As inflation in the U.S. reaches a four-decade high, Pasadena restaurant owners said rising food and fuel prices have made serious dents in their cash flow and forced them to raise menu prices more frequently than usual.
“I’ve been in this business for almost 50 years. I have never, ever seen it like this, never. We are getting hit from all sides. So it used to be that when a vendor delivered food or supplies to your restaurant, they would just deliver the stuff, charge the price and off they went. Now they take a fuel charge on top of it,” Michael Hawkins, owner of Green Street Restaurant said.
“Avocados in January 2020 were $50.50 a case. Yesterday, avocados were $101.50 a case. That’s what we’re dealing with,” Hawkins added in mid-June. “It’s the same thing with chicken. It’s the same thing with lettuce, with dairy, with fish. Salmon went to over $22 a pound and it used to be $12 a pound.”
Coupled with the inflation, restaurateurs say the July 1 minimum wage increase in Pasadena worries them.
Effective July 1, the minimum wage in Pasadena will increase by a dollar and 11 cents from $15 per hour to $16.11 per hour.
“It’s (minimum wage increase) a very, very, very major concern. So on average per week, we do about 1,100 hours of payroll. That doesn’t count management, which is on salary. So you increase that by a dollar and 11 cents. And you’re talking about adding another $1,300 per week to payroll costs,” Hawkins said.
Pie n’ Burger owner Michael Osborn also considers the persistent minimum wage increases a tightening vise.
“People certainly understand that everything’s costing more, but in minimum wage, it’s indexed now. It’s not like it’s going to be an every-few-years thing. I mean, the minimum wage can continue to go up on a regular basis. And for us here [at Pie n’ Burger], and I don’t mind saying this, it’s the expenses over $3,000 a month. That’s just one thing, it’s not including the price of everything else that’s going up — but for us, that’s $36,000 a year.”
Osborn said an increase of $36,000 a year in expenses is huge for a restaurant like Pie n’ Burger, which operates with 30-35 seats.
Restaurant owners are now facing a new set of economic challenges after just reopening their restaurants from the 14-month pandemic shut down, Osborn said.
“A lot of people are really struggling just to get back to a normal business model. We’re not there yet. Inflation is not helping at all,” Osborne said.
Because of the accelerating inflation and wage increase, Osborn is planning to raise menu prices.
“Minimum wage goes up the 1st of July here in Pasadena, so that’s going to have a large impact. We’re actually getting ready to raise prices again here. Normally it’s maybe [a] two year process, but this’ll be our third raise in the last year,” Osborn added.
Paul Little, President of Pasadena Chamber of Commerce said inflation is hurting not just restaurants but a number of other business categories.
“Everyone is struggling, not just restaurants. Costs are going up as customers are staying away, and back rent payments are coming due. It will not be an avalanche, but more of a slow slide as we see businesses closing.”
“The bigger issue is that the local businesses are most at risk. Those businesses that add a unique character to our city,” Little said.
Little believes the biggest challenge to restaurateurs is how they will increase prices without losing their customers.
“Costs to consumers rise with the cost of supplies to provide those goods and services to consumers. The challenge for restaurants is that customers can be very sensitive to price increases that raise costs above a certain threshold. That is why we see so many things [at prices of] $9.95 or $19.95.”
Little urged the City Council to consider utilizing millions of federal funding to help businesses struggling due to the inflation hike and the upcoming wage increase implementation.
“The city has millions of dollars in federal stimulus money at its disposal. It may be time for the City Council to consider another round of grants to stave off the closures of local businesses,” Little said.