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Rebound Mid-Michigan - Sticker Shock for Restaurants/Businesses Face New Hurdle in Reopening

Posted at 9:30 AM, Jun 02, 2020
and last updated 2020-06-02 09:30:02-04

LANSING, Mich. — Restaurants looking to reopen are facing financial hardships like never before. Now economic experts believe both businesses and consumers will be forced to change the way they operate. Kai Beech reports how increasing costs at the grocery store could impact the bottom line for restaurants, and how much you as the consumer are able to afford.

Coronavirus concerns forced Sam's No. 3 Diner to shut down for seven weeks and when they reopened for takeout orders only they found challenges with fickle food costs.

"Prices are crazy right now. The supply chain is messed up" owner Sam Armatas says.

Before the pandemic this iconic diner served nearly 17-hundred people a day. Burrito wrapping now they're lucky to make 70 meals from open to close.

"I want to cry every day. its sad" While Armatas is struggling with expiration dates and an erratic economy. "Today an egg is 8 cents. right before it was 25 cents an egg. We're dealing with food in the warehouse that has probably been in the warehouse since mid-march from produce to proteins."

Economic experts say the cost for restaurants to do business is becoming more unstable.

"There really are disruptions throughout the supply chain" says Dr. Richard Sexton, a distinguished professor of agricultural and resource economics at the University of California, Davis. He says restaurants looking to rebound will have not only have problems with food pricing but also dealing with new health guidelines.

"The meat prices have risen and will probably continue to rise. milk prices are down due to reduced demands. People will be at least at the outset reluctant to resume their normal habits despite the challenges, sexton doesn't predict that extra cost will impact shoppers at supermarkets. The last thing a big grocery chain wants is to be accused of price gouging during a pandemic. They would rather be stocked out of product than raise price to equate the supply with the demand."

Sam Armatas shares that "we're having to baby sit everything and you know we don't even know what we're going to sell. We're going to hopefully adapt and change as it moves forward."

Armatas says this pandemic could even impact how they list their prices. "I don't know if we can come out with a paper, or a solid menu again. it's almost we price weekly at market value saying this is the new cost of doing business during the COVID-19 crisis.

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