TEXARKANA MAGAZINE
chicken prices recently shot up roughly 300% and seem to have recently settled at roughly double. The locally owned, mom-and- pop restaurant world is a very small universe to which I belong. I know many of these restaurateurs personally and am keenly aware of them through a
The Texarkana Newk’s survived COVID with the help of us building the first drive-thru in the Newk’s system of 105 stores.
Wendy’s drive‑thru stayed open as well. That, along with our dedicated staff at Newk’s and Wendy’s, kept us open when many businesses were shut down. Both Newk’s and Wendy’s have faced the same pressure of increased food and labor costs as all restaurants in our area have. Although our sales since COVID 2020 are up 21-22%, food cost is up 10‑12%, along with a labor increase of 20%. A large part of Wendy’s sales increase has come from Wendy’s implementation of breakfast and value meals. Especially the $5 biggie bag and much-improved fries. The margins on Biggie Bags are much smaller than regular combos. Price increases for both restaurants have been implemented to cover some, but certainly not all, of these increases. Our customers have been most understanding not only with the price increase but our struggle with labor and the inability to obtain products. We have three convenience stores tied in with three Wendy’s locations. Sales are flat, and labor is up 35% for the Arkansas locations, primarily due to the increase in the minimum wage over the last two years. Getting products has been extremely difficult. Even strong companies like Coca- Cola struggled to deliver in the peak season of summer. The PPP (Paycheck Protection Program) allowed us to keep many of our employees fully employed. The ERC (Employee Retention Credit) kept us from laying off staff and allowed us to compensate with bonuses for those who stayed with us. We are thankful for the government subsidies but are also aware this will eventually come back to us in the way of inflation, higher interest rates, and possibly recession. It has been a challenge, but we have somewhat thrived because of stronger brand awareness. Wendy’s, especially with breakfast, has great promotional products in sandwiches and the new strawberry frosty. Wendy’s social media has done a great job with this. Along with our partners, growth plans are four stores in east Texas, growing toward Dallas, and construction soon begins in Broken Bow, Oklahoma. Our other locations are inside travel centers.”
cover photo by Matt Cornelius, burger by Reggie’s
network of wholesale food and service companies. Based on my direct industry involvement and network, I know practically all area restaurants have been forced to increase menu prices by as much as 30%. Even for me, this is a staggering upward adjustment. If you are alarmed by the menu price increases you see, maybe this will help. I am no accountant, but there are three general categories of costs associated with any retail business, including local restaurants: Cost of Goods Sold (COGS), Labor, and General Overhead. COGS includes food items, beverage items, and any dry goods necessary to deliver prepared food to the end consumer (cups, bags, napkins, utensils, condiments, etc.). A few months back (which corresponds to the recent June inflation numbers), in a candid conversation with a leading food wholesaler executive, it was explained to me that his company’s true year-to-year, all-inclusive COGS was up just over 18%, which means my restaurant’s COGS is up just over 18%. I can tell you that these costs have gone up further since June. Regardless of what some politicians may say today, from experience, I expect near-future inflation numbers to be worse than 9.1%. Labor starts with hourly wages. Located in a twin city, the area’s labor market is driven by the highest minimum wage of either state. Arkansas led the way with incremental increases from $8.50/hour through December 2018 to $11/hour in January 2021. Now, add corresponding increases to employer paid tax withholdings (matching funds), worker’s compensation insurance, unemployment insurance, and other benefits calculated by base wage rates. I am as happy as anyone that employees make more for the same work, but such wage increases have a very direct bearing on the prices we pay for things like cheeseburgers, vehicles, or absolutely everything. General overhead will include costs associated with real estate (lease rates or interest expense), utilities and other provider services, necessary governmental fees and licenses, property taxes and insurance. Nobody remembers this expense category, as the
—Daphne Cox, Newk’s Eatery and Wendy’s
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BUSINESS & POLITICS
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