly purchased goods and services, had risen 8.5% from a year earlier. , largely matching Wall Street’s predictions. Excluding the often volatile prices of food and energy services, the so-called core CPI rose 6.5 percent compared to March 2021.
Rising levels of inflation translate into higher prices that consumers have to pay for everyday items. Price hikes felt by Americans haven’t been this frequent since stagflation crippled the economy in the late 1970s and early 1980s.
Perhaps there is no better way to see the impact of inflation than to consider what Niko Semertsidis, the owner of Old Brooklyn’s former family restaurant Gus’s, now has to pay for a box of fresh eggs.
“Eggs are one of our main features here,” Semertsidis said. “Last year right now it was $16 a box and now we’re at $47 a box. In one year, that’s an increase of more than 150%.”
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Considering that the restaurant only serves breakfast and lunch, you begin to get a better idea of how deflating inflation can be.
And that’s just part of it.
Bacon and meat prices have increased more than 100%. Takeout boxes and other paper goods are up 150%. Coffee deliveries are now subject to a $15 service charge on top of more expensive product and mileage fees, Semertsidis said.
Compounding price increases and supply chain constraints have been difficult to navigate, Semertsidis said.
“I’m trying to cut costs any way I can. I’m trying to find the best deal out there, even if I’m running out of [buying products retail], that’s what I’ll do,” Semertsidis said. “On top of everything else we have to do in the restaurant, especially in a small restaurant like this, it becomes stressful trying to figure out what the next solution is. It is always a problem and solve it”.
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George Mateyo, chief investment officer at KeyBank, said entrepreneurs like Semertsidis face the difficult task of striking an increasingly delicate balance.
“[Inflation] harms consumers. It hurts companies. It usually becomes a problem for a lot of people, frankly,” Mateyo said. “It’s very tough. They have to worry about higher wages to keep people employed because they want to keep the restaurant open. They have higher prices for materials and goods, etc., but they also have higher wages. They don’t want to alienate their customers.” , so they have to handle both sides of the equation.”
Unfortunately, when it comes to mitigating the effects of inflation, it largely comes down to waiting, Mateyo said. Business owners can better manage their inventory and employ other cost-cutting measures, but inflation is largely out of their control.
“You may have to be flexible with your staff. You have to ask your clients to share some of the pain with you,” Mateyo said.
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Earlier this year, Semertsidis made the difficult decision to implement a small price increase across the board. However, as is the case in the restaurant industry, implementing any price increase carries expense: menus need to be changed and reprinted, online listings and other in-store displays need to be altered, and marketing materials need to be updated.
For a neighborhood staple like Gus’s Family Restaurant, price increases aren’t just business decisions. They are personal decisions too.
“It was a difficult thing for me to do. I have clients who come in every day and see that difference,” Semertsidis said. “Every day, it’s a couple of extra bucks. That hurts them. That hurts me. I don’t want to have to do that. But at the same time I’m here to try to make a living and provide for my family. We’re just trying to survive like everyone else.”
That kind of lightness and dedication to the customer is why Gus’s Family Restaurant has been feeding Old Brooklyn for over 30 years.
And it is the reason why Semertsidis wanted to start in the hotel industry.
“I’ve wanted to do this since I was 6 years old. It’s a cliché, but it’s not work for me,” Semertsidis said.
