Restaurants are raising prices and adding fees amid continued inflation

CINCINNATI — Many people may feel that eating out is more expensive than ever, and they’re not wrong. Restaurants report that inflation and supply chain issues have yet to improve since last fall.

What do you want to know

  • Prices are at their highest in 40 years according to the CPI
  • March prices were 8.5% higher than in 2021
  • With rising costs for food, transportation and packaging materials, restaurants are seeing lower-than-average profit margins
  • Many pass these costs on to consumers through fees or price increases.

With their profit margins razor thin, many have looked for creative ways to stay afloat, including removing menu items, adding new fees, raising their prices, and even adding a supply chain surcharge, which means customers pay.

At Mt. Adams Bar and Grill, Pat Sheppard thanked his regulars for keeping his kitchen running for more than 30 years.

Pat Sheppard in the kitchen at Mt. Adams Bar and Grill. (Michelle Alfini/Spectrum News 1)

“We have such a large group of customers,” she said.

Over the past two years, she said that was truer than ever.

“It’s one thing after another that isn’t even fully supported yet,” Sheppard said.

In 2020, the restaurant closed for three months, unable to sustain the take-out-only service. Then, when they were able to return to a reduced capacity, Sheppard said customer support returned in droves.

In 2021, it was like the good old days in the dining room, but in the kitchen, the supply chain was causing its own disruption.

“It’s that I can’t have wings, so we could be out for two days,” Sheppard said. “And then we can get wings, but we can’t get Frank’s hot sauce, which we make the wing sauce from.”

Along with unpredictable ingredients, she said prices had started to climb faster than she had ever seen.

“Everything almost doubled in price, from gloves to straws,” she said.

Waitresses deliver meals at Mt. Adams Bar and Grill. (Michelle Alfini/Spectrum News 1)

According to the Consumer Price Index, prices rose 8.5% in March compared to the same month last year, making it the largest year-over-year increase in more than 40 years.

“Twice since COVID we’ve had to raise prices,” Sheppard said.

Sheppard said she tried to minimize the impact. It started with menu tweaks, removing some items and replacing them with more reliable and cost-effective options.

Then prices went up 50 cents, then a whole dollar. However, over the past year and a half, Sheppard said she’s committed to making any cost increases fully transparent, reflected in the menu.

“There are things that are easier to understand,” she said. “And when you start adding fees, people start thinking ‘I’m paying for this and I’m paying for that.’ Simply raise the price of your food or beer.

E+O Kitchen, which has three relatively new high-end restaurants in the Cincinnati area, came to a different conclusion.

“We’ve made a fairly conscious and quite difficult decision to do everything we can to keep prices the same for our customers,” said Tony Castelli, Marketing Director of E+O Kitchen.

The waiter prepares a take-out meal at E+O Kitchen. (Michelle Alfini/Spectrum News 1)

Castelli said the company, which opened two of its restaurants amid the pandemic, has been blessed with breaking sales records almost every month, although he said the cost of inflation and supply chain issues were increasingly difficult to overcome.

“While our revenue has increased, our margins are much lower, and that’s a result of our total cost of goods,” he said.

Looking for a way to keep the menu affordable, Castelli said E+O was looking for another way to raise costs. The restaurant has seen takeout, which once made up less than 1% of its business, have exploded in popularity and price, so Castelli said the restaurant group has expanded its online ordering portal and added fees 5% service charge on all takeout orders.

“Hard goods like take-out boxes, chopsticks and forks, those things are very expensive,” he said. “So as long as we can be considerate and fair to everyone in the process, we’ve found that our guests have been very supportive and willing to pay that fee.”

Other restaurants have opted for other methods, such as adding the processing fee for credit card purchases to the bill, or like Taste of Belgium, adding a “chain surcharge”. supply” by 8.5% instead of making permanent price changes.

Sheppard, meanwhile, said her current pricing may need further review, but she’ll keep customers in mind when weighing those decisions. Now that they are back in the building, she hopes their support will keep her business running.

“It can be worse,” she said. “We’ve been through worse before.”

Richard Dement

The author Richard Dement