Big & Small Businesses, Consumers Impacted By Raging Inflation, Shortages

— Steve’s Marketplace —

Editor’s note: Contributing columnist, Steve Nicklas, expresses his views and insight on various topics in Marketplace.

When the world’s largest restaurant group is experiencing food and staffing shortages, you worry about smaller companies. Big and small alike, they are being strangled by a noose of inflation and supply-chain woes. 

If you pull into your local McDonald’s, you might get an unappetizing taste. One morning recently, the restaurant in Fernandina Beach was out of orange juice and sausage burritos. “We are having supply issues,” said the cashier. 

On another morning, the McDonald’s dining room was closed due to worker shortages, the handwritten sign taped to the door proclaimed. The drive-thru was open, with a long line of cars. 

Inevitably, small restaurants are fighting the same battles. With fewer resources, with less financial staying power, with yet another obstacle lurking around the corner.  

Like McDonald’s, the mom-and-pop restaurants are now having to raise wages, which is a big expense, and in some cases, having to offer healthcare benefits, a bigger expense. To complicate matters, workers are on short supply – especially here at a popular tourist destination with an abundance of restaurants. 

Restaurants, both fast-food and full-service types, are luring workers with sign-on bonuses and elevated wages, based on signs everywhere you look. Meanwhile, with the elevated inflation, the costs rise for restaurants to buy food, which means the prices they charge their customers must increase. 

It’s the only way to compete, and survive. However, the supply-chain shortages are not only impacting restaurants. It’s also difficult to find truck drivers to transport the goods. It’s so much of a problem that Wal-Mart is hiring driver trainees with cushy $100,000-a-year salaries. 

And the supply-chain shortcomings are also feeding the inflationary picture. In fact, the U.S. is experiencing its highest inflation in 40 years, dating back to the dysfunctional Jimmy Carter era. Inflation is defined as rising prices, and you don’t have to look far to see the evidence. 

Used cars cost more, as do new cars. Energy prices are skyrocketing. Food shortages are prevalent, like with McDonald’s. Even at the supermarket, prices are high and many supplies are low. Chew on that McNugget of information, why don’t you? 

Our locally owned restaurants are our bread and butter here, so we must nurture and support them. No offense to our beloved chains like McDonald’s and Chipotle and on a smaller scale, The Loop. 

As inflation rages, consumers are losing confidence. And since a large part of the U.S. economy runs on and relies on consumer spending, this is not a positive development. 

By numbers, the University of Michigan’s sentiment index dipped below 60, a critical level that spells trouble. It is the lowest reading since 2011, a few years after the subprime meltdown. 

This is surprising, with a healthy job market and with asset values near records – most notably stocks and real estate. A readjustment in the prices of stocks and real estate is inevitable if inflation continues its current upward path. 

By the way, inflation impacts individual earnings the hardest. You simply cannot buy as much with what you earn, when prices are rising. And that’s what we have now. No wonder consumers are feeling unsentimental. 

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Steve Nicklas is a financial adviser with a regional brokerage firm who lives and works on Amelia Island. He is also an award-winning columnist. His columns also regularly appear in several weekly newspapers in North Florida, and on his website at SteveNicklasMarketplace.com. He has published a book, “All About Money,” of his favorite columns from the past 20 years. The book is available on Amazon. He can be reached at 904-753-0236 or at [email protected].