Food costs have been on the rise since the onset of the pandemic. The price of meat in particular spiked sharply in the spring, due to the limited number of processing facilities that feed the U.S. supply chain. At its height in May, the Bureau of Labor Statistics reported that prices of meat, poultry, fish, and eggs soared by 10 percent to extremes not seen in more than a decade. Gordon Food Service, a major wholesaler, told MLive in July that some cuts of meat had nearly doubled in price. Disruptions at facilities like slaughterhouses where employees faced greater risks for contracting COVID-19, made it difficult to keep a steady supply of chicken, pork, and beef to stores and wholesalers.
The limited amount of meat available, in turn, drives up costs for grocery shoppers and restaurant operators alike. Now, many Michigan restaurants are trimming their menus, streamlining their recipes, and training staff to juggle multiple duties in an effort to combat rising operating costs and provide the same caliber of experience that warrants a $30 pizza. It’s a complicated numbers game unlike any the hospitality industry has faced before.
At Coop, a Caribbean food stall at Detroit Shipping Company in Cass Corridor, the wild variations in food costs forced owner Max Hardy to make some major adjustments to his menu over the past month and a half. Hardy has not only had to scale back portion sizes on meals at Coop, but also restructure menu items in response to the rising operating costs. The price of wings, for example, went from between $75 to $80 a case to between $100 and $300 a case, Hardy says. Takeout and single-use containers and flatware — a necessity for nearly every restaurant in operation during the pandemic — is another expense on the rise. Hardy estimates that his supply of eco-friendly containers averages between $55 and $70 per case. It is an additional cost that contributes to the weight of this new normal. At the same time, with dining and carryout being so unpredictable it is hard to anticipate ordering trends and stay on track for budgeting.
Hardy is far from alone. Saffron De Twah scaled back beef options on the menu during its reopening in June after witnessing the extreme increase in meat prices. And at Hop Lot Brewing Co. in Suttons Bay, Steve Lutke opted to strip a popular summertime brisket sandwich from the menu when he realized the brewery would likely have to charge $25 per sandwich.
Most restaurants have always had to face the battle around food cost. A typical goal is to operate around 25 percent within the overall budget. However, Hardy says he’s currently operating around 28 percent, a seemingly modest increase that makes a big difference in a business with very thin profit margins.
Some businesses like Parks Old Style BBQ in Detroit’s North End have opted to eat those additional food costs in the short-term to maintain the customer experience. Owner Rod Parks tells Eater that cutting portion sizes isn’t really an option at his restaurant where portion sizes are measured by accepted barbecue standards. “A rack of ribs is eight ribs,” he points out, and because his business was geared towards takeout before the pandemic, he didn’t need to make too many costly adjustments to his operations. Parks feels as though his vendors’ prices change from day-to-day and that not all of those increases can be attributed to COVID-19. Small increases of one or two percent for a company that orders twice a week can take a toll on food costs, but keeping prices affordable for the guest is a priority, he says.
As a restaurateur, Hardy’s agrees that it’s tough putting all of these additional costs on guests. The consumer isn’t generally privy to the details of food costs at restaurants, but the financial circumstances of the pandemic have driven Hardy to take a new approach: In an effort to defend the adjustments he’s made to the menu, he offers a public spreadsheet displaying his current food costs, keeping things transparent for his guests and staff.
Wayne State-area spot Common Pub had to increase prices slightly during the pandemic in order to cope with the rising food costs, but recently things have been looking up. In late-July the restaurant announced that its menu had been adjusted to reflect a decline in the price of certain items — a small bit of relief for the business. One supplier recently confirmed a similar trend in decreasing meat prices to MLive. Owner, Paul Silveri is positive about patio season, and with only being open for three years, feels they are prepared to provide good service with the restrictions they are held to for the time being. He notes that the restaurant has adopted new strategies to reach customers including ramping up its social media presence, offering pre-packaged food items, and selling to-go cocktails.
Overall, restaurant operators seem united in the goal of trying to bring back some sense of normalcy during a very aberrant time for the industry. That could mean any number of things from whittling down menus to the essentials or paring down portion sizes. Yet, those adjustments aren’t necessarily going to rescue every business. “Not every restaurant was designed to pivot in the world of COVID-19, and many won’t survive it,” says Brendon Edwards, former executive chef at Gold Cash Gold. “The hospitality industry is a resilient one, but it will be a long road.”
Eater is tracking the impact of the novel coronavirus on the local food industry. Have a story to share? Reach out at email@example.com.
• Seeing Beefed Up Prices at Michigan Grocery Stores and Restaurants? Here’s Why [MLive]
• Consumer Prices for Food at Home Increased 4.8 Percent for Year Ended May 2020 [Bureau of Labor Statistics]
• It’s Still the Jungle Out There [E]