Sticker Shock in Restaurants: Still There, Despite a Food Price Drop

Jun 23, 2023

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Rare exceptions aside, restaurants have not lowered their prices. Also, why a small, scum-covered pond in Morningside Park is the perfect place to study algae.

By James Barron

Good morning. It’s Monday. Today we’ll look at why food prices have come down but menu prices in many restaurants have not. We’ll also look at why an algae-covered pond is the perfect site for researchers from Columbia University.

Morgan’s Brooklyn Barbecue in Downtown Brooklyn did something last month that went against an economic trend in restaurants: It reduced prices on some items on the menu.

The fried chicken platter dropped to $25 from $29. The two brisket options, one fatty and one lean, cost $3 less. The $19 pork ribs became the $17 pork ribs, and the wedge salad — iceberg lettuce, bacon and blue cheese dressing — was cut to $15, from $16.

“We had to take some price increases over the past couple of years,” said Mathew Glazier, an owner. “Everything went up. Then some things came back. Where we could pass that on, we felt that we should.”

But cost-of-living figures suggest that far more restaurants have kept menu prices where they were. For some customers who have finally returned to restaurants this summer amid waning concerns about Covid-19, the “check, please” moment is followed by indigestion-inducing sticker shock.

Overall, consumer prices in the New York metro area were 2.5 percent higher in June than they were in June 2022. Prices of some grocery items actually fell during that time: the meat, poultry, eggs and fish category was down 1.1 percent.

But the “food away from home” category — which includes takeout and restaurant meals — was up 7.2 percent over the year in the New York area, slightly less than the 7.7 percent increase nationally. The Bureau of Labor Statistics breaks down the national number into two components. One is full-service restaurants, where prices were up 6.2 percent from June of last year to June of this year. The other, “limited service,” includes fast-food restaurants, where they jumped 7.8 percent in the same 12 months.

So both locally and nationally, the cost of cooking at home has leveled off while the cost of dining out has continued to rise at a steady pace.

Why?

Andrew Rigie, the executive director of the NYC Hospitality Alliance, a trade group, called menu pricing “a challenging issue.”

“While it may not seem this way to the consumer,” he said, “many menu prices are often set lower than they probably should be to cover all of a restaurant’s expenses.” He mentioned everything from labor costs to insurance premiums, along with unpaid bills left over from the pandemic — all of which, he said, make for “a recipe to keep menu prices up.”

Glazier said that raising prices on menus was tricky “because obviously customers are resistant.”

“You have to do it slowly,” he said. And cutting them “wasn’t selfless.”

“We felt it would be better for our business” because lower prices would make the restaurant more competitive, he said. “We charge a premium. It gets expensive. A couple of dollar raises and you get really expensive really quick.”

During the pandemic — and as restrictions were relaxed and restaurants reopened — restaurants struggled with soaring prices of ingredients they cannot do without, like cooking oil and flour. Last year, David Ortega, a food economist who teaches at Michigan State University, attributed those price jumps in large part to the war in Ukraine. The conflict disrupted shipments and drove up wholesale prices of essentials like wheat. Russia and Ukraine were also big sunflower oil suppliers, and higher prices for that restaurant kitchen staple were accompanied by price jumps for other oils that chefs could use instead.

And then there are labor issues. It is difficult to find and keep employees in restaurants. Michael Whiteman, a restaurant and food industry consultant, said the “quit rate” remained high. “Since the restaurant industry is notorious for its low pay, the exodus is understandable,” Whiteman said. “All of that goes into raising the cost of your pasta carbonara.”

Labor is often said to account for one-fifth to one-third of a restaurant’s outlays — multiples of the cost of labor in a supermarket, Whiteman noted.

“The supermarket is selling manufactured goods somebody else made,” he said. “The restaurant is manufacturing the goods on the premises.” Restaurants are increasingly attempting to replace labor by automating, or by serving products prepared by other manufacturers — chicken parts that have been marinated and are ready to be fried, for example.

Egg prices jumped so high that some people thought about setting up their own chicken coops. But Glazier, who does the grocery shopping for his household, said he had noticed that a dozen eggs at the supermarket cost less than they did a few months ago. The story at Morgan’s is different: “We don’t see eggs coming down that quickly in our normal purchasing channels,” he said.

“The thing about prices coming down is, when they went up dramatically, most restaurants couldn’t raise prices right away,” he said. “If they did that, every restaurant would have scared everybody out.”

The result? “Restaurants did a slow creep,” he said. “It was not like the shock at the oil pump,” caused by prices that seemed to skyrocket from one day to the next “because of whatever was happening in the Middle East.”

Glazier said that wholesalers had long added fuel surcharges, and Whiteman said some restaurants had followed suit because “they’re afraid to reflect their true operating costs in their menu prices.” Surcharges increase profit margins, he said, but consumers resent them at restaurants, just as they resent airlines’ surcharges for checked luggage.

Weather

It’s a partly sunny day near the upper 80s. At night, prepare for a chance of showers and thunderstorms late. Temperatures will drop to the low 70s.

ALTERNATE-SIDE PARKING

In effect until Aug. 15 (Feast of the Assumption).

A painting in a closet worth millions?: A dog walker in Upper Manhattan came into possession of a rolled-up painting. He thought it was worth millions. Sotheby’s planned the auction — at first.

The local fabric store behind Bridgerton: Mendel Goldberg, a Jewish immigrant from Poland, opened Mendel Goldberg Fabrics in the late 1800s. Four generations later, it’s a go-to destination for top costume designers.

The artificial pond in Morningside Park is covered with revolting green algae.

Maybe the unhealthy-looking scum is a fitting symbol. The pond is a relic of not one but two low points in New York’s past — the 1960s and the 1980s.

Now it is something else: a research site. Scientists from Columbia University and the city’s Parks Department are using the pond in a new effort to study the spread of harmful algae blooms worldwide.

The pond was to be the site of a gymnasium for Columbia in the 1960s, but the university scrapped that plan amid objections from Harlem residents and the student protests of 1968. The crater that was left behind was turned into the pond. Columbia’s engineering school will restore the adjacent waterfall, which was rehabilitated in 2018 but is not working now.

As my colleague Hurubie Meko explained, the project signals a new chapter in Columbia’s sometimes strained relationship with the surrounding community over a section of the 13-block-long park, an irregularly shaped strip that runs to West 123rd Street.

The pond’s small size, and the amount of its water that has been taken over by algae, made it a perfect case study, said Joaquim Goes, the project’s lead researcher and a biology professor at Columbia’s Lamont-Doherty Earth Observatory.

For years, Dr. Goes has studied toxic algal blooms around the world, even monitoring a bloom that grows to “three times the size of Texas” every year off the coast of Oman. With the study involving the pond, his team hopes to figure out the best way to mitigate the spread of harmful algae and create an “early warning system” for future blooms, he said.

METROPOLITAN diary

Dear Diary:

It was the late 1950s. I was a freshman at City College and pledging a fraternity. The frat brothers often tormented us with outlandish commands. One was particularly far-fetched: obtain one of Harry Belafonte’s dazzling shirts.

Mr. Belafonte was performing regularly in New York at the time. I determined which hotel he was staying at and, with uncharacteristic chutzpah, I called the switchboard and demanded to be put through to his room.

To my amazement, I was. Harry Belafonte was actually on the line! Stammering out my story, I explained my mission: Obtain one of his shirts.

He actually chuckled. He couldn’t give me one of his shirts, he said, but he could, and would, autograph one of mine.

I selected a favorite shirt, and my mother sewed a blank piece of white cloth into it for a nameplate.

On the chosen night, I and a fellow pledge attended a performance by Mr. Belafonte as his guests. Afterward, we went backstage, where, as promised, he signed his name on the tag in my shirt.

Eventually, after the shirt was worn and washed many times, the name disappeared. And I was left with a blank space where Harry Belafonte’s autograph had been.

— Ralph Blumenthal

Illustrated by Agnes Lee. Send submissions here and read more Metropolitan Diary here.

Glad we could get together here. See you tomorrow. — J.B.

P.S. Here’s today’s Mini Crossword and Spelling Bee. You can find all our puzzles here.

Melissa Guerrero, Patrick McGeehan and Ed Shanahan contributed to New York Today. You can reach the team at [email protected].

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James Barron is a Metro reporter and columnist who writes the New York Today newsletter. In 2020 and 2021, he wrote the Coronavirus Update column, part of coverage that won a Pulitzer Prize for public service. He is the author of two books and was the editor of “The New York Times Book of New York.” More about James Barron

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