Labor pains hit menus where it hurts

Photo courtesy of Bellagreen

Pent-up demand drives customers back to their favorite restaurants, but sometimes they’re disappointed to find a menu with less choice, higher prices, and some of their favorite dishes gone.

In the struggle to recruit staff after the pandemic amid a critical labor shortage, operators are finding they have to pay more for both back-office and room workers. Hourly wages for restaurant workers rose 12% year-over-year between April 2020 and 2021, according to Catering company sister company Technomic and many restaurants pay $ 20 an hour or more for a cook and $ 15 for an inexperienced waiter. Even teens looking for their first restaurant job demand a higher salary. To compensate for the increase in labor costs, a number of operators are increasing menu prices.

But taking the price can put customers off. “You can only raise the prices if you don’t have the best waiter or waiter for those positions,” said David Burke, longtime restaurant owner and chef and head of DB Hospitality Management. “With strong staff and enough manpower, you can write a better menu.”

Burke recently opened three restaurants in New Jersey – Orchard Park, Red Horse, and Belmar Kitchen – and was able to set prices without having to meet previous expectations. But it is also trying workarounds to deal with the shortage of skilled workers.

Photo courtesy of DB Global Hospitality

Burke traditionally has a cook on staff with the expertise to butcher the meat and a pastry chef to prepare the desserts. But with a high labor force, he gets pre-cut portions of beef, pork, and other meats, and uses a consultant pastry chef who works at five restaurants.

The equation of value

Consumers keen to dine out may be willing to pay higher prices at the moment, but as inflation continues to climb, there may be more resistance.

In June, the Labor Department reported that the consumer price index was up 5.4% from a year ago, the largest year-over-year jump since 2008. Food prices excluding home contributed largely, increasing 4.2% from the previous year. .

“In today’s restaurant environment, we all need to be more creative and innovative with the strategies we use to run our business when it comes to minimizing price increases,” said Tom Sacco, CEO and President of 52 Happy Joe’s Pizza and Ice Cream units. , who also holds the title of “Head of Happiness”. “Rather than passing the high costs on to the consumer, at Happy Joe’s we have renegotiated contracts on some of our larger food products and containers to help minimize the price pressure we are experiencing due to labor shortages. – work nationally, rising wages and inflation.

At Bellagreen, “we look at what the consumer is willing to pay and bill,” said Jason Morgan, CEO of this seven-unit, 15-location Original Chop Shop concept. He currently pays double the chicken and beef than he was three months ago, but “it’s a short-term setback,” he said.

Morgan hasn’t raised menu prices this year, saying customer traffic more than offsets rising commodity prices, so his profits remain strong.

“Once you take the price [on menu items], you never see anyone reducing it. I hope other quick casuals will take the prize so that Bellagreen looks better value, ”he said.

The average check at Bellagreen is $ 16 – a high amount for a quick casual dress – but Morgan believes the value is more important to consumers now. “Our food is affordable and projects high perceived value,” he said.

The chain’s menu, which is captioned “American Bistro,” reads more like that of a full-service restaurant, with chef-inspired and seasonal dishes prepared from scratch. In addition to the most anticipated bowls, salads, burgers and pizzas, there are dinner options like brick chicken, pistachio-crusted snapper, premium garlic rib-eye and rosemary and homemade white chocolate bread pudding.

Wine and beer are also available at Bellagreen stores, and alcohol accounts for 5-10% of sales.

Bellagreen employees average $ 18 an hour with tips. The chain is only present in two states, Arizona and Texas, where the minimum hourly wage is $ 12 and $ 7.25, respectively. This is where Morgan starts hourly workers, frequently providing them with raises and opportunities for training and growth. He had no difficulty retaining workers, he said, as he kept almost everyone employed during the pandemic and paid managers full bonuses.

Dillas Quesadillas, who also operates largely from Texas, had to pay more than the minimum for new hires.

“The fight for the $ 15 salary has influenced the initial demand from frontline workers,” said Kyle Gordon, founder of seven-location fast casual. “Potential employees would come in and ask for $ 9 an hour, now new team members, even 16 year olds, want $ 12 or more. The pressure is mounting because Dallas is a very competitive market. ”

Gordon offers a base salary of $ 12 an hour in Texas and around $ 9 in Louisiana where the cost of living is lower.

“The current menu prices roughly reflect labor costs,” he said, “but it’s the increases in staples and inflation that have the most impact on prices. menu prices than the labor market. The salary of a team member does not double in three months.

Photo courtesy of Dillas Quesadillas

Like Morgan, he’s paying double for chicken – $ 100 a case compared to $ 50 a case three months ago – and took a 50-cent price increase on one item. This is the “Make it a Meal” option, which includes two sides and a drink with the order of quesadillas.

“About 70% of customers order the combo, which helps us absorb the costs. We can’t add 10% at all levels, ”Gordon said.

If the minimum wage rises to $ 15, menu prices may have to increase further, he added. “Whether you pay a worker $ 12 or $ 15 an hour, we serve the quesadilla the same way and we will have to charge $ 7 instead of $ 6 to make a 20% profit.”

Gordon and his partners put together a few points for team members to discuss and explain the 50 cent increase. No customer has requested it, he said.

But Dillas competes on value and service, not price, he added. The stuffed quesadillas are filled with premium ingredients such as steak, brisket, portobello mushrooms, roasted vegetables, Hatch peppers and cheese, and served with a variety of house sauces. The average transaction time is 2½ to 4 minutes.

Limited-time offers are offered by customers who submit ideas in an annual Dillas Madness competition. Coming in November, a Frito Pie quesadilla.

Juggle the menu

Dillas did not have to reduce the menu due to labor or supply issues. “Since we have multiple restaurants in the same market, we can build on them,” Morgan said. “We can send workers to another location to get products if we run out of products or even take a shift if a cook quits on short notice. We never cut anything off the menu.

It’s a little different at the Fish City Grill, where the casual dining menu is more extensive and supply chain issues are the big news, with labor sometimes impacting shortages.

“We do our best to keep the menu as comprehensive as possible, but every day there are around 20 items that we can’t get,” said Gje Green-Wallace, dmarketing director of the 20-unit chain.

Ketchup in plastic bottles is rare, so it comes in glass bottles. But manufacturers can’t get enough glass to bottle wine and spirits, so sometimes customers can’t get their first choice of a brand of tequila or vodka. The restaurant procures a specific type of bacon, but it was scarce and the substitute brand was more expensive.

“With seafood it’s less about what we can’t get – we can always find it somewhere – but it might not be the size, price, or supplier we’re used to. “said Green-Wallace. Currently, the seafood industry does not have enough fishermen to catch fish or workers to pack it fresh for distribution.

This problem has led to the disappointment of cooks and customers.

As an example, the chef specifies a 5-7 ounce fish fillet – the usual serving size – but that might not be available. “Then we have to switch to a 7 to 9 ounce fillet and adjust the cooking time, presentation and price. The customer gets something that looks different on the plate and costs more, so waiters or managers have to explain what’s going on, ”Green-Wallace said.

Fish City Grill must continue to price items fairly to deliver the perceived value that customers expect, she said. But scallops, catfish and crab legs have all increased due to supply shortages.

“We’ve had to raise a few prices, mostly on the more sophisticated fish, and our staff always tell us why,” Green-Wallace said. “But instead of increasing prices across the board, we’ve redesigned the menu to bring back old favorites that add value to the customer.”

Photo courtesy of Fish City Grill

Shrimp are in constant supply and profitable, so the chain has brought back an old favorite: shrimp and grits. It is selling better than before the pandemic, she said, priced at $ 14.99. Shrimp also appears in Honey Chipotle Shrimp Tacos ($ 13.99) and Shrimp & Shroom Linguine ($ 16.99).

The restaurant also removed prices from printed menus for more expensive and less available seafood, like crab legs. “We now list them as market prices and use tables to communicate the current price,” she said.

Fish City Grill’s Culinary and Beverage Manager works hard to address supply chain issues by staying in close contact with suppliers. The menu is flexible enough to adapt. But if the minimum wage goes up to $ 15, “we can’t leave the menus as they are,” Green-Wallace said.

“A higher minimum wage will have an impact on the valuation of the products we bring, the price of the menus, the design of the restaurants and more,” she said. “If you change one sundial, it affects all the others.”