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Restaurants tighten belts

Rising food, wine and fuel prices are causing an industry to rethink menus, alter operations

Susan Troller  —  5/15/2008 2:39 pm

For a pizza restaurant, flour is the staff of life.

So when the price of a 50-pound bag almost tripled in less than 18 months, from just over $12 to about $35, the owners of The Roman Candle pizzerias had to scramble to remain profitable, while keeping prices within the reach of customers.

The trouble was compounded by the weak dollar, which increased the cost of imported cheese and wine. Rising gas prices led some suppliers to impose delivery charges. Record snowstorms this winter didn't help, either.

"This winter was brutal," said owner Brewer Stouffer. So he and co-owner Tom Cranley got to work: "We aggressively looked at every single cost, and renegotiated things like our insurance, our phone service. We looked at all our costs, including portion size and waste and inventory."

Sales at their restaurants -- one on Madison's near east side and one in Middleton -- are improving with the season, but the troubled economy still lingers. Like many other restaurateurs, Stouffer and Cranley are keeping a close eye on food and fuel prices, and are paying attention as customers watch their spending.

Tracy Kosbau, a spokeswoman for the Wisconsin Restaurant Association, acknowledged that these are challenging times for restaurants all over the country. This year's rapid escalation in food costs comes on the heels of double-digit increases in 2007, she said. In fact, last year saw the biggest run-up in food prices for restaurants in 27 years, according to figures from the National Restaurant Association.

"You try to cut elsewhere. Maybe you reduce the payroll, you probably work more shifts yourself," said Lindsay Lee, owner of Madison's Cargo Coffee on Park Street and Ground Zero on Williamson Street. "A down economy is not the time you want to raise prices."

Lee also said that it's important to remain creative, and come up with interesting new offerings or specials. With a little promotion, an iced white mocha coffee drink has become popular at his shops.

Monty Schiro, president of Food Fight restaurants, including Bluephies and the Eldorado Grill, said no one in the restaurant business is impervious to the impact of price increases, like the tripling of the cost of eggs in the past couple years. He agreed that it is critical to control the cost of operations to stay profitable.

"Maybe you take on more of the cleaning in-house, for example. You're always fine tuning where you can," he said. "And, at some point, you simply have to raise prices."

Schiro said he believes that most customers, well aware of rising prices at the grocery store, realize that restaurants face the same costs.

Some chefs are rethinking the offerings on their menus, with an eye on value as well as taste.

Lombardino's chef Patrick O'Halloran has found part of the solution in offering less expensive cuts of meat that are somewhat unusual for restaurant fare, like skirt or hanger steaks.

"There are lots of really flavorful things that are a little different, and we've found that customers are more than willing to try them. But you need to know how to handle them," he said.

O'Halloran said he was planning to bring more locally raised foods to the table, which will provide quality taste and cut down on transportation costs.

Another issue facing restaurants is the weak dollar and the higher cost of imported foods, like French and Italian wine, and cheese.

Finn Berge, a partner at Madison's Restaurant Magnus and Barriques wine and specialty food boutiques, said that in just the last year, plenty of wines have jumped from about $9 a bottle to $11 because of the poor exchange rate.

That's affected Barriques' well-known "wall of 100" -- 100 appealing wines that are under $10.

"Some of my old favorites have fallen off the wall," Berge said.

But he's finding some excellent values in wines from Latin America, especially from Argentina.

"The wine world is still evolving very, very quickly, and I think the level of quality is actually rising faster than the demand," he said. "There are a lot of excellent wines that are a good value today but you have to know where to look."

Several chefs emphasized the hope that customers will think locally when they head out to eat.

"I think it's important to support local businesses, because more of our dollars stay in our communities," Roman Candle's Stouffer said. "When times are not so good, that's especially important."

While the economic challenges facing the restaurant business are very real, there have been some bright spots amid the gloom. Schiro said Bluephies is expanding at Knickerbocker Place mall, and Stouffer said taking a hard look at finances will benefit Roman Candle in the long run.

"The good news is that we're a much better business now," Stouffer said.

Susan Troller  —  5/15/2008 2:39 pm