The restaurant industry is having to adapt, yet again. First with COVID, then a labor shortage and supply chain issues. And now, food establishments are dealing with inflation at a rate higher than the average grocery store shopper.
Chicken and beef are essential at The Halal Guys, a restaurant nationally known for its gyros. Those proteins are costing Geoff Herbert more at his Houston-area Layne’s Chicken Fingers and The Halal Guys franchise locations. He said chicken costs are up 35% since the beginning of the year.
“Just in the last month, it’s probably risen 10% of that 35,” Herbert said.
Herbert said that’s not considering the rising costs of oil and potatoes for french fries.
“It’s not just inflation for food, it’s inflation for labor costs as well, so you kind of get a double hit,” Herbert added.
Melissa Stewart is the Senior Executive Director of the Texas Restaurant Association. She said many food establishments had to get innovative to keep up with the increased costs of food. Stewart said some businesses have even removed more costlier items, such as chicken wings and oysters, off their menus altogether.
“It should be no surprise to anyone we have an inflation problem, you go to the grocery store, you’re like, ‘oh, how much is bread?’” said Stewart. “Restaurants we’re seeing it at a wholesale level, about a 17% increase. We are having to adjust our prices, but restaurants overall are really going up around 7%, and they’re just sort of absorbing the rest of that.”
Stewart said restaurants aren’t just dealing with the rising cost of food, but also labor shortages and supply chain issues. She said if you’ve noticed food establishments raising costs on the menu, it’s not because they’re trying to make a huge profit.
“The restaurants are still absorbing more than half of what their wholesale inflationary costs (and) trying to navigate through that,” she said. “So it’s absolutely not that they’re not trying to raise a profit margin. They are trying to stay open and serve you under the same circumstances we face when we all go to the store.”
Herbert said their strategy at AYG Food Services has been to focus on delivering good customer service rather than charging more to make for inflation.
“But that’s a strategic decision we were fortunate to be in a position to make where we could give up some of that and focus on customer service and value proposition as opposed to necessarily making the same money we were making before,” Herbert said.