Monday, July 15, 2024

Kevin O’Leary: Inflation Is Responsible for Restaurant Closures

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O’Leary Ventures chairman and Shark Tank star Kevin O’Leary recently weighed in on the issues inflation has been presenting in certain U.S. markets, particularly as it applies to potential homeowners and renters in the housing market.

Now, O’Leary is offering his insight into why he believes inflation is to blame for the collapse of another American market: the restaurant industry.

Related: Kevin O’Leary Says Housing Prices Aren’t Dropping Anytime Soon

In an op-ed for the Daily Mail, the Shark Tank star referred to inflation as a “virus” and lamented that the “fast-casual reckoning” has been brought on by pandemic-related aftereffects, including price increases and a change in traditional work environments.

“Supply chains crippled by the Covid pandemic lockdown haven’t recovered. Food costs — especially for proteins like chicken, beef and seafood — are up 30 to 40 percent over the last 36 months,” he pointed out. “Worst of all for the restaurant industry — customers haven’t returned from the shutdowns.”

O’Leary noted that many Americans have maintained a hybrid or completely remote work model in a post-pandemic world, resulting in less foot traffic inside restaurants during the day.

Related: Red Lobster Speaks Out on ‘Misunderstood’ Bankruptcy Filing

“This has been devastating to businesses that invested in brick-and-mortar locations. Eateries in urban locations have been hit especially hard as their expensive locations are no longer receiving the footfall they need to meet rent,” O’Leary wrote. “Some businesses will have to go bankrupt, reorganize themselves entirely and move to less expensive areas.”

Take Red Lobster, which began shuttering dozens of locations and auctioning off equipment last month before declaring Chapter 11 bankruptcy just days later.

Related: Kevin O’Leary: Do Not Merge Finances With Your Spouse

In O’Leary’s opinion, Red Lobster’s fall might be just one of many in the near future.

“Inflation is devastating for average-income earners,” he cautioned. “Unfortunately, there’s no telling when — if ever — these prices will come back down to Earth.”

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