As Bermuda's restaurant industry grapples with skyrocketing expenses, one restaurateur is calling on the Government to ease regulatory burdens and support business growth in the upcoming 2025-26 Budget.

Phil Barnett, the president and managing director of Island Restaurant Group and its seven restaurants, is urging policymakers to reduce red tape and remove hiring restrictions that are hampering restaurants' ability to give customers the quality meals they crave.

“Let's not add to any of that tax burden wherever we can take away some of the regulatory red tape,” Mr Barnett said.

One key regulatory concern is the “closed category” for certain types of work permits, he said, which can prevent restaurants from hiring specialised staff like high-level bartenders.

“There’s not a single unemployed bartender in Bermuda,” Mr Barnett emphasised. “We’ve had numerous meetings about it, and we can't find the quality of bartenders we need.”

There are challenges for Bermuda's restaurant industry, including food costs which have risen dramatically.

The basket of goods and services measured by the Consumer Price Index cost 1.8 per cent more in September 2024 than in September 2023, with the food division rising even more dramatically, by 3.1 per cent.

Meat and fish prices in particular are hitting restaurants hard, according to Mr Barnett. “We've seen an increase in our raw materials cost,” he explained. ”It just feels like we can never quite catch up to where they need to be in order to maintain our necessary margins.“

Beyond food costs, restaurants are battling multiple expense pressures.

Labour costs are equally of concern, and utility expenses continue to climb, too. “Electricity is going up,” Mr Barnett noted, while health insurance costs for many employers have seen “double-digit increases” nearly every year.

Shipping adds another layer of complexity. Because Bermuda imports all containers full and exports them empty, importers pay for both trips.

Local fishermen are also feeling the pinch, with fish prices nearly doubling over the past decade owing to increased fuel and maintenance expenses, according to Mr Barnett.

Because of all of these factors, the industry's profit margins remain razor-thin, typically hovering at about 4 per cent to 5 per cent. External events like hurricanes can quickly push restaurants into the red, as fixed costs remain constant regardless of sales volume.

Population decline compounds these challenges. Bermuda's resident population dropped to a 20-year low in 2022, the Department of Statistics found, which in turn has reduced the local customer base.

Mr Barnett remains hopeful, particularly about the potential reopening of the Fairmont Southampton, slated to happen in the next 18 to 24 months, which could boost tourism and create economic opportunities.

“When conferences come, everything's buzzing,” he said.

Despite all the challenges, Mr Barnett insists that restaurant quality and portion sizes have remained consistent.

“We've certainly not changed our portion size at all,” he said, emphasising that an eight-ounce filet mignon steak remains standard across Bermuda's restaurants.

As the Government prepares its next budget, the restaurant industry is seeking practical support: reduced regulatory restrictions, more flexible hiring options and policies that can help stabilise rising costs.