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May 20, 2021

As food costs rise, restaurants figure out how to adjust

Owners look to manage 50 percent increases without alienating customers

The Covid-19 pandemic brought to light some pressing issues with the way our food supply chain has become industrialized — primarily, how quickly that chain can come to a near-halt, and how long it takes for the country’s biggest providers to catch up. Meat has seen the biggest jump in price, due to slowdowns at processing plants. One bright spot has been the increase in customers at farmers’ markets, and that shift toward more local spending is reflected in restaurants, too.

With such a short supply chain — from nearby farms and farmers directly to customers — local products haven’t seen much of a price change, says Jesse Leadbetter, owner of Freshlist. Freshlist delivers local produce to restaurants and — more recently — residential customers.

“Surprisingly, aside from some price increases on local proteins — mainly due to bottlenecks with local meat processors — our prices are on par with where they were a year ago,” he says. “In fact, I was surprised to see our restaurant business grow (almost 50 percent) in 2020, and while it’s attributed to several factors, one of the surprising ones was the rising cost of products from broadliners.”

Meat costs, however, make up a bulk of restaurants’ plate price, and as price per pound rises rapidly, restaurant owners are left trying to determine how they can make a profit, knowing that customers may react with sticker shock if menu prices increase accordingly. For many, that means smaller menus, less waste, and smaller meat portions.

We spoke with four restaurateurs to see how their costs are rising on a product they use frequently, what they’re doing to offset the cost, and what they hope customers understand.

What The Fries, Pineville

Ingredient: Chicken wings
Price increase since pre-pandemic: $30 per 40 pound case
Amount used per week: 200 pounds (wings and tenders)

Why are prices rising? “I think the reason for the price increase is that, every restaurant is pretty much opening back up right now,” says co-owner Greg Williams. “With everyone opening up and not as many people working in the factories and driving trucks, it has definitely made an increase in all prices on food. Not to mention this gas shortage now, which has really made things tricky.”

How much has your menu pricing increased to account for this?We have been making small increases here and there to not totally alarm customers too much — maybe a dollar increase as the purchase cost goes up per week,” co-owner Jamie Barnes says. “Some items like steak, we have had to go up about $3, and lobster we added $2 to offset the raise in prices from purveyors.”

How are changing prices affecting your business?I think changing prices have been a hit or miss for us because a lot of people just can’t understand that, with the restaurant industry, we change as it does,” Williams says. “If the prices on steak go up $10 per pound, then we have to go up on our prices. If not we are really hurting ourselves and losing money. We are definitely in this industry to make money, so we have to adapt to all types of different changes. So some people don’t like it, but I feel the customers who really enjoy our food and have been continuous customers for years understand and they are definitely the ones we want to keep.”

Fin & Fino, Uptown

Ingredient: U-10 dry-packed scallops
Price increase since pre-pandemic: Between 35 to 50 percent
Amount used per week: 40 to 45 pounds

Why are prices rising? “Scallops have gone up because of reduced supply and increased demand,” says general manager Tim Buchanan. “Fishing restrictions in some areas, higher demand for U.S. export, and reduced catch size have all contributed to price increase.”

How much has your menu pricing increased to account for this? “We are all small plates at Fin and serve either 2 or 3 sea scallops to order,” Buchanan says. “We have had to increase our price by $1 once and another time by $2 to reflect the item cost increase. And it’s still one of our least profitable dishes based on percentage.”

How are changing prices affecting your business? “Seafood prices always fluctuate based on time of year and availability, so we try not to make increases with each fluctuation,” Buchanan says. “We do watch the trends though and if needed will make the change on the menu price. As a general statement, most of our seafood small plates from salmon to octopus to crab have gone up a few dollars. Chef Scott and Chef Tom do a really great job ensuring that there is still perceived value along with memorable flavors on the plates so the guest doesn’t think twice about the price.”

Oysters from Fin & Fino in Uptown. Kristen Wile/UP

The Dunavant, South End

Ingredient: Black Angus steak
Price increase since pre-pandemic: From $4.80 a pound two years ago to around $10 per pound today
Amount used per week: About 600 pounds

How much has your menu pricing increased to account for this? “At the beginning of Covid due to the requirements and cost of PPE, we had to raise our prices from $25 to $29, but I also tried to expand the menu to offer more value to our customers,” says owner and chef Travis Hearne. “Sadly, because of our concept (which is supposed to be non-pretentious fine dining at a budget you can afford), unless I have absolutely no other choice I very much am trying not to change my menu prices again. Sadly, I don’t think that we’re going to be able to return back to that $25 price point due to the trajectory of the industry.”

How are changing prices affecting your business? “Throughout Covid, I’ve been doing my best to track prices and stay ahead of them. However, not just in the last two years, but the last few months I have watched just about every kitchen cost I have double, including steaks, which have become harder and harder to even find much less to my quality and standards. I had to find completely different sources for almost every item that I have, as well as anticipate shortages, shipping errors, lack of resources, and sudden changes in the market.”

The main course of The Dinner at The Dunavant, a tasting menu with steak as the main course. Pictured with cafe de Paris sauce. Kristen Wile/UP

Sweet Lew’s Barbecue, Belmont

Ingredient: Prime beef brisket
Price increase since pre-pandemic: 48 percent
Amount used per week: 1,000 pounds

Why are prices rising? “Most of my suppliers say the same thing: when Covid hit, a lot of animals were lost due to shutdowns in the processing plant and restaurants,” owner Lewis Donald says. “For the past year or so, farmers have decreased their herds — again because of the demand. Without an exact date that Covid is ‘over,’ things in the manufacturing and farming world will continue to have ups and downs.”

How much has your menu pricing increased to account for this? “We have not done a price adjustment until this week,” Donald says. Brisket went from $21 to $24 per pound.

How are changing prices affecting your business? “I hope everyone understands,” Donald says.

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