Restaurant sector remains afflicted by staff shortages, soaring production costs, say stakeholders

AMMAN — Insolvency and restaurant closures have become common due to rising production costs and staff shortages, according to Omar Awwad, president of the Jordan Association for Restaurants and Sweet Shops Owners.

After nearly three years of abysmal profits, the restaurants that survived the pandemic are now struggling to hire and retain employees, all while battling inflationary pressures on key food items, Awwad told The Jordan Times. 

Recent government measures have stopped the recruitment of foreign workers in the sector, according to the association president. 

The average restaurant worker earns a salary between JD300 to JD350 per month, he added.

The past two years also recorded an increase exceeding 35 per cent of the prices of “key production inputs”, which include cooking oil, chickpeas, meat, rice, sugar, dairy products and vegetables, he said.

Moreover, the outbreak of the Russian-Ukrainian war led to a 60 per cent increase in the price of corn oil, the cost of which has recently decreased by roughly 13 per cent, according to Awwad. 

He noted that these challenges are all accompanied by extremely low demand compared with the pre-pandemic period. 

The sector witnessed a boom in sales during the third quarter of 2022, followed by a steep decline during winter, Awwad said. 

The lucrative summer season is the time when businesses in the sector make the bulk of their profits, as “it is marked by weddings, graduations, growth in tourism activity and the return of Jordanian expatriates, leading to a notable increase in demand,” he noted. 

The summer uptick slightly mitigated the financial burden on restaurant owners, but profit margins remained low when considering the high production and operational costs, Awwad noted. 

During summer, sales in fast food restaurants increased by 100 per cent. All other restaurants and sweet shops witnessed a roughly 60 per cent sales increase, he said. 

The 2022 World Cup period also gave coffee shops a “much-needed” business boost, he added. 

Although the demand improved on Christmas and New Year’s Day, “it wasn’t enough to fix three years of stagnation,” Awwad said.

Hussam, a restaurant owner who preferred to be identified by his first name only, predicts that the “tough” economic situation and the high rates of unemployment will keep a lid on consumers spending habits.

He also said that his sales did not improve on New Year’s Day.

“I don’t usually close my restaurant before midnight on New Year’s Day, but this year, I was home by 10pm,” he told The Jordan Times. 

Awwad noted that for many Jordanians stung by financial worries and more careful spending habits, going out to eat is no longer an option. 

Ahmad Murad, a Jordanian employee in the private sector, said that he spent New Year’s Day at home. 

“My wife and I used to dine out once a month. Nowadays, I have to choose between paying the bills or paying for a meal at a restaurant,” he told The Jordan Times. 

Awwad pointed out that while costs are increasing, prices have remained stable. 

Restaurants can be exempted from the 16 per cent sales tax if they sell their products at “low and stable prices”, he added. 

However, for many restaurant owners, closures seem “inevitable” as bills and debts continue to mount, Awwad noted.