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Small businesses face inflation, high gas prices

Customers likely have some catching up to do after more than two years of the pandemic – but there are plenty of other factors to consider.

Small businesses dependent on outdoor crowds and spending-happy tourists aren’t sure what to expect this summer.

Consumers likely have a lot of catching up to do after more than two years of the pandemic. But they face significant financial headwinds from the highest inflation in decades. And COVID-19 remains a looming presence.

The US Travel Association, an industry group, expects spending on travel — excluding business travel — in the United States to total $726 billion in 2022, up 3 percent from 2021 and slightly above pre-pandemic levels. Many Americans appear ready to spend what’s left of their pandemic savings.

But inflation could thwart their plans. Higher prices make daily life more expensive, which could leave less money for discretionary spending. Gasoline prices are up more than 60% year-on-year, and hotel rooms and airfares are also more expensive, putting pressure on travel budgets.

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Memorial Day weekend could offer a snapshot of how summer will play out. According to the Transportation Security Administration, an average of 2.23 million people per day passed through US airport security during the five-day holiday season from Thursday through Monday. That was 9% less than the same five days in 2019, but 24% more than the same days last year.

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Companies are also struggling with inflation – raw materials and finished goods are more expensive and workers are demanding higher wages. Owners were forced to raise prices or cut some services.

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“It’s a summer of uncertainty,” said Ray Keating, chief economist for the advocacy group Small Business & Entrepreneurship Council. “Inflation is a big concern and with that comes the cost increases that small businesses are seeing from their own vendors and suppliers. There is a tight job market. It’s a tough mix.”

Jack Morey’s family has owned and operated Morey’s Piers & Beachfront Water Parks, three waterfront amusement parks in The Wildwoods, New Jersey, for two generations. Morey said the past two years have been devastating for his businesses due to closures and COVID-19 restrictions and staff shortages.

This year, the restrictions were lifted and Morey was able to fully increase staff again. But wage bills and all other expenses are “through the roof,” so he had to raise prices. Morey isn’t sure his base, mostly working-class families, will return to the parks as they face higher prices for everything from food to gas. But he hopes for the best.

“Will people come back? I think they will. I know they will come for the beaches first,” he said. “What will happen to inflation and gasoline, no one knows. I’m cautiously optimistic – we’ll know when we know.”

The higher cost of petrol and other items means a growing divide between affluent tourists and the middle or working class. At the Mansion House Inn on Martha’s Vineyard, rooms are being booked at pre-pandemic rates, with most of the summer sold out. Owner Susan Goldstein said her clientele likes the fact that despite higher gas prices, they can drive to the Vineyard instead of flying anywhere.

But Goldstein said people aren’t booking as far in advance as they used to.

“There are a lot of last-minute deals,” she said. “People are waiting to see what the world has to offer.”

A labor shortage is putting many small businesses under pressure again this summer. To fill her two Cinnaholic vegan cinnamon bun bakeries in Tennessee, Holly Roe had to raise wages — and hire a lot more teenagers.

Before the pandemic, Roe’s staff was 80% over the age of 18 and 20% younger. Now the relationship has completely changed.

“It’s their first job for most of them, but it’s been interesting. They’re hard-working, excited, and want to impress,” said Roe, whose stores are located in Knoxville and Pigeon Forge, Tennessee, near Great Smoky Mountains National Park and Dollywood amusement park.

Hiring more teenagers is a national trend. According to data from Gusto, a payroll, benefits and human resources provider, teenagers accounted for 9.3% of new hires in April 2022, up from 7.7% in April 2021 and 2% in April 2019. The proportion of hires is now 25 to The number of 54-year-olds fell from 75.3% in April 2021 to 62.9% this April.

RELATED: A scorching summer job market awaits US teens as employers sweat

Some companies are still concerned about the ongoing threat of COVID-19 cases. Samuel Clark, Broadway Crew, a recruitment agency and street team promoting Broadway shows,’s business depends heavily on face-to-face interaction with tourists in Times Square. Though his business has bounced back since Broadway reopened, it’s not going smoothly. Shows are still temporarily closed due to COVID-19 cases.

“It’s a clear and present existential threat — we’re seeing events and shows closing and having a week off,” he said.

Meanwhile, Clark has had to raise wages, but his staff is being thinned out by the higher cost of living. “For hourly workers, rent is up 25% year over year,” he said. “These guys have no margin for error in their budgets. It’s heartbreaking for me.”

Still, Clark says he’s hopeful for the summer as Asia eases restrictions and hopefully brings an influx of international tourists. Still, outbound visits in April remained 43% below 2019 levels, according to the US Travel Association. Travel from Asia is still down 71% due to restrictions in individual countries.

For Austin Ray, who owns Von Elrod’s Beer Hall and Kitchen in Nashville, summer means an influx of crowds, many of whom come from the Nashville Sounds minor-league ballpark next door. The minor league season was abandoned in 2020 so times have been tough. But sales rebounded in 2021 because the restaurant has a large outdoor patio and baseball has returned. While the crowds are back, Ray’s expenses have skyrocketed. He’s planning a menu overhaul that will raise prices across the board by 7% to 10%.

Retaining workers remains a challenge that requires “more time and more money,” he said.

However, having weathered the pandemic for more than two years, he believes his company can weather it too.

“I feel like we can get through anything because we’ve made it this far,” he said.

https://www.king5.com/article/news/nation-world/small-businesses-summer-travel-inflation/507-5ca1b4e6-97a8-4960-b9ff-69ac21f54ca4 Small businesses face inflation, high gas prices

Alley Einstein

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