At the best of times, restaurant owners operate on thin margins. Now, rising costs are making it even harder for independent eateries 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.
How has this painfully high inflation affected your business?
Jenna Petersiel: In terms of inflation, the cost of goods for me on Martha’s Vineyard has always been high. And so when it goes up like it is now, it’s really hard for us to adjust our prices to reflect a proper profit margin.
I always feel, “Oh my God, I’m charging too much money? Is it worth what I’m charging now?” For me, the biggest challenge around that is the anticipated customer perception. How much can we pay for food without people thinking they are being ripped off?
Since it is difficult for you to raise your menu prices, can you remain profitable due to the increase in costs?
We never charge enough here. Chilmark is a dry town so we are BYOB, and most restaurants make all their profit from alcohol and are lucky if they even break even on food. We have to earn money on food to cover all costs. I find myself stuck in this place where it’s like, “How high can we go until it’s just not okay anymore?”
Economic growth has slowed this year, and there is a risk of recession. How does that affect you?
I live in a constant state of fear. It’s always, “What’s this week’s concern?”
As for recession fears, it seems as if my customer base is kind of recession proof. But I realize that customers who used to come two or three times a week eat here a little less often. I don’t know if it’s diet-based, due to age or COVID, or recession fear. I don’t ask them, but I would like to.
COVID-19 is still around. Have there been any cases among your staff?
I was fully staffed and anticipated being overbooked, which is a miracle in this market. Then a little over a month ago our sous chef and line cook were in a terrible car accident and one of them actually died.
Immediately after the accident, we were closed for five days. We reopened for one night, then I tested positive for COVID and the entire kitchen staff tested positive for COVID the next day. We were all sick and we closed for another week. That was the first COVID illness we’ve had in the restaurant since COVID happened.
We had to close even though we bought food — had perishable food — but there was nothing we could do. We saved what we could and had to throw away a bunch of stuff, which feels awful. We lost the two weeks before the Fourth of July, which are usually terrible weeks for us.
We also usually have a 24-hour cancellation policy but people say, “I can’t come in because I just tested positive for COVID.” I don’t know if they did or not, but I can’t tell them they’re lying.
Many restaurants say they are understaffed, but that wasn’t a problem for you. What is your secret?
Right now, what’s important to me is making sure our kitchen staff is well paid and appreciated. Sometimes that actually trumps making sure the restaurant is profitable because it’s hard to watch people work 16 hours a day in a hot 110 degree kitchen and not make enough money. I don’t want to be that kind of boss – to push people to their edge.
I think it was through word of mouth that I was good to work with and a nice employer. I’m always looking for a dishwasher. I think that will be eternal for the rest of time in restaurants. You’ll always be looking for a dishwasher — it’s not a fun job.
So what is your biggest challenge right now?
The cost of goods and holding thereof. Also the cost of utilities, especially here on Martha’s Vineyard, has gone up. Electricians, plumbers, refrigeration repairs cost a lot more than they used to.
Even though my costs have gone up, I haven’t raised menu prices that much because it just doesn’t feel right. Would you be comfortable paying $36 for a burger? That’s kind of what it’s worth for everything that goes into it.
Are you a small business owner dealing with inflation and a slow economy? If so, CBS MoneyWatch would like to hear about your biggest challenges, and how you’re adapting your business. Please email moneywatch@cbsinteractive.com.
