Restaurants
The commodities that restaurants depend on are getting more expensive, and labor costs are rising as owners pay higher wages to attract a slimming workforce, presenting Ohio restaurateurs with two less-than-ideal options: They can raise prices and risk alienating customers, or keep prices down and watch their profit margins suffer.
“We work in an industry with razor thin margins,” said Anthony Hamilton, a restaurant consultant and chef instructor at Kent State University. “So when a variable expense like that goes up, we have to compensate, otherwise we’re getting pinched.”
Most restaurants now seem to have chosen the latter, although restaurant owners in Greater Columbus largely say they’ve shielded customers from the brunt of the excess costs.
The National Restaurant Association estimates that check sizes at restaurants throughout the country have increased around 4% this year. While the organization doesn’t break its figures down by state, Ohio Restaurant Association CEO John Barker said Buckeye State eateries probably raised prices by a similar percentage.
Over the same period, restaurant costs inflated by about 9%, Barker said, citing National Restaurant Association figures.
“That’s everything that would go into the expense column, including wages and costs for everything from packaging to protein,” he said.
Price hikes are not universal, though, Barker stressed.
Some restaurants “have not raised them because they are sensitive to the pressure consumers have, or perhaps they’re economically in a more-challenged area,” he said.
More than a year and a half after the first coronavirus cases were diagnosed outside of China, factory shutdowns, shipping disruptions and hiring woes still stymie the global supply chain.
Factory shutdowns and labor shortages at factories and transportation companies result in a scarcity of goods.
“Now people want to go out and they want restaurant food, so the demand is coming back,” said David Brasington, a professor in the department of economics at the University of Cincinnati.
The heightened demand and an uneven supply create a perfect storm of upward pressure on costs, experts say.
“When we first started our business two years ago, chicken wings were $70 a case,” said Kanica James, co-owner of JD’S Kitchen, on the Northeast Side. “At the peak of the pandemic, back in January and February, chicken was running $160 a case. And now it’s at $121 a case.”
Chicken prices are especially vexing to taverns and sports bars, whose customers demand the popular dish.
Pat Daly, who owns the Atlas Tavern and the Nomad restaurant, both near Polaris, managed to source local beef without taking on extra costs, but he wasn’t immune to the spiking cost of wings.
“With chicken wings, at this point we’re just trading dollars,” he said. “We’re selling them for what we pay.”
“We have a biweekly discussion about taking them off the menu, and if the price goes up any more we will probably end up doing that,” he said.
Even non-food items cost more,
James said.
“Gloves doubled in cost,” she said. “They were $10 for a box, now we’re paying $20, $26 per box in gloves. And we didn’t have the cost for masks (before COVID).”
Cost hikes kept MMELO Boutique Confections, which has locations in Groveport and Polaris, from expanding, owner Michelle Allen said.
“I wasn’t able to buy a tempering machine,” she said, referring to a device that melts chocolate to make it smoother and glossier.
Between the new equipment snag and the increase in prices for necessary ingredients like vanilla, “we actually had to scale back our holiday collection,” Allen said.
Restaurants, particularly mom-andpop operations, profit from low labor costs, paying kitchen staff close to minimum
wage and servers less than minimum wage, said Sandy Chen, an associate professor in Ohio University’s hospitality and tourism program.
But big box companies, including Amazon and Walmart, increased minimum pay to at least $15 per hour, nearly twice Ohio’s minimum wage, and restaurateurs have to offer higher salaries to compete or lose good workers to better-paying jobs.
“Amazon is rich, but most restaurants are small,” Chen said.
JD’S Kitchen falls into that category. James and her business partner, Emma Demus, said the restaurant simply can’t afford to increase pay and keep prices at the level its customers expect.
“We can’t be competitive with the bigger companies, and that entices (workers) to leave us,” James said.
But to Daly, the upward pressure on salaries is a long time coming. He said he offered his workers salaries of around $18 per hour long before COVID came to Ohio, which helped him keep his prices
stable when the pandemic struck.
Restaurant work is difficult, requiring more skill than most patrons realize, Daly said, and he hopes the pandemic will encourage business owners to pay workers in accordance with the work they do.
“We have to realize this isn’t just grunt work,” he said. “There’s a lot of talent going into running a restaurant correctly, and the prices are going to reflect that.”
James and Demus said they’ve forgone their own salaries to keep check sizes down, worrying they’ll drive away patrons if they charge more.
“We don’t want to shock the customer base,” James said. “Essentially they’re getting the same meal they’ve been getting for the past two years.”
But the restaurateurs have quietly discussed raising prices on some menu items. It’s just a matter of deciding what selections need to cost more and what to charge.
Whether higher prices will keep customers home remains an open question. Daly expressed amazement over how many patrons still order wings at inflated prices, but other restaurant owners are terrified customers will balk at bigger checks and abandon them for fast food joints and grocery stores.
Independent restaurants tend to have a stronger relationship with customers and are more sensitive to cost increases, Hamilton said.
“They don’t want to raise prices because Mary and Bob have come in every Monday for the last 20 years, and they don’t want to upset Mary and Bob,” Hamilton said.
The issue isn’t well studied, Chen said.
“People talk about it,” she said. But “the research pace has been very slow.” pcooley@dispatch.com @Patrickacooley