Press Release
FOR IMMEDIATE RELEASE
June 12, 2024
Media Contacts:
Michigan Restaurant & Lodging Association State of the Industry Operations Survey Indicates Lower Traffic, Scarce Profitability and Outright Catastrophe if Tip Credit Lost
Two in Five Restaurants Not Profitable Now and One in Five Would Permanently Close if Michigan Loses the Tip Credit
Two in Five Restaurants Not Profitable Now and One in Five Would Permanently Close if Michigan Loses the Tip Credit
LANSING, Mich. – The Michigan Restaurant & Lodging Association (MRLA) today released the results of a recent hospitality industry operational survey it conducted covering topics of sales volume, customer traffic, staffing, and inflation.
The MRLA conducted this industry survey to gain a clear, data-based picture of the state of Michigan’s restaurant industry in 2024, four years after the onset of the COVID-19 pandemic, and further evaluate the impact of the loss of the tip credit.
“Michigan’s restaurant industry is in a far more precarious place than we had anticipated,” said Justin Winslow, President & CEO of the MRLA. “The residual impact of the pandemic has had a long tail, particularly for independent, full-service restaurants, as protracted inflation and workforce challenges have made it exceedingly hard to sustain even a modest profit.”
Survey highlights include:
Michigan’s hospitality industry also awaits the result of a Michigan Supreme Court ruling that could increase the state’s minimum wage to about $14 per hour and eliminate the tip credit. In addition to state of the industry data, the operational survey also tracked the economic impact if Michigan eliminated the tip credit.
Data results indicate:
“If an adverse ruling from the Michigan Supreme Court later this summer requires the elimination of the tip credit, an industry on the edge will plunge headfirst into the abyss,” proclaimed Winslow. “The Michigan legislature is in a position to implement a reasonable solution to prevent such a catastrophe, but we all need Democrats and Republicans to quickly work together in common cause. The alternative is a pandemic-level of restaurant closure and job loss, which will decimate Michigan’s second largest private employer, wreaking havoc on Michigan’s overall economy.”
The survey was conducted May 1-6, 2024 by the MRLA and included 209 responses from Michigan foodservice operators, representing approximately 3,000 locations and 104,360 employees.
The MRLA conducted this industry survey to gain a clear, data-based picture of the state of Michigan’s restaurant industry in 2024, four years after the onset of the COVID-19 pandemic, and further evaluate the impact of the loss of the tip credit.
“Michigan’s restaurant industry is in a far more precarious place than we had anticipated,” said Justin Winslow, President & CEO of the MRLA. “The residual impact of the pandemic has had a long tail, particularly for independent, full-service restaurants, as protracted inflation and workforce challenges have made it exceedingly hard to sustain even a modest profit.”
Survey highlights include:
- Sales are down with only one-in-four restaurants experiencing sales growth over the last year.
- Despite significant cost inflation driving up menu prices, 45 percent of restaurants have experienced decreased topline sales over the last year.
- 60 percent of restaurants reported having less customer traffic than a year ago.
- 40 percent of restaurants are not profitable right now.
- 55 percent of restaurants are operating without adequate staffing.
- 57 percent of operators experiencing workforce challenges is being impacted by an affordable housing shortage.
- Nearly 60 percent of restaurants are operating with fewer hours or days as a result of inadequate staffing.
- 89 percent of operators have experienced commodity inflation over the last 12 months of greater than 5 percent.
- 75 percent of those restaurants reporting being profitable currently say they are less profitable now than they were a year ago.
- 70 percent of restaurants in Michigan believe the operating environment over the next 12 months will be worse than today.
- Only 9 percent of operators believe that the operating environment will improve.
Michigan’s hospitality industry also awaits the result of a Michigan Supreme Court ruling that could increase the state’s minimum wage to about $14 per hour and eliminate the tip credit. In addition to state of the industry data, the operational survey also tracked the economic impact if Michigan eliminated the tip credit.
Data results indicate:
- Two-thirds of restaurant operators would lay off employees with an estimated 40,000-60,000 restaurant jobs lost. The vast majority of job loss would be concentrated amongst tipped employees.
- One-in-five full-service restaurants would close permanently.
- 94 percent of operators would raise prices with an average expected menu price increase of 25 percent.
“If an adverse ruling from the Michigan Supreme Court later this summer requires the elimination of the tip credit, an industry on the edge will plunge headfirst into the abyss,” proclaimed Winslow. “The Michigan legislature is in a position to implement a reasonable solution to prevent such a catastrophe, but we all need Democrats and Republicans to quickly work together in common cause. The alternative is a pandemic-level of restaurant closure and job loss, which will decimate Michigan’s second largest private employer, wreaking havoc on Michigan’s overall economy.”
The survey was conducted May 1-6, 2024 by the MRLA and included 209 responses from Michigan foodservice operators, representing approximately 3,000 locations and 104,360 employees.
About the Michigan Restaurant & Lodging Association
Michigan Restaurant & Lodging Association (MRLA) is the recognized leader of Michigan's hospitality industry, providing essential services to the foodservice and lodging community. Founded in 1921 as the Michigan Restaurant Association and now known as the MRLA, the Association represents over 5,500 Michigan foodservice and lodging establishments. The industry plays an integral role in Michigan's economy, employing more than 450,000 people and creating nearly $44.6 billion in annual sales. For more information, visit www.mrla.org and www.detroitrla.org.
Michigan Restaurant & Lodging Association (MRLA) is the recognized leader of Michigan's hospitality industry, providing essential services to the foodservice and lodging community. Founded in 1921 as the Michigan Restaurant Association and now known as the MRLA, the Association represents over 5,500 Michigan foodservice and lodging establishments. The industry plays an integral role in Michigan's economy, employing more than 450,000 people and creating nearly $44.6 billion in annual sales. For more information, visit www.mrla.org and www.detroitrla.org.
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