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Economic Crunch Puts Pinch on Local Restaurant Diets

By April Larsen

Many might think eating out is too expensive with today’s economy, but keeping food on the table is more the challenge for restaurants. The cost of groceries and non-food items, like paper products and supplies, has greatly increased.

Angie’s Restaurant owner Saboor Sahely said the price of eggs, flour, and shortening has had a minimum increase of 30 percent. A bag of flour which cost $9 last year costs $17 this year.

Mohit Singh, owner of Tandoori Oven, said a 20-pound bag of rice costs $7-8 more than it did last year. Spices are up 10-20 percent. He said those increases are a challenge because Tandoori Oven includes rice in their meals for free and they cannot change any of their recipes, as customers rely on the taste of their food.

The challenge restaurant owners feel more than ever is the delicate balance of keeping their business up without pricing themselves out of the market.

“We don’t want to rock the boat,” said Sahely. Although operational costs, including labor, are always increasing, he said he will not pass it on to his customers.

“It would shock them,” he said. He said their bill would literally double if he charged more to make up the difference.

Singh expressed the same idea, adding that they want their customers to return.

“We want our customers to come back,” he said. “We don’t want them to overspend their money.”

Sahely said there are little things which can help manage the cost without charging customers more. Among the changes at Angie’s, he said, they have taken some items off the menu, and expanded the lower cost items like chicken, building specials around items that don’t cost as much to make.

The changes are not enough to fix the cost, he said. But most restaurant owners remember their customers are affected by the economy, too.

“We cannot raise our prices,” Sahely said. “Menu pricing cannot keep up with it because you don’t want to raise your prices substantially because the economy is affecting them too.”

Singh said his prices have only increased on some items, only 10 to 20 cents. Besides that, he said, the prices have been the same for four to five years.

According to Chicago-based foodservice consultants Technomic, Inc., 74 percent of consumers will visit restaurants less often due to the economic downturn. They report over 50 percent of consumers, and over 70 percent of high-income consumers, will spend less at restaurants when they go.

The study says people will pull back because they are concerned about the future of their retirement, home equity and credit card debt. It says “As a result, they indicate clear intentions to reduce spending in a variety of ways. Restaurants will most certainly feel the effects of the pull-back.”

Sahely said Angie’s still has repeat business with “a fairly loyal customer base,” coming three to seven times per week, up to three times per day. But, he said, there is a trend of fewer dinner patrons.

“Evening business is where you can feel it more than in the morning and lunch time,” he said. “When it comes to spending more for evening, they’ll sacrifice that.”

New York City reports that many restaurateurs “battle for survival,” where upscale restaurants have switched to more conventional dishes.

Detroit Economic Growth Corp. lends money to projects which might improve the struggling “motor city.” Roast, owned by celebrity chef Michael Symon, received such funding. It opened October 23 and it’s too early to see the outlook.

A bizarre exception, Abilene, TX boasts the amount of diners hasn’t decreased and restaurant business hasn’t even so much as “hiccupped.”

Article comments try to solve the Abilene mystery. They suggest citizens are indulging in comfort food, and there isn’t anything else to do in Abilene anyway.

“You know how long it takes for fashion trends to hit the Big Country?” another states, “Well I guess it’s like that with recessions, so we should feel the effects somewhere around 2018.”

It’s hard to tell the direction Logan restaurants are headed. Some less popular and less busy restaurants may close, but the local business could still sustain a lot of the establishments.

Facing unpredictability is nothing new to the restaurant business. Sahely said they will continue to do what they’ve been doing.

“We have to weather the storm, so to speak,” he said. “We’re still making a living, still keeping 70 plus employed. That’s the goal--make a living in this economy. As usual, we have to be aware of competitors and the moves they make.

He summed up the challenge in one line.

He said, “You can only stretch so far before you break the elastic.”