Thursday, August 23, 2012

Local & national restaurants weather lack of rainstorms

If you live in South Louisiana, you might not realize that other areas of Louisiana are in a drought. Many states and countries, including four parishes in Northeast Louisiana, have been designated natural disaster areas as a result of the severe lack of rain. This is the hottest summer on record globally.
“It’s unfortunate that our farmers need this type of assistance (low interest Farm Service Agency emergency loans), but we are grateful it exists,” said Mike Strain, Commissioner of Louisiana’s Dept. of Agriculture and Forestry. “You can’t control Mother Nature, but we are glad to see our farmers get the assistance they need to alleviate some of the hardship.”

The ongoing drought that is affecting crops in more than half of the United States will likely accelerate wholesale food price inflation, the National Restaurant Association says. According to Hudson Riehle, senior vice president of the NRA’s Research and Knowledge Group, one-third of a restaurant’s sales typically go toward food purchases, so wholesale food costs are a big concern for many operators. In fact, he noted, restaurateurs rank food costs as the second biggest business challenge.

“With food costs rising, restaurant owners are adjusting their cost management strategies while managing consumer expectations of value at the same time,” Riehle said. “With a typical restaurant averaging pretax profit margins of three to five percent, operators will have to manager their escalating input costs to ensure those margins remain viable.”
LRA Communications
Director Erica Papillion
says the drought is adding
insult to injury given the
rise of food costs
in recent years.
WWL Radio interviewed Louisiana Restaurant Association Director of Communications Erica Papillion in early August, where she said, “Food prices are at an all-time high and have been for a few years now, but the drought is adding insult to injury. Restaurants try to absorb as much of the costs as they can, raising prices only as a last resort. But at some point they have to make a profit.”

In the CityBusiness article, New Orleans restaurants wither under drought-driven higher costs, restaurants are split on their tactics to deal with the rising costs. On one hand, Chophouse, a downtown steakhouse, has raised their menu prices given the alternative of reducing sizes of prime steaks or substituting choice steaks instead of prime. They’ve chosen quality and passed on the cost to the consumer.

Ralph Brennan Restaurant Group takes an entirely different approach. Corporate Executive Chef Haley Bittermann said that the restaurants will retool menu items if an element of a dish’s price has increased too drastically.

In the article she said, “If for some reason asparagus goes from $28 a case to $48 a case, we will ask if it is really that important to have asparagus on this dish, “ she said. “And if the product is an integral part of the dish, we’ll just change the dish instead of raising prices.”

To overcome a price hike, she added, some restaurants will opt for what’s affordable. For example, instead of a filet mignon on the menu, you may see hanger or skirt steak. 

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