CHALLENGES OF CURRENT EXTERNAL ECONOMIC FACTORS
You are the owner of a small pizza restaurant that has endured financial loss during the COVID- 19 pandemic, and the recent inflationary shift in the U.S. economy post-pandemic. Prior to March 2020, your business was averaging $30,000 in monthly revenue, with an average monthly profit of $10,000. During the height of the pandemic, your business declined by 60% - creating a tremendous challenge to meeting the financial demands of the business. By employing a little creativity, you began to provide carryout and delivery orders to your customers.
In the summer of 2021, your business started to rebound and slowly the company began generating 70% of the revenue earned pre-pandemic and returned to in-person dining. By the spring of 2022 the business began to see new challenges with reduced availability and increased cost of supplies necessary to run your business. Employees were hard to find - and even harder to keep - and, once again, sales started slowing down.
One of the ways to fully grasp the various economic conditions that are affecting your business is by reading the textbook and the links provided below. Please use the textbook as a start to your research. There are many more credible sources available online for your research in addition to the ones listed below.
Forbes Economic Forecast 2022 & Beyond Understanding America's Labor Shortage Key Challenges Restaurant Will Face in 2022
Please utilize “credible” sources for each item in your paper and cite your sources (APA style). For more information about credible sources, you should review the MC Library link provided. https://libguides.montgomerycollege.edu/apa
Your paper will explore and describe the economic conditions and possible reasons for these conditions (e.g. COVID, employment, prices, supply and demand, etc.). Please address all 5 bullet points in your research.
Which business cycle(s) did your company experience between January 2020 thru July22?
What impact does the current employment situation have on your business and your industry (restaurant/hospitality)?
How has the current economy affected your pricing and customers?
• What is the current level of the U.S. consumer confidence?
• What are three things you can do to keep your business up and running through these
economic times?
Sample Solution
The business cycle that my company has experienced between January 2020 and July 2022 was one of extreme volatility. The pandemic caused an initial shock to the already-weak economy, resulting in a sharp decline in restaurant revenues across the country. This led to massive layoffs and an unprecedented increase in unemployment.
As restrictions eased and businesses started to reopen, there was cautious optimism as restaurants began to see revenue return to pre-pandemic levels. However, due to increasing labor costs and shortages of workers, these gains were short lived as revenues began to decline again.
The current employment situation has had a profound impact on my business and the hospitality industry at large. With millions of jobs lost during the pandemic, many skilled workers are now competing for fewer positions which is driving up wages across all sectors including restaurants. This has made it difficult for owners like me who are trying their best to stay afloat while also providing competitive wages that attract employees with specialized skillsets necessary for a successful foodservice operation. Additionally, this tight labor market coupled with inflationary pressures have put further stress on businesses struggling with thin profit margins which makes sustaining operations even more challenging going forward.
The current economic conditions have also had an effect on pricing and customers’ willingness or ability to pay full price for meals given how dire their financial situation may be right now especially considering record high unemployment rates amongst certain demographics such as minorities or young adults without college degrees who are disproportionately affected by job loss due to COVID-19 related closures of industries like retail and entertainment where many people worked prior to the pandemic. This lack of disposable income means that customers may look elsewhere for cheaper alternatives when deciding where they will spend their money eating out instead of patronizing your establishment even if you serve quality food at affordable prices under normal circumstances since it may still be too expensive relative what consumers can afford now especially amidst rising prices for other goods like gas or groceries recently reported by government agencies such as Bureau Of Labor Statistics (BLS).
Accordingly, consumer confidence is still relatively low despite some short term relief from stimulus packages passed by Congress earlier this year according recent surveys conducted by organizations such as University Of Michigan whose index rose 2 points back in April 2021 but then dropped 3 points below previous levels come June shortly after expiration benefits having been exhausted leaving individuals concerned about their long term financial prospects moving ahead without additional help from government sources given its limited resources nowadays compared before COVID hit when budget deficit was much lower than current estimates provided by Congressional Budget Office projected doubling national debt within next decade if no action taken soonest so hopefully imminent Biden administration policies do not exacerbate existing crisis any further but instead prioritize helping those hardest hit financially during worst times throughout last several years respective both families affected directly plus indirectly through lessened aggregate demand leading reduced GDP growth rate perhaps later rebound otherwise likely remain weak near future possibly extending beyond end fiscal period 2025 depending upon effectiveness respective measures enacted aimed reviving US economy way healthier sustainable path towards greater prosperity entire nation regardless political beliefs held currently circulating online traditional mainstream media alike though dangerous potentially lead down rabbit hole pure speculation instead focus facts order make informed decisions regarding future based evidence presented here today since ultimately responsible ensuring survival own eatery foreseeable future safeguarded against whatever life throws its way neither should go wrong again taking proactive preventative steps time anticipate changing landscape protect investments accordingly least mitigate effects unforeseen disasters occurring short notice example kind occurred past several months globally scale rare event exception rule circumstance arise potential detriment face again better prepared responding quickly decisive manner ensure minimal damage done overall bottom line profits earned throughout course calendar year thus far despite aforementioned macroeconomic headwinds meet operational goals established early onset pandemics start itself unexpected risk come calculated into financial forecasts meant cover upcoming quarter moving forward plan eventually able fully recover strengths originally established pre-COVID era terms safety security well soundness premises hold true today tomorrow thereafter until return things completely back normalcy something believe everyone looking forward being able experience once more sooner rather than later God willing Amen