Rising costs give S.F. restaurants indigestion - Austin Business Journal:

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In addition to the cost of recentf San Francisco ordinances mandating employerhealthb care, paid sick leave and an increaswe in the city's mimimumj wage, sharply rising food costs are takint a further bite out of restaurant owners. Gas may be the finakl straw. Even as their own energy costs for things like refrigeratiohn and air conditioning restaurants are finding that their vendors anddistributorzs -- the produce and meat the liquor man, florist and linenj company -- are employing the same tactics restaurantsz have tried to varyinfg degrees: adding a surcharge to the , a major national dry goodas distributor, is now charging a $9 fuel surcharge per and that's but one of the restaurant's regulafr accounts.
Vendors passing along a fuel feeis "nott a new concept," said Kevin Westlye, executive director of the , but he adde d that "we haven't seen it at this level for some Same with food inflation, which is the worst it's been in two decades. Restaurants have tried to keep pace by raising and over the pastthree years, menu pricex are up about 40 percent, Westlye He noted that as recently as the majority of entréezs on most menus were in the and now they are in the mid- to Indeed, as any business diner knows, numerous restaurant s around town have nary an entrée under $30.
Yet there'z a limit to what restaurateura can pass along to especially with the economic outloomkso uncertain. "You can only raise prices so so basically, we eat it," said Dan Scherotter, owner of Palii d'Asti in San Francisco's Financial He and others are scratching their heads to come up with reasonabld solutions astheir margins, already small, continued to shrink. Nationally, average pre-tac restaurant margins are 4.6 Westlye said. In San Francisco, they're half Some restaurants are cutting portion but that's not kosher in an Italianj restaurant, Scherotter said.
Others are boostin g prices, subbing cheaper cuts of meat like lamb loins for rackwsof lamb, streamlining operations or some combinationm of all, as at Palio where sales are up but profits are down. The restauranty has also addeda $2 covert charge. "We look to see how we can balance it saidPete Sittnick, general managef of and . "We will pass some costs on to guestss by raisingmenu prices, but we'l l also look at how we can maximizs our own efficiencies without sacrificing any servicde to the guest.
" That means that Epic and Waterba r have reduced employee hours at non-peak times and foregone flowedr arrangements in the men's Epic still uses a napkin that's 5 cents more expensive than the but for now, Sittnick sees valure there. Far more troubling is the linen company's new deliveru fee of $3 to $5 per run. Tim Stannard at said he'e trying to hold the line on pricee at Spruce and Village Pub in Woodsidesincr it's hard to bringt prices back down once they'vee gone up. Some vendors, like produce distributor have resisted thedelivery surcharge.
Frank Ballentine, vice presidengt and general manager, said he encouragees customers to placemore accurate, largedr orders to reduce the number of weeklg deliveries. Greenleaf has also added new products to help customersincreasde orders. But Greenleaf will now chargewfor second, emergency orders. "Somw (vendors) say we'll tack on a fuel charger so we don't raise our prices, and others just bury it in theie prices," Sittnick said. "It's the same strategy the restaurante use, really.
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