But without years of business tax returns to show his record, it has been difficult for Kirk to obtain financing and small business loans, which is essential for many new businesses that are not part of a well-funded hospitality group. Coming in while trying to pay off a owed tax debt of about $5,000 that his ex-business partner (who took over the finances) put up another $5,000 to wrap vinyl for his food truck, he keeps paying salaries. Dedicated kitchen staff.
The necessary expense of $15,000 is also on top of the financial stress he faces with inflation, where ordering food is like playing a sports game where the numbers change on a daily basis.
“I couldn’t order chicken this week because I didn’t want to charge people more for chicken tacos than for beef tacos,” said Kirk, who explained that the price of chicken had gone up dramatically.
Kirk turned to GoFundMe, where he asked for help with payroll funding and back taxes.
He wrote to “his family desperately”.
To date, it has raised nearly $6,000 from over 50 donors.
Kirk is not the only small restaurant facing significant financial burdens, despite its success. A turbulent supply chain has thrown many commercial kitchens into disarray, with chefs forced to rethink their menus and even reaching out to diners for help. This comes when many Americans are feeling the effects of inflation at their local grocery store or gas station.
Full-service meals are up 9.7 percent, and ready meals are up 7.2 percent over the past 12 months, according to the latest CPI report. It’s the largest 12-month increase since the index was founded in 1997, according to the US Bureau of Labor Statistics.
So just as restaurateurs feel free to operate without COVID-19 restrictions and erratic traffic, the still-struggling industry still faces growing challenges testing its future.
Wholesale food costs are up 7.9 percent in 2021, and hourly labor costs are up another 8.6 percent for the year, according to the National Restaurant Association. Industry suppliers, such as Tyson Foods, saw their average sales prices for the last fiscal quarter rise nearly 20 percent over the prior year. The Producer Price Index found food prices jumped 12.8 percent in a year, which includes a 33 percent increase in cooking oils and nearly 185 percent in eggs as of May.
“But you can’t increase your rates by 80 percent,” Del Venturini, president and CEO of the RI Hospitality Association, said in a recent episode of the Rhode Island Report. “In the past, some of the things that were expensive to do were just a cost of doing business because the business was doing well. Today, we treat nickel like manhole covers…we have to account for every cent today.”
While the largest increase in average prices was seen at seafood restaurants (up to 19 percent, nationally), there was also a 10.5 percent increase, said Kevin Brilla, head of customer experience at SpotOn, a software and payment company that provides restaurant services. In the price of tacos alone over the past year ending in May.
“The volatile market will continue to pose challenges to maintaining a healthy profit margin for the restaurant,” Brilla said.
Kirk, who is back at Masa Taqueria, said there are plenty of chefs and owners who will “eat the cost” of their food orders each week, and keep buying the same things. He said that instead he changes the menu items, based on the availability and price of the products.
“In a small restaurant, it makes no sense for us to do that [eat our losses]. Because prices fluctuate constantly, Kirk, who is constantly working with the distributor to figure out the best times to buy meat and produce, said, “We’re going to lose a lot of money.” Even avocados: one week they’re $40 [per case]. The following week, they crossed $100. I just wouldn’t order them unless they were under $70.
Another small restaurant, Providence-based food truck, TrapBox, was started by Welby Jinau after he was laid off from his job during the pandemic. It serves modern Latin meals and was so successful that it found itself in a bind last month. With summer approaching, he was expecting his biggest selling month to be in June when his truck’s engine blew. It took a month to get a new one. Without any good sales during that time, Jinao had to use nearly $10,000 of her tax savings to get the truck back up and running.
And now he has a balance with the state to pay off. He, too, turned to GoFundMe to raise $10,000. Each donor who makes more than $20 can get free food from their truck for a year.
“For those tough moments when you don’t even know if you have enough money to put gasoline in your car at this point, let alone eat,” he wrote on a GoFundMe page that raised about $950. “We know the same struggle you’re in and hope that a free meal will help you at least as much as if you’ve always helped us.”
If they don’t pay state sales taxes by June 30, Jinao will lose his tax license renewal.
“It’s a headache to deal with now but I think it’s part of the ups and downs in the business,” he said.