SF restaurants face product shortages and skyrocketing costs
Imagine sitting down for dinner in a restaurant and being told you will have to eat your soup with a fork, drink your wine from a glass of water, or pay a few extra dollars for your favorite burger.
What may seem like a one-time blunder to some guests is actually indicative of a troubling reality for many restaurant owners in San Francisco. Those who survived the grueling pandemic are now grappling with a disrupted supply chain, resulting in product shortages and skyrocketing costs.
âThe supply chain crisis has affected us in almost every way imaginable,â said David Nayfeld, chef and co-owner of two restaurants at The City. “The only way to respond is to adjust your expectations and the expectations of customers.”
Much of the world has come to a standstill for over a year, as have traditional models of the global supply-demand curve, which rely heavily on the movement of goods around the world.
What followed in recent months has been a relatively rapid recovery that has outstripped the rebound capacity of the broader supply chain. Combined with the difficulties of hiring and retaining workers, entire industries are stuck waiting for basic necessities to survive and paying a premium while they do so.
San Francisco restaurants are no exception.
The owners told The Examiner that it has become nearly impossible to restock cutlery, glassware and other dinnerware, items restaurants sell out quickly due to basic wear and tear. They said things that didn’t take more than eight weeks to happen now could take up to five months.
More substantial projects such as redesigning an interior space or building a park with permanent infrastructure are also virtually impossible on a predictable schedule. In some cases, this means that merchants are forced to pay the overhead costs associated with a space, but are unable to use it to capacity, if at all.
According to the National Restaurant Association, wholesale food prices are “trending strongly up” nationally by up to 2% each month. Even California, rich in agriculture, is not immune to skyrocketing costs.
Most restaurants import at least some of their produce, and even those that work exclusively with small, local distributors face rising prices due to rising labor costs, Nayfeld said. He regularly imports olive oils and cheeses from Italy for serving at his restaurant, Che Fico Alimentari, but these products are held up for weeks with shipping delays.
Tony Marcell, owner of LUNA on Valencia Street and Wayfare Tavern in the Financial District, said the cost of animal protein had risen dramatically, enough to affect his bottom line.
âI’ve never experienced anything like this,â said Marcell, who has operated restaurants in The City for almost 22 years. âThe waves of the pandemic have each brought new challenges, and each is particularly different but nonetheless extremely trying. “
Collectively, these disruptions threaten to disrupt the ability of the restaurant industry to recover from the pandemic.
With such uncertainty, businesses can’t plan in advance for special events around the holiday season – usually a sure-fire way to generate much-needed income – lest the items arrive, and they can’t capitalize. on growing customer demand without the infrastructure in place to support the influx.
âWe’re in a really tough spot,â said Laurie Thomas, executive director of the Golden Gate Restaurant Association and owner of two restaurants in Cow Hollow. “People see full restaurants that are lucky enough to be in the neighborhoods, mine is one of them, but we still make up for the seven to nine month closure last year.”
Those unfamiliar with the restaurant business might have a hard time understanding why these kinds of delays and rising supply chain costs matter. But for owners who already operate on very thin margins and barely come out of the worst of the pandemic, this could be the kiss of death.
To survive, they must strike a delicate balance between how much of the rising costs they are prepared to pass on to the customer and how much they can tighten their belts without compromising the quality and experience of their establishments.
âPrices have all had to be increased due to the rising cost of food and labor,â Nayfeld said. âThey haven’t been high enough to meet the challenges yet, but we’re doing our best to thread the needle.
Thomas said customers may start to see portion sizes decrease as menu item prices increase. Marcell said its restaurants are still operating at reduced opening hours and that Nayfeld has not reopened the larger of its two spaces due to supply chain and workforce issues.
Many restaurateurs say the only way out is to get more help from local, state and federal governments. They are calling on Washington DC to step in where it can, including renewing the Restaurant Revitalization Fund to give restaurants another financial boost, which would allow them to keep more people at work and boost local economic spending. during the many months of recovery to come. .
âWe are far from normal operational activities,â Thomas said.