From Dairy Queen to Brooks Running, Berkshire Hathaway’s businesses seeing an impact from inflation

Inflation has been one of the hot topics for markets this year, and rising prices are impacting portfolio companies for Berkshire Hathaway in different ways.

In March, the Federal Reserve’s preferred inflation gauge rose 5.2%, and the central bank is starting to raise interest rates, trying to thread the needle between slowing the rise in prices and avoiding a recession.

Ahead of the Berkshire annual shareholders meeting, executives from several of the conglomerate’s companies told CNBC how inflation is hitting their businesses.

Irv Blumkin, the CEO and chairman of Nebraska Furniture Mart, said that the higher prices were starting to chip away at the fundamentals of his business but things are in good shape overall. Home furnishings was a boom industry during the pandemic, as Americans stuck at home redesigned their living spaces and adjusted to remote work.

“Inflation impacting our business a little bit, and we can see a little slowdown in written business, but it’s coming off such huge numbers from the pandemic. … It’s still at a high level, but you can definitely see a slowdown,” Blumkin said.

Jim Weber, CEO of Brooks Running, said it was tough to raise prices but that he thinks some of the cost pressures would cool soon.

“We don’t have unlimited pricing power, but have taken selective price increases where we think we can. But our whole industry is so competitive. It’s a big market place. … I do believe in the supply chain that costs are going to mediate a bit,” Weber said.

Related to inflation, Dairy Queen CEO Troy Bader highlighted the tight labor market in particular as a challenge for the restaurant industry.

“It’s the biggest challenge that our franchisees face, and I would say it impacts us in three different fronts: one is our franchisees,” he said. “The other really are our vendors and our distributors.”

Roughly 20% of Dairy Queen’s franchise locations still have closed dining rooms because of staffing issues, Bader said.

“It’s not about wages today. People are paying whatever they need to pay. There just aren’t enough people to really come and work in the industry,” Bader said.

Check out all of the CNBC Berkshire Hathaway annual meeting coverage here.