Whether picking up weekday breakfast tacos or a special occasion meal at The Pearl complex, San Antonio diners are getting hit in the pocketbook as the nation experiences its highest inflation rates in four decades.
Faced with a historic spike in food costs, Alamo City restaurateurs say they have little choice but to raise prices. While those increases are most obvious when it comes to items such as meat, dairy and fresh produce, they’re not isolated to those big-ticket items.
“Chicken and ground beef tripled in price, and my to-go packaging and supplies have doubled — and that’s when I can find those packaging supplies. Sometimes there’s nothing on the shelves,” said Steven Pizzini, owner of Southside institution Lala’s Gorditas. “We’re doing our best to keep our prices reasonable, but there comes a point where you are either going to be profitable or you’re not going to be in business anymore. And that’s where a lot of us are at.”
The consumer price index (CPI), an inflation barometer that measures costs across dozens of items, increased 7% in December from a year earlier, according to the Bureau of Labor statistics. That’s the index’s steepest increase since 1982.
The bottom line is that inflation is affecting every aspect of business for San Antonio diners’ favorite restaurants, whether it be chorizo, ribeye, to-go packaging, labor, rent or utilities. The specific CPI category for “food away from home” is up nearly 6% over the past year.
Several San Antonio restaurant owners said they’re apprehensive about pushing rising costs onto their guests. At the same time, they don’t know how they’re going to survive if they don’t.
To be sure, local eateries have already shut their doors due to that price pressure. Floresville’s Two Sawers BBQ shut down two weeks ago, for example, its owners telling the Express-News that rising rent and food costs left no choice.
“We’ve been around for 20 years, so we’re so fortunate to have had the time to grow the following we have,” said Hunter Bogar, owner of Northeast San Antonio burger joint Biff Buzby’s. “I fought raising the prices of my menu items for months. I didn’t want to be one of those places charging $15 for a burger. But at some point, something has to give.”
Indeed, two months ago Bogar faced the possibility of closing his 23-year-old business when exploding prices made it nearly impossible for him to maintain his building. Electricians and plumbers, feeling the same supply-chain squeeze, were taking weeks to make repairs because they had to wait on parts.
Tough choices
San Antonio food businesses interviewed by the Current said their dedication to
quality ingredients, while appreciated by customers, has only made the current situation that much harder.
“Every month, I have to figure out if this business is going to survive. And it simply comes down to sacrificing the quality of my ingredients or raising my prices,” said Meg Morales, a San Antonio pastry chef and owner of Cereal Killer Sweets. “It’s just tough because I built my following on using real butter, high-quality chocolate, the best ingredients. … I had to let go of all of my employees to be able to provide the same product with just a small increase in price.”
In an early February Facebook post, Morales aired her grievances about paying $160 for a case of butter — something she’d never paid more than $100 for in the past. Due to declining cow herds, labor shortages and higher packaging costs, December’s average price for Grade AA butter increased by more than 40% from a year prior, according to federal data.
Both diners and restaurant owners will need to tighten their belts for the long term, economists warn. We’re likely stuck with surging inflation for months to come.
“I’m an optimistic person, but I’m no Pollyanna,” said Alan Adelman, senior research analyst for San Antonio-based Frost Bank Investment Advisors. “Hopefully COVID-19 is a once-in-a-generation event, but we’re going to be seeing the effects of this pandemic on the economy until at least the fourth quarter of this year. We’re still in the middle of it.”
Adelman uses more than 30 years’ experience to advise businesses in investment strategies. The restaurant industry, he says, is in a particularly difficult spot as it rides out not just labor and supply shortages but also a post-lockdown demand for dining out.
“People have this pent-up desire to go out to eat, so when your demand is higher than your supply, the equilibrium is upset,” he said. “It’s a situation in which these businesses have to be creative and adaptable at a higher rate than ever before.”
Feeling the pushback
To that end, Cereal Killer Sweets’ Morales now works nearly 70 hours a week to sell her cookies, brownies and rice-cereal treats, primarily using a direct-to-consumer shipping model.
Though customers can pick up their products at her Castle Hills-area storefront, most get them shipped. Often, those customers don’t realize the delivery expenses tack on an additional $15 Morales must offset.
Like Morales, Bogar and Pizzini have raised menu prices over the past four months.
Thankfully, the customer pushback has been minimal. Even so, Bogar said he feels it.
“You have 40% of regulars who understand [the price increases] and don’t make a stink, 30% that understand but don’t much like it and 30% that vow never to come back because of it,” he said. “Sales-wise, we’re the same we were a year and two years ago, but profit-wise, we’re nowhere near where we’re supposed to be, because everything has gone up.”
Pizzini, whose outdoor seating helped his business withstand the pandemic, reported similar experiences with customers. While he hasn’t received many direct complaints, he’s now seeing fewer of those regulars who frequented his business based on its low menu prices.
“If the price of supplies comes down, I think a lot of local small business will lower their prices to reflect that. We’re not going to be greedy … these are our communities,” he said. “There are just so many other factors that contribute to a $2 increase in a plate that I don’t think consumers realize. Shipping, trucking, labor: it all trickles down, and we’re just trying to stay afloat throughout all of it.”
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This article appears in Feb 9-22, 2022.
