Restaurant owners face challenges to balance rising costs, keep customers happy (2022)

Award-winning restaurateur Michael Scelfo has run kitchens post-9/11 and through the 2008 economic downturn, but he said the COVID-19 pandemic and soaring inflation have brought on prolonged issues businesses are still trying to figure out.

"What's so different this time around is it's this sustained, evolving-downward spiral since March of 2020 when things hit the fan with COVID and the shutdown," Scelfo told "Good Morning America." "What we're left with is the economic rubble of the aftermath."

Restaurant owners face challenges to balance rising costs, keep customers happy (1)

Ben Gebo Photography

Restaurant owners are accustomed to dynamic changes, but even industry veterans like Scelfo said, "it feels like we're continually taking punches and not necessarily getting the relief that we expected."

And problems that began at the onset of the pandemic -- mandated restaurant closures, safety restrictions, staffing shortages and broken supply chains -- have been exacerbated by rising costs on food, fuel and materials, failed federal relief packages and inflation, experts said.

Soaring inflation hits cost of ingredients

Food prices have outpaced the overall inflation rate, which is up nearly 11% year-over-year in July, according to the latest data from Bureau of Labor Statistics. Common restaurant staple ingredients like flour -- when purchased in a U.S. city -- rose 22% in the last year, while eggs have increased 38%.

Restaurant owners face challenges to balance rising costs, keep customers happy (2)

David Paul Morris/Bloomberg via Getty Images, FILE

I don't want to raise prices on the consumer any more than I have to because I'm sensitive to it too...

"It all trickles down to what the baseline cost of whatever the product is," Scelfo said. "If you're paying more for it on the home front, you can be assured that we're paying more."

Scelfo, who has not passed along increases to his guests, looks at that as a last resort.

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"I don't want to raise prices on the consumer any more than I have to because I'm sensitive to it too. And I do think there's a limit to what you can realistically charge," he said. "If you're a restaurant that's operating on thin margins, you're really probably up against it right now -- there's kind of this feast or famine out there for restaurants who have the means to navigate this period."

MORE: Omicron's impact on restaurant industry shows dire need for restaurant relief grants

"Inflation is having a tremendous impact on everyone across the board," Leslie Silverglide, co-founder of California casual restaurant chains Split and Mixt, told "GMA." "[We've tried to] hold price as much as possible," she added, and "be smarter about how we run our business."

Food shortages, costs impact menus and availability

Brooklyn-based chef-owner Sal Lamboglia of the newly opened Italian hotspot, Cafe Spaghetti, thinks customers may relate more than ever to the challenges of rising food costs as they shift their own spending on groceries.

Restaurant owners face challenges to balance rising costs, keep customers happy (3)

PLS Consultants

"So many things that we use that aren't even specialty items -- eggs, milk, cream, butter – have gone up 10, 20 30% -- I'm sure every restaurant is going through this, but I also feel also for the diner," he said. "It's scary because I don't know if things will make their way down again."

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And he said Lamboglia's menu has taken a hit.

"We've been getting shorted on certain pastas, and certain grains and flour -- I've had to actually change a brand of pasta," he said. "[We] go back to the drawing board each time and say, 'OK, how valuable is this dish with this exact pasta? Can we change the shape? Are people going to like it? And that's what we deal with now. It's a lot."

our costs have been rising steadily and aggressively for nearly two years

Chef David Nayfeld, owner of Che Fico and Independent Restaurant Coalition (IRC) board member, told "GMA" that some think inflation is "just now happening." "Our costs have been rising steadily and aggressively for nearly two years," he said.

"We've decided to actually lean into quality," Nayfeld said. "It may mean that people will dine out less," but he believes diners will choose restaurants "based on quality."

Restaurant owners face challenges to balance rising costs, keep customers happy (4)

The Washington Post via Getty Images

He also hopes the decision to spend more on employees, products and farms will ensure the support of key players who share his values to "offer a better quality of product to our guests, knowing that they're smart enough to know the difference."

Paying for quality labor impacts every facet of the supply chain: "If nobody is there to support and prop the supply chain up, [it] will collapse," he said. … when we believe in product and believe in farms -- we need to support them."

New strategies to stay afloat

Jake Dickson, owner of Dickson's Farmstand Meats -- a butchery, restaurant and bar -- called "huge increases in labor costs, packaging costs and meat inputs" a "triple whammy" over the last six months.

"Our labor costs per head were up 30%," he told "GMA" of the overhead and "first punch" at the start of the pandemic. "And that's pretty tough in a business where labor costs are already massive."

Restaurant owners face challenges to balance rising costs, keep customers happy (5)

Dickson's Farmstand Meats

Our farmers' costs are now going through the roof

Where Dickson was initially "insulated from food cost increases" and able to keep meat prices steady thanks to longstanding relationships with purveyors, he said "unfortunately, those things don't hold right now."

"Our farmers' costs are now going through the roof," he said, noting fertilizer and fuel costs have prompted higher prices.

"They don't want to increase prices on us because they don't want me to buy less and they know that if I raise my prices, we'll probably sell less," Dickson said.

Four months ago, he made a "very purposeful decision to add a beer and wine license," opening a bar that serves as "a high margin business" to offset other new costs.

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Restaurant owners face challenges to balance rising costs, keep customers happy (6)

Dickson's Farmstand Meats

"We've kept either small increases or no increases in many places because the bar's margins are so much higher," he said, hailing it "a bulwark."

He also strategized his labor costs.

"Now they're pretty much flat because we made a choice to pay our employees really well then and we haven't had to keep giving raises -- we're very competitive -- now we're just kind of figuring out all the other pieces."

Adapting to skyrocketing expenses

In 17 years of opening restaurants across California, Texas and Arizona, Silverglide said her growing list of challenges has been unlike any other.

it's like Whac-A-Mole ... we solve one thing, then something else pops up

"We joke that it's like Whac-A-Mole. We solve one thing, then something else pops up," she said. "Especially as we're looking to build out new restaurants, we're finding it really hard to just get standard equipment -- we place the orders and then as we get closer, they're like, 'Oh, actually, it's gonna be another four to six months.'"

"It's a hard place to be running a restaurant today," Silverglide told "GMA."

MORE: Over 50% of independent restaurants, bars without federal grants fear permanent closure within 6 months

Lamboglia thinks restaurants can strike a balance by offsetting expensive entree lists with a section of the menu that's affordable.

"At least giving the guests the option not to feel like, 'Wow, I almost can't even go out to eat because it's just too much," he said.

Rather than constantly revising menu prices as inflation rose to 7% this spring, Leslie Whitney, the owner of Sunset Grill in Virginia, told "GMA" she and her husband decided on a "temporary fix" to add an "inflation fee" of 3.5% to diners' checks.

"As food prices were literally rising and changing every day ... we had to do something to recoup some of the money loss," she said. Although the flat fee won't cover all their new costs, they are "simply trying to stop the bleed."

Staffing has been one of the "lasting effects of COVID" that Whitney has grappled with.

"We can fluctuate with rising food prices, but not having appropriate staff really puts a wrench in our operations of service -- we're constantly trying to hire where we are short staffed," she said. "Back-of-the house positions are the hardest to hire because we have high expectations and aren't willing to cut corners in knowledge and experience."

A push for federal funding

"The one big player here that has not done enough is the government," Nayfeld said. "[The government] has had the ability with multiple bills to refill the Restaurant Revitalization Fund, which would really do a tremendous amount – not just for now, but for a couple of years, making sure that these restaurants can stabilize."

Restaurant owners face challenges to balance rising costs, keep customers happy (7)

San Francisco Chronicle via Getty Images

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Scelfo, who applied and said he never received money from the bill that was part of the American Rescue Plan, added that the "RRF only funded maybe a third or half of restaurants that applied for it and they've still never replenished that."

Despite the constant battering, resilience has created a resounding sense of gratitude and respect in the industry.

"To look for a positive in all this, I've never been more proud of our teams," Scelfo said of the staff who continuously rises to the occasion.

"Restaurants are continuing to find a way to provide a great customer experience so that they really try to minimize the effect of what's happening out there and make you feel like you're escaping it … that's why I'm trying not to pass along that cost."

"None of that would be possible without a lot of dedicated people that continue to work in this industry and work harder than they ever had before," Scelfo said.

Restaurant owners face challenges to balance rising costs, keep customers happy (8)

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FAQs

What challenges do restaurant owners face? ›

8 challenges restaurant owners face and how to tackle them:

Changing consumer behaviors. Time-consuming restaurant marketing tactics. Services eating away at profits. Meeting diverse training needs.

What are the challenges of having a restaurant? ›

How to overcome the 4 biggest challenges all restaurant owners...
  • Finding and retaining quality staff.
  • Mitigating rising food costs.
  • Controlling growing operational costs.
  • Reaching new customers.

What do you consider to be one of your greatest challenges in the restaurant industry? ›

Top 10 Challenges Facing Restaurants
  • Keeping up with market trends. Before a potential business owner decides to open a restaurant, he or she must become familiar with the market. ...
  • Having enough capital. ...
  • Providing health care coverage. ...
  • Effective inventory management and menu pricing. ...
  • Hiring permanent and seasonal staff.
18 Feb 2014

How you can improve the sales for fast food restaurants in your community? ›

16 Ways to Increase Restaurant Sales
  • Offer signature packages. ...
  • Optimize your menu. ...
  • Throw a themed event. ...
  • Secure a social media presence. ...
  • Sell branded products. ...
  • Increase speed of service. ...
  • Partner with popular delivery services. ...
  • Embrace the power of upselling.
20 Jan 2022

What do restaurant owners care about? ›

Restaurant owners need to be a “gracious host, firm but fair employer, tough negotiator, empathetic friend, all with excellent cleaning skills,” says Goldberg. And if an owner is in charge of a big staff, that involves having excellent management skills to ensure all of their employees' needs are met.

What are key challenges restaurants will face in 2022? ›

More than 50% of full-service, quick-service, and fast-casual segments reported labor recruitment and retention as the biggest challenge of 2022. Even though the restaurant and foodservice industry added back 1.7 million jobs in 2021 for a total of 14.5 million jobs, many restaurants are still understaffed.

What is the most challenging aspect of being a restaurant manager? ›

The most challenging aspects of being a restaurant manager involve training and motivating staffers to consistently meet customer demand. This involves providing adequate oversight in food preparation protocols including culinary and food safety training.

How do restaurants improve operations? ›

6 Tips for Improving Restaurant Operations
  1. Streamline Your Menu. Your menu is what usually attracts customers to your restaurant initially. ...
  2. Invest In and Train Your Employees. ...
  3. Invest in the Right Restaurant Technology. ...
  4. Utilize Third-Party Integrations. ...
  5. Keep Up With Inventory. ...
  6. Remember Your Customers.
23 Mar 2021

What are some challenges and opportunities in the foodservice industry? ›

Seven challenges and trends the food industry can expect in 2021
  • Upholding safety standards. ...
  • Keeping sustainability on the front burner. ...
  • Dealing with constant shutdowns. ...
  • Food fraud. ...
  • Plant-based marches on. ...
  • Artisan products to grow from strength to strength. ...
  • Digital acceleration – more to come.
7 Jan 2021

How do you handle customer complaints in a restaurant script? ›

I'll bring you another one right away. I'll change it right away.
...
Approach the guest and ask politely if there is a problem:
  1. Excuse me, may I help you Mr. Samuel? (Listen with concern and empathy).
  2. Stay calm. And never argue with the guest.
  3. Be aware of the guest's self-esteem. ...
  4. Tell the guest what can be the best done.

What are the common reasons why restaurants fail? ›

Why do restaurants fail?
  • Lack of vision.
  • Not enough industry experience.
  • Not enough operating capital.
  • Poor location.
  • Not knowing the numbers.
  • Ineffective menu pricing and planning.
  • Failing to adapt.
  • Being too trendy.
15 Oct 2019

How can a restaurant increase sales without advertising? ›

How to Increase Your Restaurant Sales
  1. Turn Your Existing Customers Into Promoters. Your existing customers can be your most prominent advocates. ...
  2. Upselling. ...
  3. Improving the Table Turnover Rate. ...
  4. Social Media Promotions. ...
  5. Providing Offers and Happy Hours. ...
  6. Leveraging Online Ordering. ...
  7. Offering Smaller Plates. ...
  8. Hosting Events.

How can I become a better restaurant owner? ›

6 Tips for Becoming a Restaurant Owner
  1. Wear many hats. The best way to prepare for starting your own restaurant is to work in one. ...
  2. Research the industry. Market research is your first step to writing a business plan. ...
  3. Create a concept. ...
  4. Calculate the costs. ...
  5. Hire staff. ...
  6. Start marketing before you're open.
20 May 2021

What are skills needed for a restaurant owner? ›

4 ESSENTIAL SKILLS FOR RESTAURANT ENTREPRENEURS
  • People Skills.
  • It almost goes without saying, but let's just get it out there: if you can't deal with people, the restaurant business isn't for you. ...
  • Leadership Skills.
  • A restaurant always has to be operating near peak efficiency. ...
  • Financial Knowledge and Skill.
9 Jan 2020

What do restaurant owners worry about? ›

There's food and beverage inventory, employee wages (and overtime), cleaning fees, kitchen supplies, and utility costs, just to name a few. Because of the competition in restaurants, many are operating on thin margins.

What are some of the major problems that managers have to deal with in a restaurant? ›

Below are four of the top challenges that people who work in restaurant management must face day in and day out.
  • Cultural Barriers.
  • High Turnover Rate.
  • Unpredictability.
  • Training. The staff has to be trained to memorize the items and prices on the menu.

What are the challenges of cafe business? ›

7 Challenges Café Owners Face
  • Motivating Staff. Customers will come into your cafe or coffee business just as much for the service you provide as the food and drink you serve. ...
  • Letting Go of Responsibilities. ...
  • Team Work. ...
  • Growing the Business. ...
  • Increasing Average Spend. ...
  • Keeping Motivated. ...
  • The Business Side.
20 Jun 2017

Is the restaurant industry profitable? ›

Yes, restaurants are profitable, but they have low profit margins. Profitability depends on many factors including the size and type of restaurant, as well as economic ones. It takes an average of two years for a new restaurant to turn a profit. Unfortunately, there is a very high restaurant failure rate.

Why is restaurant management so hard? ›

You're Focused on Tasks, Not People. The restaurant business is fast-paced and loaded with puzzle pieces that need to come together to create an outstanding restaurant. We have so many variables that need to be juggled simultaneously that many new managers quickly become overwhelmed.

What are the challenges for growth of cafe or restaurant? ›

10 Challenges to Owning A Restaurant
  • #1: Getting Enough Capital to Open. ...
  • #2: Finding the Right Location. ...
  • #3: Putting Together the Perfect Menu. ...
  • #4: Underestimating the Competition. ...
  • #5: Finding the Right Suppliers. ...
  • #6: Hiring and Retaining Employees. ...
  • #7: Keeping Track of Inventory. ...
  • #8: Managing Food Safety.
8 Jul 2019

What are common problems encountered in food and beverage control? ›

Food and Beverage Industry Challenges
  • Enforcement of Plastic Ban.
  • Stringent Regulatory Landscape.
  • The Pervasive Presence of e-Commerce.
  • Rise of Veganism.
  • An Optimized Supply Chain.
  • Use of Modern Technologies.
  • Transparency and Sustainability.
  • Waste Reduction.

How can restaurants improve customer service? ›

7 Ways to Improve Restaurant Customer Experience
  1. Keep a Happy Team.
  2. Offer Online Ordering and Reservations.
  3. Revamp Your Space.
  4. Master the Art of Customer Service for Better Reviews.
  5. Audit and Update Your Menu.
  6. Give Customers Some Birthday Cake.
  7. Implement a Loyalty Program.
27 Nov 2019

How do restaurants add value? ›

6 steps to improve your restaurant's value
  1. Remodel. This. ...
  2. Add online ordering or delivery services. ...
  3. Transform your supply chain to meet consumer demand. ...
  4. Step up your employee engagement efforts. ...
  5. Invest in restaurant technology. ...
  6. Optimize your online presence.
6 Jan 2016

What are the solutions for the challenges faced by the food production sector? ›

Answer. Explanation: The deployment of green business practices – right from the production to the packaging and supply chain management is a crucial solution to tackling the current issues in the food industry.

What are the major problems and risks in food service business? ›

Is your food business protected from these five key risks?
  • Supply chain disruption. Every player in the food industry relies on suppliers. ...
  • Equipment failure. If your equipment breaks down, your business comes to a standstill. ...
  • Contamination and spoilage. ...
  • Food safety and recall. ...
  • Cyber attacks.
10 Sept 2014

What are three challenges facing the foodservice industry? ›

Let's take a look at a few challenges facing the food industry right now.
  • Labor Shortages. Grocery stores have seen an increase in demand lately, and the food industry is dealing with labor shortages across the board. ...
  • Protecting Employees. ...
  • Supply Chain Pressures.

How do you respond to customers who complain about prices? ›

But who doesn't want to save money? Sometimes customers complain about pricing because they hope they can negotiate down a bit.
...
If you're confident in your pricing, try this 3-step response:
  1. Affirm that yes, they are correct. ...
  2. Give a short explanation. ...
  3. Give them loving permission to make another choice.
16 Feb 2021

How do you handle customer complaints examples? ›

Complaints handling procedure
  1. Listen to the complaint. Thank the customer for bringing the matter to your attention. ...
  2. Record details of the complaint. ...
  3. Get all the facts. ...
  4. Discuss options for fixing the problem. ...
  5. Act quickly. ...
  6. Keep your promises. ...
  7. Follow up.

How do you handle customers? ›

10 Tips for Dealing with Customers
  1. 10 Tips for Dealing with Customers.
  2. Listen to Customers. Sometimes, customers just need to know that you're listening. ...
  3. Apologize. When something goes wrong, apologize. ...
  4. Take Them Seriously. ...
  5. Stay Calm. ...
  6. Identify and Anticipate Needs. ...
  7. Suggest Solutions. ...
  8. Appreciate the Power of “Yes”

What do you do if a customer connects and is frustrated because they were on hold for a long period of time? ›

Address the Issue

Sometimes a simple acknowledgement about the frustration will help customers relax and feel less resentful. For example, “Sorry for the long line folks, we're a bit under-staffed. We know your time is valuable and we appreciate your patience. We'll get to you as soon as possible.”

How do you deal with angry customers interview question? ›

How to answer "How would you deal with a difficult customer?"
  1. Listen carefully to the customer. ...
  2. Repeat what you've just heard. ...
  3. Actively sympathize / apologize. ...
  4. Take responsibility to resolve the issue. ...
  5. Remain calm and compassionate.
15 Dec 2021

How is customer service related to customer satisfaction? ›

Businesses rely heavily on their customer service people to connect with its customers and provide a service experience that is both pleasant and helpful. The effectiveness of the customer service department is directly linked to customer satisfaction.

What does a restaurant need to be successful? ›

A strong restaurant identity, hiring and retaining your staff and building a supportive environment, familiarizing yourself with profit and loss statements, creating a profitable menu (and learning how to market your best-selling items) are just some of the key elements of successful restaurants.

How can I grow a small restaurant business? ›

5 simple steps to grow your restaurant business
  1. Capture more orders with website integration. ...
  2. Partner up with other restaurants. ...
  3. Localize your marketing tactics. ...
  4. Build out your local SEO strategy. ...
  5. Launch multiple virtual brands to maximize reach.
8 Aug 2022

How long does it take for a restaurant to be successful? ›

Most restaurants only start to turn a profit within three to five years. But instability doesn't mean you need to feel alarmed. If your financial reports are showing that your revenue is good and you can reasonably project rising revenue, you're likely okay.

What is the most challenging aspect of being a restaurant manager? ›

The most challenging aspects of being a restaurant manager involve training and motivating staffers to consistently meet customer demand. This involves providing adequate oversight in food preparation protocols including culinary and food safety training.

What are some challenges and opportunities in the foodservice industry? ›

Seven challenges and trends the food industry can expect in 2021
  • Upholding safety standards. ...
  • Keeping sustainability on the front burner. ...
  • Dealing with constant shutdowns. ...
  • Food fraud. ...
  • Plant-based marches on. ...
  • Artisan products to grow from strength to strength. ...
  • Digital acceleration – more to come.
7 Jan 2021

What are common problems encountered in food and beverage control? ›

Food and Beverage Industry Challenges
  • Enforcement of Plastic Ban.
  • Stringent Regulatory Landscape.
  • The Pervasive Presence of e-Commerce.
  • Rise of Veganism.
  • An Optimized Supply Chain.
  • Use of Modern Technologies.
  • Transparency and Sustainability.
  • Waste Reduction.

How do restaurants improve operations? ›

6 Tips for Improving Restaurant Operations
  1. Streamline Your Menu. Your menu is what usually attracts customers to your restaurant initially. ...
  2. Invest In and Train Your Employees. ...
  3. Invest in the Right Restaurant Technology. ...
  4. Utilize Third-Party Integrations. ...
  5. Keep Up With Inventory. ...
  6. Remember Your Customers.
23 Mar 2021

Why is restaurant management so hard? ›

You're Focused on Tasks, Not People. The restaurant business is fast-paced and loaded with puzzle pieces that need to come together to create an outstanding restaurant. We have so many variables that need to be juggled simultaneously that many new managers quickly become overwhelmed.

What are the challenges for growth of cafe or restaurant? ›

10 Challenges to Owning A Restaurant
  • #1: Getting Enough Capital to Open. ...
  • #2: Finding the Right Location. ...
  • #3: Putting Together the Perfect Menu. ...
  • #4: Underestimating the Competition. ...
  • #5: Finding the Right Suppliers. ...
  • #6: Hiring and Retaining Employees. ...
  • #7: Keeping Track of Inventory. ...
  • #8: Managing Food Safety.
8 Jul 2019

Why is working at a restaurant difficult? ›

Restaurant work is physically taxing. No matter where you are in the restaurant, you're on your feet all night, either carrying heavy plates and zipping between tables, or hunched over in a hot kitchen with barely any time for a bathroom break. And then there's the customers, who might harass or abuse you.

What are the solutions for the challenges faced by the food production sector? ›

Answer. Explanation: The deployment of green business practices – right from the production to the packaging and supply chain management is a crucial solution to tackling the current issues in the food industry.

What are the major problems and risks in food service business? ›

Is your food business protected from these five key risks?
  • Supply chain disruption. Every player in the food industry relies on suppliers. ...
  • Equipment failure. If your equipment breaks down, your business comes to a standstill. ...
  • Contamination and spoilage. ...
  • Food safety and recall. ...
  • Cyber attacks.
10 Sept 2014

What is the most common customer complaints in the restaurant? ›

Common Restaurant Complaints and Solutions
  • Poor quality. ...
  • Overly priced. ...
  • Long wait time. ...
  • Weird temperature. ...
  • Too much lighting/Too dark. ...
  • Noisy & bad music. ...
  • Obnoxious guests. ...
  • Ill-behaving or rude wait staff.
7 Apr 2021

How can restaurants improve customer service? ›

7 Ways to Improve Restaurant Customer Experience
  1. Keep a Happy Team.
  2. Offer Online Ordering and Reservations.
  3. Revamp Your Space.
  4. Master the Art of Customer Service for Better Reviews.
  5. Audit and Update Your Menu.
  6. Give Customers Some Birthday Cake.
  7. Implement a Loyalty Program.
27 Nov 2019

How do restaurants add value? ›

6 steps to improve your restaurant's value
  1. Remodel. This. ...
  2. Add online ordering or delivery services. ...
  3. Transform your supply chain to meet consumer demand. ...
  4. Step up your employee engagement efforts. ...
  5. Invest in restaurant technology. ...
  6. Optimize your online presence.
6 Jan 2016

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