Kevin O’Leary has a keen sense of business trends during his legendary investing career.
Now he’s worried about the direction the restaurant industry is headed.
And Kevin O’Leary sounded the alarm on this scary threat to America’s most iconic restaurants.
Kevin O’Leary says the restaurant industry is going to be hammered
O’Leary Ventures Chairman Kevin O’Leary became famous for being able to spot a good investment as one of the “Sharks” on the hit ABC reality show Shark Tank.
His ability to figure out what direction the business world is moving has led him to strike some of his most successful deals.
Now, he’s warning that inflation is going to cause major upheaval in the restaurant industry in a piece for the Daily Mail.
The industry has seen a constant flow of bad headlines in the media recently including bankruptcies, store closures, or layoffs.
And some of the most well-known restaurant chains in the country have been impacted.
Casual dining seafood chain Red Lobster declared bankruptcy after closing almost 100 stores across the country.
Beloved southern homestyle cooking chain Cracker Barrel has seen its sales and stock price plummet since the pandemic after its customer base failed to return.
Woke Crack Barrel CEO Julie Felss Masino criticized the concept of the restaurant with seniors and the “after church crowd” by saying that the store wasn’t as “relevant” as it once was and vowed dramatic changes.
Once thriving fast-casual chain Boston Market is down to a few dozen locations after having more than 1,200 locations across the country in the 1990s.
This distress could be a sign of more pain to come for the restaurant industry.
Inflation is still damaging the economy
O’Leary said the turmoil in the restaurant industry is a sign that inflation is still a problem for the economy.
“Supply chains crippled by the COVID pandemic lockdown haven’t recovered. Food costs – especially for proteins like chicken, beef, and seafood – are up 30 to 40 percent over the last 36 months. Worst of all for the restaurant industry – customers haven’t returned from the shutdowns,” O’Leary wrote.
The pandemic changed the eating habits of customers during the lockdowns.
More consumers became comfortable with ordering on third-party delivery apps like DoorDash and Uber Eats.
And takeout became more common.
That meant fewer customers sitting down for a meal, which closed off some revenue streams for restaurants.
Fewer dine-in customers for many chains meant a decline in profitable alcohol sales.
And restaurants were paying for bigger dining spaces that they didn’t need anymore with less foot traffic.
O’Leary said that an estimated 22 million Americans haven’t returned to the office after the pandemic.
This increased work-from-home means fewer business lunches and less traffic for restaurants in downtown and near office buildings.
Restaurants will have to reinvent themselves to cater toward takeout while some will relocate and others will go out of business.
The mom-and-pop restaurants are struggling more than the major chains.
O’Leary noted that President Joe Biden’s economic agenda has ignored small businesses for major corporations.
“As much as President Biden is desperate to convince the American people that ‘Bidenomics is working,’” O’Leary wrote. “It’s not.”
And the restaurant industry is entering a new reality after the Biden inflation crisis.
