Food Prices Force Some Detroit Restaurants to Make Tough Menu Decisions
Food costs have increased since the pandemic started. The price of meat in particular rose sharply in the spring due to the limited number of processors serving the US supply chain. At its peak in May, the Bureau of Labor Statistics reported that meat, poultry, fish and egg prices rose 10 percent to extremes that have not been seen in more than a decade. Gordon Food Service, a large wholesaler, told MLive in July that some cuts of meat had almost doubled in price. Disruptions in facilities such as slaughterhouses, where employees were at higher risk of contracting COVID-19, made it difficult to keep providing constant supplies of chicken, pork and beef to stores and wholesalers.
The limited amount of meat available, in turn, increases costs for food buyers and restaurant operators alike. Now, many Michigan restaurants are cutting down their menus, tweaking their recipes, and training staff to do multiple tasks to counter rising operating costs and provide the same level of experience that warrants a $ 30 pizza. It’s a complicated numbers game that the hotel industry has never faced.
At Coop, a Caribbean food stand for the Detroit Shipping Company in the Cass Corridor, wild fluctuations in food costs have forced owner Max Hardy to make major adjustments to his menu over the past month and a half. Hardy not only had to reduce the portion sizes for meals at Coop, but also restructured the menu items in response to rising operating costs. For example, the price of wings rose from $ 75 to $ 80 per case to $ 100 to $ 300 per case, Hardy says. Take-out and single-use containers and cutlery – a necessity for almost every restaurant operating during the pandemic – are further rising costs. Hardy estimates that its range of eco-friendly containers averages between $ 55 and $ 70 per case. It is an additional cost that adds weight to this new normal. At the same time, given the unpredictable take-away, it’s difficult to anticipate ordering trends and stay on track with budgeting.
Hardy is far from being alone. Saffron De Twah cut down the beef options on the menu during its reopening in June after seeing an extreme spike in meat prices. And at Hop Lot Brewing Co. in Suttons Bay, Steve Lutke decided to ditch a popular brisket sandwich from the menu during the summer when he realized the brewery would likely have to charge $ 25 per sandwich.
Most restaurants have always had to face the battle over food costs. A typical goal is to reach around 25 percent of the total budget. However, Hardy says he’s currently operating around 28 percent, a seemingly modest increase that makes a big difference in a company with very low profit margins.
Some companies like Parks Old Style BBQ in the North End of Detroit have chosen to eat that extra food cost on a short-term basis to keep the customer experience going. Owner Rod Parks tells Eater that portion size cutting is not an option at his restaurant, which measures portion sizes according to recognized grill standards. “A rib shelf consists of eight ribs,” he emphasizes. Because his pre-pandemic business was geared towards takeout, he didn’t have to make too many costly adjustments to his operation. Parks feels that its vendors’ prices are changing day by day and that not all of these increases are due to COVID-19. Small gains of one or two percent for a business that orders twice a week can weigh on grocery bills, but keeping prices affordable to the guest is a priority, he says.
As a restaurateur, Hardy agrees that it is difficult to get all these additional costs on to diners. Consumers are generally not familiar with the details of food costs in restaurants, but the financial circumstances of the pandemic have led Hardy to take a fresh approach: to defend the adjustments he has made to the menu, he offers a public table on display its current food costs, transparency for its guests and employees.
Common Pub in the Wayne State area had to raise prices slightly during the pandemic to cope with rising food costs, but things have been improving lately. In late July, the restaurant announced that its menu had been adjusted to reflect a drop in prices for certain items – a small relief for the company. One supplier recently confirmed a similar trend in falling meat prices as MLive. The owner Paul Silveri has a positive attitude towards the terrace season and is only open for three years. He is ready to provide good service with the restrictions he is currently following. He notes that the restaurant has put in place new strategies to reach customers, including expanding its social media presence, offering prepackaged groceries, and selling take-away cocktails.
Overall, the restaurant operators seem to be in agreement on regaining a feeling of normality in a time that is very different for the industry. That can mean any number of things from cutting down on menus to basing it or cutting down on portion sizes. However, these adjustments won’t necessarily save every business. “Not every restaurant is designed to pan the world of COVID-19 and many will not survive,” said Brendon Edwards, former head chef at Gold Cash Gold. “The hospitality industry is robust, but it will be a long way.”
Eater is tracking the impact of the novel coronavirus on the local food industry. Do you have a story to share? Contact us at [email protected]
• Increased prices in grocery stores and restaurants in Michigan? Here’s why [MLive]
• Consumer prices for groceries at home increased 4.8 percent in the fiscal year ended May 2020 [Bureau of Labor Statistics]
• It’s still the jungle out there [E]
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