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When considering dining out, patrons often grapple with the elusive question of valuing hospitality. On one side, there’s the allure of expertly prepared dishes, flavors that might be difficult or undesirable to replicate at home, presented with care and attention. Conversely, eating out carries the inherent risk of disappointment, whether through lackluster service or subpar food, all of which still comes with a price tag. Each dining experience is a unique equation that diners seek to solve.
Recently, the dynamics of this equation have grown more complex. Prices at restaurants seem to have surged, leading to shocked reactions at the bill. Many of my acquaintances share frustrations over their tightened budgets, resulting in less frequent dining outings and reduced orders when they do eat out. Recommendations for new restaurants often come with disclaimers: “The food was good,” but is it really worth the expense?
While diners express discontent over rising costs and often revert to familiar establishments, restaurant owners are also feeling pressure. Operating margins have tightened as restaurant owners confront escalating expenses, including higher rents, ingredient prices, reservations fees, and personnel costs, all while attempting to keep prices palatable for customers. Though recent reports signal a decline in consumer inflation and an uptick in GDP, the perceived financial strain in the restaurant industry persists. This issue transcends geographical and demographic boundaries, creating a national dialogue about the cost of dining out. Throughout the country, restaurateurs are reflecting on their financials, the types of clientele they attract, and the methods they’re employing to navigate these tough times.
“There’s a cultural expectation in America around how much Vietnamese food should cost”
Vien Dobui, chef and co-owner of Công Tử Bột, a modern Vietnamese restaurant in Portland, Maine
“To be frank, we filed for bankruptcy in December 2023. This year, we hope to break even. Our labor costs dominate our expenses, with our unionized workforce pushing that number to a challenging 50 percent. When setting prices for our dishes, I typically start with the highest-cost ingredients and multiply that by a factor of three and a half to four and a half to account for labor, but that still falls short. There exists a cultural benchmark in America regarding the prices of Vietnamese cuisine, particularly when it’s not marketed as fine dining. Currently, we charge $26 for our pho, which features chicken sourced from Joyce Farms and a broth that requires a three-day preparation. Yet, we receive criticism for our pricing, as some diners claim they can find ‘comparable quality’ for just $10, which simply isn’t the case.
“We encountered similar issues with a popular fried rice dish that included costly Chinese sausage and premium hot dogs. I ultimately had to switch to shrimp to meet customer expectations of cost, despite the fact that both options carried similar price tags. There’s space for affordable pho, but the market should accommodate various price points. Interestingly, some of our loudest critics come from the Asian community. I often question, Don’t you want us to earn a fair wage? Making the value we offer visible is a struggle. And in a recent visit to Applebee’s with my family, we enjoyed a $75 meal — a price I considered reasonable, yet I knew someone along that service chain may not be compensated fairly.”
“It’s important for us not just to be the expensive spot”
Cody McCain, co-owner and general manager of Elvie’s, an all-day cafe in Jackson, Mississippi
“Given our elevated offerings, we have slightly more leeway in setting prices — we’re not competing strictly on cost. While ingredient prices have undeniably climbed, this trend has redirected us to source more from local farmers. Utilizing nearby farms has mitigated some of the effects of national price fluctuations. At one point, local eggs were pricier than those from larger distributors, but that gap has since narrowed, making local sourcing more viable.
“Our goal isn’t to be perceived solely as a high-priced venue; accessibility is key. The food desert prevalent in much of Jackson heightens our responsibility to cater to local needs. Thus, innovation in our menu is critical. We substitute more expensive steak cuts with less common options that are cheaper for us and beneficial for our butcher. Although most patrons understand the rationale behind restaurant pricing, some do express dissatisfaction over charges for bread and butter, which we prepare in-house. In those instances, these conversations can be educational as we explain our pricing philosophy.”
“I’m not going to start cutting quality as a way to roll back into profit”
Peter Hemsley, chef at Aphotic, a seafood-focused tasting menu restaurant in San Francisco with a Michelin green star
“San Francisco presents a unique landscape compared to other regions. Despite significant menu price hikes following our Michelin Green Star recognition, we’ve been careful about adjusting our prices. For instance, our 10-course tasting menu increased from $135 to $200. Sourcing sustainable seafood necessitates building connections, and that endeavor inherently drives costs up. Nevertheless, our menu remains competitively priced within the market.
“Patrons still experience sticker shock. There’s a noticeable shift in spending behavior; we are not hosting the same festive clientele we once did. My commitment remains firm: I won’t sacrifice quality to regain profitability. Our efforts are geared toward enhancing the quality of our offerings, ensuring that when guests invest in our experience, they receive exemplary service and attention—every detail counts, from pampering to attentive service regarding drink preferences.
“Interestingly, a recent legislative shift in California regarding mandatory tipping created temporary disruptions in our service model. During that month, we saw a marked decline in tipping, reflecting customers’ hesitance when they perceive tipping as optional.”
“When you’re the only vegan chocolate business in the game, everyone has to pay what you’re charging”
Lagusta Yearwood, owner, Lagusta’s Luscious Cafe, a vegan chocolate shop and cafe in New Paltz, New York
“I initially chose chocolate as my product to facilitate conversations with customers about ethical pricing, especially in terms of sourcing that avoids child labor. Recently, we’ve received notification about a substantial 34 percent increase in chocolate prices this fall. This trend is not isolated; even large companies like Hershey’s indicate that they’ll also raise their prices. Admittedly, the renowned chocolate producers continuously claim to tackle forced labor issues in their supply chains, but sadly, they often use price hikes as a convenient excuse.
“I authored a cookbook dedicated to vegan sweets in 2019, and I’ve witnessed a boom in the plant-based food market over the years — a welcomed change. However, increasing competition in the vegan confection space means we have reevaluated our business model and focused on sustaining our community impact while ensuring fair wages. We strive for competitive starting salaries in our shop at $24 an hour, but the rising cost of living in the Hudson Valley complicates matters. Where our employees once lived nearby and walked to work, many now find that unaffordable.
“In light of rising chocolate prices, we are now compelled to increase the prices of our confections from $3 to $3.25. Even this small increment can feel significant for customers, particularly in a growing market where new competitors emerge. The question for us now is whether consumers will still be drawn to our ethical and homemade ethos.”
“We can’t tell our guests we have to raise the price of food because rubber gloves are more expensive”
Garrett Benedict, chef and owner of G-Love, a vegetable-forward restaurant in Portland, Oregon
“With our average check ranging between $60 and $70, labor costs hovering around 38 percent, we find ourselves within industry benchmarks, yet our food pricing remains on the higher end. This places an onus on us to deliver top-tier quality consistently, as that’s what distinguishes us from competitors.
“Since the onset of the pandemic in 2020, menu prices have risen significantly. We used to boast that no dish cost more than $20, but now nearly half our offerings exceed that price point. Protein costs have skyrocketed, which benefits us as a vegetable-centric establishment, yet we face rising expenses in other areas as well. I recall purchasing nitrile gloves for $70 a case in 2020, only to see that go up to over $400 today. However, we can’t explain to our guests that we must raise food prices due to inflated glove expenses.
“Our commitment to quality has helped us maintain steady guest flow and revenue. For instance, while we offer a $25 roasted pork dish, we serve only 4 ounces instead of the traditional 12-ounce portion. Customers perceive its value once they taste it, and tend to forget their preoccupation with the price. Although certain segments of our clientele have been deterred by rising prices, we must prioritize our sustainability. During the summer months, our revenue can peak at around $270K to $300K, but winter presents its own challenges. We cannot afford to incur losses — if we lose 10 percent of our regulars, we hope to attract new guests who prioritize quality.”
“We can’t lose money”
Gehad Hadidi, owner of La Bonne Soupe, a classic French bistro in New York
“La Bonne Soupe has served patrons since 1973 with a straightforward concept aimed at Midtown lunch-goers. Our establishment caters primarily to those who pay out of pocket rather than on company expense accounts, which naturally limits our pricing flexibility compared to nearby competitors. Yet our expenses parallel those of other restaurants in the area.
“Our signature French onion soup remains popular, but rising cheese prices, particularly Gruyere, have surged over 50 percent since 2019. Other staples, including canola oil and potatoes, have also seen similar upticks. Many of these costs we absorb, and our workforce has decreased since 2019. Staff members are often asked to do more with less, which has made operations even more challenging — but we cannot afford to operate at a loss.
“Located off Fifth Avenue and close to Central Park, we draw a mix of tourists and office workers, often seeking more affordable dining options in the area. Changes in work patterns have further influenced our client base, with remote work reducing the number of people dining in the vicinity. Those who do come are more judicious in their spending habits, often forgoing dessert or sharing fewer bottles of wine. You can sense their hesitancy to splurge.
“A couple of years back, we introduced a 2 percent appreciation fee for our kitchen, fully allocated to our culinary team since New York labor laws restrict tipping to front-of-house staff. However, the broader predicament facing our industry requires synchronized action through governmental changes to institute meaningful reforms. Otherwise, maintaining substantial profit margins remains elusive, as consumers will simply opt for more affordable alternatives.”
Source
www.eater.com