While households can adjust to rising food prices by purchasing less costly groceries and adopting lower-cost meals, restaurants don’t always have that option.
For example, a steakhouse can’t stop selling beef no matter how much suppliers are charging for it.
On the other end, restaurateurs who pass higher food costs along to customers run the risk of driving them away.
In Jacksonville, here is how some restaurant operators are approaching the dilemma.
Outfoxing price increases
Ian Chase has owned The Fox Restaurant at 3580 St. Johns Ave. in Avondale for 24 years. The diner, with its long countertop and wall-lining booths, serves breakfast and lunch and has a regular clientele of locals and shoppers.
Chase said he relies on a small group of suppliers with whom he has worked with for most of his career.
He also shops at the Jacksonville-based Restaurant Depot supply company for condiments and paper goods.
“It seems to be a little bit more affordable on some items like oil and condiment types of things. It’s worth a couple hundred bucks a week that I can to put into other costs like labor,” he said.
Chase raised prices slightly at the beginning of the year but said he has made changes in customers’ favor.
“I’ve actually gone the other way with it. I upped my sausage patties to a larger sausage patty. It’s a local product, Azar Sausage. I did it just to show my guests that we’re all in this together, and that’s without increasing the price (of dishes containing sausage), just so that they can count on me to provide them the best product for their money,” Chase said.
Chase said he bases his menu pricing on six-month projections of food cost increases as opposed to making on-the-fly adjustments.
“If you can read the tea leaves, you can get ahead of any discomfort with goods going up by putting menu prices up a nominal amount and in preparation for things to go up. So you’re kind of already in a good place when they do go up,” he said.
Multiple restaurants increase leverage
As part of a husband-and-wife team that operates nine Northeast Florida restaurants with a 10th on the way, Nathan Stuart says he’s always looking for opportunities to reduce the cost of supplies.
Whether cups or cleaning chemicals, Stuart says he enjoys the deal-making part of the business.
“We’re looking at buying large quantities of products. It’s kind of like the futures market. We’re reaching out to all of our reps, all of our vendors, price shopping from different vendors, trying to form partnerships with items that we use a lot of and we’re looking at new items,” Stuart said.
“If we have been using the same cup manufacturer, maybe there is a new cup manufacturer with something similar who is hungry for business.”
Stuart and his wife, Margo Klar, own Outback Crab Shack, five Fish House & Oyster Co. stores, two Boathouse locations and the Grouper Shack with a second planned to open in November in Jacksonville Beach. Having several restaurants gives him leverage that a smaller restaurateur does not have.
Stuart will remind vendors that if he changes wholesalers on a product, the salesperson isn’t losing just one restaurant, but nine.
In another cost reduction, Stuart agreed to use a company’s dishwashing soap if it would waive its rental fees for the dishwashers it provides for his restaurants.
“If I’m buying soap from you, why do I need to rent the dishwasher? I just saved $500 a month per store,” he said.
Increased tariffs are forcing some changes, Stuart said. For example, in response to the cost of a case of French wine climbing from $439 to nearly $1,000, he sourced a California wine with a similar taste profile and took the French wine off the menu.
With seafood, he has stopped listing particular species and is instead serving items with the best value.
Because he orders in quantity, he can promise a provider a consistent sale of products on a regular basis, with no sales agents needed.
“I wouldn’t be able to do that if I only had one or two restaurants. The fact that I have nine is the number of restaurants I need to have that kind of power. When I had three or four, they didn’t have to. I was staying aggressive,” he said.
“If you don’t try, you don’t know. All he can say is ‘No,’ I guess.”
Changes are necessary
Restaurant owner Jonathan Insetta estimates that food costs have risen about 30% over the past four years.
That has meant rethinking operations of his Bellwether and Orsay restaurants, including reducing hours and adjusting items on the menus. An increased effort in catering events and private parties also has proven helpful, he said.
Insetta is considering instituting a 3% charge to cover his cost for accepting credit cards, but says he has heard customers complain about similar fees adopted by other restaurants.
Insetta says that while he has adopted “less cheffy” menu items, he is not willing to lower the quality standards of the establishments.
He said rising food costs have caused strain, especially at Bellwether, a higher-end restaurant where raising menu prices is risky.
“Bellwether has been hanging on a string in Downtown for the last four years, barely making it,” he said.
Seeing both sides
Craig Smith both sells and buys restaurant products. He owns St. Johns Food Service, a wholesaler in St. Augustine, as well as the Alhambra Theatre & Dining and Dick’s Wings at 10750 Atlantic Blvd., off St. Johns Bluff Road.
Smith says he approaches both of his capacities as a shopper.
“I have to sell it to myself. I tell my staff, if St. Johns isn’t the best quality at the best price, you’ve got to find what is,” Smith said.
St. Johns Food Service sells mostly to locally owned operators rather than corporate restaurant chains. Smith has seen some remove menu items until prices become more favorable, an approach he considered for the Alhambra.
“We were paying around $9 a pound for prime rib, and now it is $15 a pound,” Smith said.
“We had a serious conversation recently on whether or not we take the prime rib off the menu for the next show. You always put that asterisk on their menu, subject to change. But the fact is, 10,000 people have bought their ticket thinking they are going to get prime rib. Ultimately, I decided not to (remove) it. You have just got to bite the bullet.”
Chicken wings are a volatile product for pricing.
Smith says he has seen the price fluctuate from a high of $140 a box to the current price of about $60.
To compensate, Smith concentrated on fried shrimp and hamburgers at his Dick’s Wings restaurant, which resulted in wings dropping from about 85% of orders to 41%.