‘There’s little excellent news’: Mass. eating places wrestle with excessive meals and labor prices

‘There’s little excellent news’: Mass. eating places wrestle with excessive meals and labor prices

But a case of three dozen premium avocados costs El Potro around $200 today, down from $79 before the pandemic. The price shock trickles down to the menu, where a side of guac costs nearly $10 — double the price of $4.50 in 2019.

It’s a troubling consequence of the economic chaos spreading along the supply chain and into commercial kitchens, say Carreiro and other Massachusetts restaurant owners. Americans have already felt food prices at the grocery store, where inflation has pushed up the prices of produce and meat by double-digit percentages, according to the Bureau of Labor Statistics. Slowly but surely, the same problem has entered the bill of neighborhood burger joints and luxury steakhouses, just as customers are shedding their COVID worries.

The first pandemic shockwave came early for restaurants as diners disappeared and outlets closed. Now comes a second (or maybe even a third) existential threat that’s more conventionally economic, but dire for this critical industry.

“We’re facing a situation where people want to believe that restaurants will work like they did before 2020,” Carreiro said. “They expect the service to be the same. They expect the same prices. But the reality is that it is not.”

Grocery costs in restaurants across the country have increased by an average of 17 percent since April 2021, according to David Portalatin, food industry consultant for market research firm NPD. But customers have only seen a 9 percent increase in menu prices, meaning restaurants swallowed half of the inflated costs. (The data does not account for shrinkage inflation, a phenomenon in which portion sizes decrease but prices increase or remain unchanged.)

At El Potro, for example, butcher bills are now 60 percent higher than in early 2020, and steaks that once sold for $16 at the restaurant are nearly as much wholesale. The restaurant has had to enforce four price increases since late 2020, after just one such increase between 2008 and the onset of COVID.

“The American consumer loves restaurants, and we’ve recaptured as much of the demand as we could afterward [COVID] Restrictions have been lifted,” Portalatin said. “Unfortunately, we went through a kind of reset. There is no doubt that restaurateurs are still facing some pretty strong headwinds.”

Food prices are just one piece of the intricate puzzle restaurateurs must navigate to stay afloat amid the seemingly endless waves of the pandemic. Today they are free from strict capacity restrictions, vaccination requirements, and the dangers of the Omicron winter. But finding workers remains just as difficult; record-breaking gas prices increase transportation costs; and delivery delays are common. Pallets of asparagus and circles of soft cheese, for example – carefully ordered from different parts of the world – often end up stranded in distant ports.

Washington has been of little help lately. Last year, the federal restaurant revitalization fund spent $28 billion to cover costs like rent and payroll while still leaving about 200,000 applicants without assistance. A proposed second round this year promised an additional $42 billion. But in May it failed in the Senate. And despite protests from lawmakers like Sen. Elizabeth Warren, it’s now “dead in the water,” said Nancy Caswell, the executive director of Massachusetts Restaurants United.

Chef Carlos Lopez put the lid on a container of fresh tortillas while working at El Potro Mexican Grill in Chelsea. Erin Clark/Globe Staff

More than 4,000 of the state’s 17,000 restaurants have already closed during COVID, according to MRU estimates, and the lack of continued government aid has left restaurateurs desperate. Independent restaurants are overextending themselves, Caswell said, by paying for inventory with credit cards or paying exorbitant interest on loans they thought the RRF would cover.

Before another pandemic summer, many restaurant owners believe the days of government aid are over. The “new normal” is here, and restaurants no longer expect sympathy — from customers and officials alike — to return to them.

“At a time when there is little good news, the RRF could have helped” cover nearly a year of salary, said Sandrine Rossi, the owner of Frenchie and Collette Wine Bistros, who applied for at least $500,000 and was turned down. “But we have to work with that.”

In order to survive, Rossi reduced working hours. She closed her brunch service at the Collette due to staffing issues and skipped a popular meal that often paired mimosa with smoked salmon tartine and poached eggs. Luckily, dinner customers still flock for swordfish and French white wines.

A glass costs a lot of money, Rossi admitted. She buys each bottle for up to $25 today, at least $10 more than she did before the pandemic, and that cost is reflected in the bill.

“I’m grateful that some people aren’t afraid to spend, especially on fine wines and cocktails,” Rossi said.

That usually applies across the board. Diners bored by the malaise of lockdown life have embraced power lunches and romantic dinners again. Restaurant traffic in April was 11 percent below pre-pandemic levels in April 2019, but improved significantly from the lows of COVID, data from the NPD showed. Households with annual incomes of less than $50,000 or those with children came out less than others, although traffic from adults-only groups rose 1 percent this April compared to last year.

A full recovery in traffic is expected but not imminent, NPD’s Portalatin said.

Amid the uncertainty, restaurants are struggling to predict when demand will return, creating an additional headache for companies that are already cash-strapped.

Laurence Wintersteen, co-owner of Horse Thieves Tavern in Dedham, keeps track of the weather and events like concerts and promotions to prepare for the heavy traffic. It helps him figure out how much food to order (and when). Still, his methods have proven unreliable in this new landscape.

“We can no longer figure out what drives people to eat out,” he said. “You’ve fallen out of a routine.”

Ian Calhoun, the owner of Mooncusser in Back Bay, found success by requiring reservations and removing its a la carte menu. The shorter monthly tasting menu — featuring tuna crudo and local scallops — allows Calhoun to more easily stock ingredients and better gauge its employees’ needs.

Chef Carl Dooley prepared sourdough bread for the next day’s menu at Mooncusser in Back Bay. The restaurant has survived the pandemic by requiring reservations and removing the a la carte menu.Erin Clark/Globe Staff

The restaurateur, who also runs 80 Thoreau in Concord and Cusser’s Roast Beef and Seafood Back Bay, was among the lucky ones to receive RRF funding in 2021, though the money didn’t spell the end of his woes. Calhoun is now opening Mooncusser’s four days a week instead of six and has eliminated its bar menu as only three people work in the kitchen. Calhoun described himself as “optimistic but realistic”.

“We don’t have to try to be what we were in 2019 or 2011, but what works now,” he said.

But what works now might not work in a year — or even a month, owners say.

The restaurant industry has served as an indicator of economic and social health during the pandemic, recovering and then faltering again with each wave of COVID. Businesses now fear that overwhelming costs and a shrinking workforce will become permanent and inflation will become a fact of life rather than the exception.

The Federal Reserve is raising interest rates to depress prices, but Caswell of the MRU, the restaurant trade association, said the state should remedy the situation. Dig into state tax coffers or COVID-era American Rescue Plan money to help restaurants, she suggested. “I want Governor Baker on this.”

Annie Mayne served customers for dinner at the Mooncusser restaurant on the Back Bay.Erin Clark/Globe Staff

Because one day, restaurant owners worry that diners might not be willing to pay for a more expensive beer or an extra $2 for chicken wings.

“We will reach a point where the air comes out of the balloon,” said Portalatin of the NPD.

Diti Kohli can be reached at diti.kohli@globe.com. Follow her on Twitter @ditikohli_.