Inflation, labor and delta variant hit restaurant homeowners, Goldman Sachs information finds

Restaurants across the county have been looking forward to the economy reopening in recent months as Covid vaccines continued to spread and pent-up consumer demand was felt.

But headwinds from supply chain interruptions to labor shortages and rising costs hit the industry as the contagious Delta variant tarnishes hopes of a return to normal.

Small business owners in the food, restaurant and hospitality sectors are more concerned than most about the ongoing disruption of the pandemic, according to new data from Goldman Sachs’ 10,000 Small Business Voices program. The data shows that 84% of owners in these sectors are concerned about the impact of rising Covid-19 infection rates on businesses, compared to 75% of the entire small business population.

Almost all of them saw an increase in operating costs, with 93% believing that inflationary pressures have increased since June, negatively affecting finances.

The data subset of 117 food, restaurant and hospitality owners came from a broader survey of 1,145 participants in the Goldman Sachs 10,000 Small Businesses program earlier this month.

The numbers underscore the continuing pressures restaurants face even in an economy recovering from the worst of the damage caused by the coronavirus. While the introduction of vaccines and looser public health restrictions have brought the industry closer to normal, challenges remain as restaurant owners look to fall.

Ruby Bugarin, who runs Margaritas and Pepe restaurants in the greater Los Angeles area, said both the availability of goods and the higher cost hit her business. Products like crabs are harder to find, the cost of chicken and pork has increased by more than $ 1 a pound, and the prices of other goods have increased.

“In the past two or three weeks, the price of avocados has gone from about $ 40 a box to $ 85 a box. So that’s more than double, ”said Bugarin, a member of the Small Business Voices program. “We can’t do the same to our customers – we raise prices once or twice a year.”

Labor costs are also rising in her two restaurants with a total of 63 employees. Bugarin said she would like to add a chef or two at each location, but instead pays overtime weekly to her current staff.

Restaurant, hospitality and hospitality owners like Bugarin are also more affected by work problems than in the wider small business community. The data shows that 79% of these business owners say the challenges for employees have worsened since the pandemic, compared with 64% overall.

Recent data from the National Federation of Independent Business underscores the labor law issues that weigh on the optimism of small businesses. The vacancies in August were above the historic 48-year average for the second month in a row.

“In June, despite inflation and despite labor challenges, 67% of small businesses said they believed the US is on the right track,” said Joe Wall, national director of Goldman Sachs 10,000 Small Businesses Voices. “That number is now 38%. The delta variant is sure to be the # 1 issue in terms of sentiment change, and then you pile on it, inflation dynamics and the challenges facing the workforce.”

With the pandemic taxing restaurant operators, Goldman’s data shows that nearly 40% of food and hospitality companies say they expect they’ll need to take out a loan or line of credit for their business this fall or winter. This corresponds to 29% of the companies as a whole.

The Small Business Administration recently announced a revision of the Economic Injury Disaster Loan program for businesses. The credit limit will be increased to $ 2 million and recipients will be allowed to use the funds to prepay business debts, which allows restaurants to use the money on business debts and more.

“At a time when small business restaurants still have extreme working capital needs, these changes will improve the prospects for thousands of operators and improve the economic prospects for communities large and small,” said Sean Kennedy, executive vice president of public policy at the National Restaurant Association said in a statement. The group worked with the SBA on the new small business terms.

Beyond these changes, small business and restaurant owners and advocates have urged lawmakers to top up the $ 28.6 billion restaurant revitalization fund. It granted grants to the industry but was quickly exhausted due to high demand.

“We were able to distribute it to over 100,000 companies across the country, but demand was 2.5 times as much,” SBA administrator Isabel Guzman told CNBC about the RRF last month. “There are still restaurants, food and beverage companies that need support. We know they have been hardest hit, and will often be the last to reopen in communities, but they define so many of our main streets.I can’t say exactly what the actions of Congress will be, but the SBA would be ready to take these Manage programs quickly, efficiently and fairly. “

Keith Rabois, Elliot Administration, and Goldman Sachs spend money on Florida

Florida recently attracted some of Wall Street and Silicon Valley’s biggest names like Keith Rabois, Elliot Management, and Goldman Sachs.

“Even though people talked about moving for years, it really wasn’t cool moving to Florida among the rich. It was like, OK, you couldn’t hack it in New York, so you go to Florida,” he told Robert Frank , CNBC’s wealth reporter. “Now you’re the sucker who stayed in New York.”

Florida reports are slowly turning into one legitimate technology and Financial center started long before Coronavirus pandemic. In 2018, Florida solidified its place in the major leagues with $ 2.88 billion was included in venture capital. The The trend has continued through 2020.

Delian AsparouhovThe Silicon Valley venture capitalist moved to Florida in March after Miami Mayor Francis Suarez responded to his tweet about leaving Silicon Valley for Miami.

Asparouhov believes Miami has the potential to become the largest technology hub in the United States.

“New York gets seven or eight times as much venture capital as Florida. And California gets five times as much as New York. So Florida is not part of the tech economy at all.” “said Cristobal Young, a Cornell University professor who studies the migration of wealthy Americans.

Other potential challenges to Florida’s rise are low wages, income inequality, and housing shortages. Migration data and GDP growth from 2020 onwards also do not point to a major upturn.

Watch the video to hear from both locals and those who recently moved to Florida and what that means for the state in 2021 and beyond.

Goldman Sachs (GS) This autumn 2020 earnings crushes estimates

David Solomon, Chairman of the Board of Directors of Goldman Sachs & Co., speaks during an interview with Bloomberg Television at the Milken Institute Global Conference in Beverly Hills, California, USA, on Monday April 29, 2019.

Patrick T. Fallon | Bloomberg | Getty Images

Goldman Sachs On Tuesday, they exceeded analysts’ expectations for fourth quarter earnings and sales due to the strong performance of the company’s stock traders and investment bankers.

The bank posted earnings of $ 12.08 per share, defeating the estimate of $ 7.47 per share by analysts polled by Refinitiv. Sales of $ 11.74 billion exceeded expectations by approximately $ 1.75 billion.

The shares of the New York-based bank rose 2.4% in premarket trading.

“We’ve been able to help our customers navigate a challenging environment and as a result have strong results across the franchise while driving our strategic priorities,” said David Solomon, CEO of Goldman, in the press release. “We hope this year brings much-needed stability and a break from the pandemic, but we remain poised to deal with a variety of outcomes and ready to serve our customers’ needs.”

The expectations of Solomon were high. Last week, JPMorgan Chase posted record trading and advisory results in the fourth quarter that helped the bank beat earnings estimates.

At Goldman, stock traders saw revenue grow 40% year over year to $ 2.39 billion, surpassing the estimate of $ 1.89 billion by roughly $ half a billion. Like most of its competitors, the fixed income business fell short of expectations for the quarter, posting revenue of $ 1.88 billion, which is below the estimate of $ 2.06 billion.

Investment banking revenues rose 27% to $ 2.61 billion, beating the estimate of $ 2.15 billion. This is due to higher income from subscriptions to stocks and completed mergers.

“Goldman Sachs’ profits were shockingly good,” said Octavio Marenzi, CEO of capital market management consultancy Opimas. “We expected a strong performance, but Goldman has outperformed almost all of its businesses. Goldman’s activities are focused entirely on investment banking and trading, areas that did well everywhere but particularly well at Goldman.”

Of the six largest US banks, Goldman generates most of its revenue from Wall Street activities, including trading and investment banking. This has been a disadvantage for the company in recent years as retail banking has driven the industry’s record profits. For the final quarter of the year hit by the coronavirus pandemic, Goldman’s model could prove to be an asset.

With unprecedented actions by the Federal Reserve earlier in the year, wide open markets should help usher in the best year for Wall Street trading since the financial crisis. Meanwhile, investment bankers are benefiting from rising demand for IPOs and a record rate of debt issuance.

Goldman shares rose 11% in 2020, outperforming the KBW Bank Index’s 4.3% decline.

Here are the numbers:

Earnings: $ 12.08 per share versus $ 7.47 per share, according to Refinitiv.
Revenue: $ 11.74 billion versus $ 9.9 billion.

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