BOSTON (SHNS) – Prices on Massachusetts restaurant menus have been increasing more than usual in recent weeks, but restaurant profit margins have actually been lower as they deal with significant increases in labor and food costs, the Federal Reserve Bank said in its latest update on economic conditions.
In Wednesday’s published Beige Book, which draws information from banking and business contacts, the Fed said that New England business activity “expanded at a modest pace on balance, but results were somewhat mixed.” Retail sales softened slightly, restaurants saw a bit of a rebound, manufacturers saw a moderate sales increase, single-family home sales softened, average price increases were moderate, and labor scarcity held back hiring despite the region’s “robust” demand for workers, the Fed said.
“The outlook was mostly positive, but contacts expressed uncertainty concerning inflation, supply chain disruptions, and the impact of vaccine mandates on the labor market,” Beige Book authors wrote in the report that compiles information from contacts in the region, which covers all of New England except one Connecticut county.
Massachusetts restaurants “experienced higher recent sales after a late-summer dip in response to renewed COVID outbreaks and restrictions,” but restaurant activity in Boston “remained well below pre-pandemic levels,” the Fed said. The prices that restaurants charge “increased at an above-average pace that was nonetheless not enough to cover large increases in food, labor, and other costs.”
A contact on Cape Cod told the Fed that the fall season was a strong one for hotels, restaurants and “main-street retail,” and that large wedding venues on the Cape are now booking events into 2024 as that industry bounces back from the days of gathering limits and event restrictions. “Nonetheless, a lack of conferences and other large group travel has continued to weigh on the recovery,” the Fed wrote.