Tales from the Food-Price Front
Five operators share counter-attack strategies for the rising costs of doing business.
By Kate Leahy, Senior Associate Editor -- Restaurants and Institutions, 5/28/2008 1:40:00 PM
It’s no secret that rising food costs have affected everyone in the retail and restaurant industries, and with reason: 2008’s big picture doesn’t look favorable.
But if the big picture isn’t altogether rosy, smaller snapshots might be. R&I Senior Associate Editor Kate Leahy talked with operators in categories from fine dining and casual dining to healthcare foodservice. Here they share their strategies for coping with an uncertain pricing environment.
• Jaime Ortiz is the executive chef of Angelo’s 677 Prime, a fine-dining steakhouse in
“Everything’s gone up. There isn’t much that hasn’t gone up, from dairy to poultry. We’re known for having high-end products at a premium [price]. It’s scary for us to raise our prices because we’re already perceived to be on the high end of the price spectrum.”
To meet rising food costs with minimum alteration to the menu prices, Ortiz froze his markup. Rather than mark up a dish by a percentage of its new, and higher, food cost, he marks up the dish by the same factor used before food costs increased. “We’re at the same profit margin, but our markup percentage has changed, and not for the better. But we couldn’t transfer both the new costs and the markup.”
Even so, Ortiz says he hasn’t seen a decline in covers or in guests’ willingness to pay high prices. A 10-oz. imported
“For our target market and the need we fill, which is the ultimate splurge and to see and be seen, that’s not really affected by the market. It’s those restaurants that have the $19.95 entrée that are feeling it. People are willing to go for luxury, but for more everyday meals, maybe they’re not.”
• Judith Hallisey is the executive chef and foodservice director at the Cancer Treatment Centers of
“Produce and dairy. Those have been our biggest jumps. Meat and seafood hasn’t been hitting that high; it’s only slightly increased. But when I did a comparison, organics have gotten a lot better in affordability.”
Despite climbing food costs, Hallisey continues to source organic and natural produce 90% of the time for patient meals (she has a budget of slightly more than $20 per patient per day) as well as for employee dining (the hospital has more than 900 employees working three shifts). She buys within the seasons, when possible, to keep produce prices affordable.
“I’m not planning on making any changes. Our menus are calculated in four-week cycles. I’m not going to change that because my prices have gone up slightly. We pay $50 a flat for blueberries, but I’m not going to take that off [the menu] because of blueberries’ nutritional value.”
• Daniel Stern is the Executive Chef and Owner of Gayle and Rae, both fine dining restaurants in
“I know the vendors are trying to do the best they can for us. And I’m willing to take a certain amount of a hit so that our prices don’t get unreasonable. But at a certain point, you have to say this is crazy. Our [natural] gas bill at Gayle last month was like our rent.”
Yet, like Ortiz, Stern hasn’t seen more empty seats. “A lot of people still come to Gayle to have the five-course menu, even though we offer [dishes] a la carte.” At Rae, Stern’s much larger restaurant, he anticipates that this year will be better than last. “We have a good mix of lower price-point items to higher price-point items.”
This summer, which is generally a slow time for
Stern hopes that the economy swings in a more optimistic direction soon. But he also takes the long view. “Hopefully my restaurants will be around for 20 years. If I only had a lifespan of five years, this would be killing me.”
•
“Prices peaked about two months ago. Flour went from $17 a bag to $40 a bag. We were due for a [menu] price increase. It had been three years. So that was helpful. But we are doing other things that, along with the new menu, will help.”
Kirchoff eliminated complimentary salads with entrées instead of raising entrée prices. “The truth is, a lot of people don’t eat [the salad].” At the same time, he dropped the charge for sharing plates. In addition, recipients of
Although Kirchoff’s
• Kurt Knowles Jr. is director of corporate affairs for The Manor Restaurant in
“It’s a very unstable market for everybody. I feel for [vendors], they have to fight for every dollar that they make. But because we’re faced with so many different costs that we can’t control, it helps to put control on what we can.”
At The Manor--which also operates Highlawn Pavilion, an events space; Ram’s Head Inn, and provides foodservice for a nearby Marriott Residence--using buying power is integral to striking deals with vendors. So is refusing to pay surcharges.
“We adamantly fight delivery charges. [In other industries] if you buy enough, they wave shipping. Yet it seems to be going in the opposite direction for food delivery. These companies pass the buck on. The customer shouldn’t have to pay for management deficiencies.”
The Manor also is becoming more self-sufficient when it comes to its produce, expanding its garden and growing more vegetables and fewer ornamental pumpkins. “This year we’re going to grow considerably less pumpkins, or none at all, so we can grow tomatoes, cucumbers and zucchini. That will be the single biggest thing that we’re trying to do, at least on the produce side.”
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