Los Angeles Restaurants Struggle as Food Costs Rise and Profit Margins Drop

“Los Angeles State of Restaurants” report from TouchBistro finds sales volume recovering to 77.4 percent of pre-pandemic levels

​​​​TouchBistro has released its 2023 “Los Angeles State of Restaurants” report, revealing that restaurant sales in Los Angeles have recovered to only 77.4 percent of pre-pandemic levels on average. While this is about 3 percent higher than the national average, it’s not all good news for restaurateurs in the area.

Due to the rising cost of food and other expenses, the profit margins of full-service restaurants in Los Angeles dropped to 9.4 percent, which is 1.2 percent lower than the U.S. average of 10.6 percent. The average menu price increase in Los Angeles is in line with the national average at 15.6 percent.

The report also found that Los Angeles restaurants are spending 50 percent more on food costs compared to the previous year, which is higher than the U.S. average by 7 percent. Fresh fruits and vegetables have seen the biggest increase in costs, followed by meat and seafood across the nation.

Moreover, nearly all (95 percent) of Los Angeles restaurants are short-staffed by an average of six staff members due to a high turnover rate of 27 percent. Despite this high turnover rate being better than many other areas of the country such as New York City where it’s at 33 percent, line cooks and prep cooks are now among the most in-demand roles.

On a positive note, direct online ordering through a restaurant’s website has become increasingly popular among operators in Los Angeles, with almost half (48 percent) preferring this type of solution over third-party platforms like Uber Eats and GrubHub.

Other key trends identified include expanded seating capacity at venues, increased staff training costs, and loyalty programs becoming more popular among customers.

With Twitter taking the lead as a preferred social media platform for promoting restaurants among restaurateurs in Los Angeles followed by Facebook and Instagram respectively, there may be hope yet for businesses looking to recover from pandemic-related losses.

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