2022 is the Year to Partner
Nearly 90 percent of funeral homes in the U.S. are privately owned by families or individuals. The NewBridge Group interfaces with independent owners across the country on a regular basis and hear their common challenges first-hand. Many of their concerns lead down one road and unfortunately, that is a continuing and increasing squeeze on profitability.
A primary concern is the significant increase in wages and salaries across the U.S. in 2021, with the highest monthly increase hovering around a 14% earlier this year1. New research is proving that pay increases are now returning to pre-pandemic levels but the recent salary increases will have lasting affects2. This is causing a significant strain on funeral service recruiting as well as mortuary school applications. Combined with rising inflation, the average funeral service working families are seeing a strain on budgets. Add to that the proposed large increase to the national minimum wage, from $7.25 to $15.00 per hour by 2025 in all U.S. states3.
In addition, labor force tightening has been perpetuated through the COVID-19 pandemic. Many of the younger generation are increasingly pushing for more flexibility on work from home schedules. We are also experiencing the “Great Resignation”4 among all generations, particularly baby boomers. The pandemic accelerated some of their retirement plans, putting even more pressure on staffing issues. This is hurting funeral home hiring. We hope this is only temporary.
What does this mean for funeral home owners? Historically, funeral service salaries have lagged other industries. Labor typically accounts for the majority of a funeral home’s expenses. Even though the hourly rate for funeral service workers around the nation varies, from $10 – $23 per hour, this proposed hike in minimum wage will affect many funeral homes. How will funeral service recruit and retain their best and brightest talent given the circumstances? It will continue to be challenging in the face of these obstacles. The increasing health insurance costs will also play a role in this reduction in future profits.
Another continuing concern is the consistent increase in cremations that negatively affect funeralservice profits. The 2021 NFDA Cremation & Burial Report states that the projected burial rate, in 2021, is only 36.6% in comparison to a cremation rate of a projected 57.7%5. As you know, this trend towards cremation has a significant impact on profitability.
We know there are many factors contributing to reduced profit margins for funeral home owners. These challenges are just a few that are prevalent and top of mind. One solution to address these concerns is the decision to partner with a larger company. At NewBridge, we have had the honor of changing the course of a funeral home owner’s life more than once. This equates to more financial security, more freedom and more peace of mind. We pride ourselves in partnering with premier buyers who are committed to keeping the family legacy alive within each community. In a sale to one of our private, regional buyers, you can choose how much or how little you want to be involved in the business.
With the ongoing changes in the industry, we are frequently contacted by many funeral home owners who want to make that life change while preserving their family’s legacy. With more than 75 years of collective experience and more than 1,000 collective sale transactions, we are confident we can help you explore your options. Please contact us for your confidential, no-obligation, complimentary valuation today.
NewBridge Group is a funeral service leader for succession planning. For more information about NewBridge Group, please contact Todd Reich at (404) 542-9956 or Tony Kumming at (813) 579-7048 or visit www.newbridgegroup.com.