Small business faces big challenges: Inflation, recession and 18-hour days

In the best of times, restaurant owners operate on thin margins. Now, rising costs are making it even harder for independent eateries to survive. Jenna Petersiel, owner of Chilmark Tavern on the island of Martha's Vineyard in Massachusetts, spoke with CBS MoneyWatch about how she keeps her business afloat. This interview has been edited for length and clarity. 

How has this painfully high bout of inflation affected your business? 

Jenna Petersiel: As far as inflation goes, the cost of goods for me on Martha's Vineyard has always been high. And so when it goes up the way it is right now, it's really hard for us to adjust our prices to reflect an appropriate profit margin. 

I am always feeling like, "Oh my gosh I'm charging too much money? Is it worth what I'm charging right now?" For me, the biggest challenge around that is the anticipated customer perception. How much can we charge for food without people thinking they're being ripped off?

Since it's hard for you to raise your menu prices, are you able to remain profitable given how costs are soaring?

We never charge enough here. Chilmark is a dry town so we are BYOB, and most restaurants make all of their profit off of alcohol and are lucky if they break even on food. We have to make money off of food to cover all the costs. I find myself stuck in this spot where it's like, "How high can we go until it's simply not ok anymore?"

Economic growth has slowed sharply this year, and there's a risk of recession. How is that affecting you?

I live in a constant state of fear. It's always, "What is this week's worry?"

As far as recession fears go, it sort of seems like my customer base is kind of recession proof. But I am finding that customers that used to come two to three times a week are dining here a little bit less frequently. I don't know if it's diet-based, because of age or COVID, or recession fears. I don't ask them, but I'd like to.

COVID-19 is still around. Have there been any cases among your staff?

I was fully staffed and anticipated I was going to be overstaffed, which is a miracle in this market. Then a little over a month ago our sous-chef and line cook were in a terrible car accident and one of them actually died.

Right after the accident, we were closed for five days. We reopened for one night, then I tested positive for COVID and the entire kitchen staff tested positive for COVID the next day. We were all sick and we closed for another week. That was the first COVID illness that we've had in the restaurant since COVID happened. 

We had to close even though we had purchased food — had perishable food —but there was nothing we could do. We saved what we could and had to throw away a bunch of stuff, which feels awful. We lost the two weeks before Fourth of July which are usually tremendous weeks for us.  

We also typically have a 24-hour cancellation policy but people are saying, "I can't come in because I just tested positive for COVID." I don't know if they did or didn't, but I cant tell them they're lying.

Many restaurants say they're understaffed, but that hasn't been a problem for you. What's your secret?

Right now, what is important to me is making sure our kitchen staff is paid well and is appreciated. Sometimes that actually takes precedence over making sure the restaurant is profitable, because it's hard watching people work 16 hours a day in a hot 110 degree kitchen and not make enough money. I don't want to be that kind of boss — to push people to their edge.

I think it happened through word of mouth that I'm good to work for and am a kind employer. I am always looking for a dishwasher. I think that will be eternal for the rest of time in restaurants. One will always be looking for a dishwasher — it's not a fun job. 

So what is your biggest challenge right now?

The cost of goods and keeping on top of that. Also the cost of utilities, especially here on Martha's Vineyard, have gone up. Electricians, plumbers, refrigeration repairs are costing a lot more than they used to. 

Even though my costs are up, I haven't raised menu prices that much because it just doesn't feel right. Would you be comfortable paying $36 for a hamburger? That's kind of what it's worth for everything that goes into it. 

Are you a small business owner coping with inflation and a slowing economy? If so, CBS MoneyWatch would like to hear about your biggest challenges, and how you are adapting your business. Please email moneywatch@cbsinteractive.com.