Price Check: Why Are Some New Restaurants Already Getting More Expensive?
If you thought Le Diplomate was expensive when it opened in April, you should see it now. The white-hot French brasserie from restaurateur Stephen Starr has increased the prices on nearly all of its entrées—anywhere from $1 to $4 per dish. The price tags for hors d’oeuvres, sides, and salads are mostly the same with a few more dollars added here and there. And the popular seafood platters—once $60 for a “petit plateau” and $120 for the “grand plateau”—are now $70 and $130, respectively.
So why are you paying about 17 percent more for your steak frites less than eight months after the grand opening? “We avoid price increases whenever possible, however, as food prices fluctuate, the cost of the dishes fluctuates as well,” Starr says in a statement. “Our team works hard to keep Le Diplomate both accessible and profitable to ensure we stay in our neighborhood for a long, long time.”
It’s perfectly normal for menu prices to increase over time or vary here and there. Food costs, after all, are far from static, and there’s a laundry list of other outside factors that can also affect prices. But a handful of popular (and expensive) new restaurants have already raised a lot of their prices. In some cases, it’s only a couple dollars per dish. In others, it’s far more dramatic. Either way, it adds up fast. Restaurateurs say they don’t like to increase prices, though they sometimes have to in order to stay profitable—but diners are left feeling ripped off, especially when no explanation is given.
Across the street from Le Diplomate at Pearl Dive Oyster Palace, restaurateur Jeff Black has kept prices steady, with only a few fluctuations since opening in fall 2011. Black sees two types of price hikes: real and artificial.
“It’s not unusual in the business for operations to come out, get some good media, get some good ink, and as soon as they’ve got that, start raising prices,” Black says. “The little dollar sign you see on reviews? All they want is less of those.” Rarely does a restaurant get re-reviewed, so there’s not a lot of scrutiny.
“I think people in the media don’t realize how powerful it is,” Black says. “It’s deceptive, but there’s a lot of people who feel they have to do that to get their business model going.”
Long relationships with local farmers have helped Black keep prices stable, but he’s not sure how long that will be possible. He pays 50 percent more for shrimp, for example, than he did a year ago. Other ingredients and delivery surcharges are up, too. Black says every restaurant in the city is getting squeezed, and it’s getting worse.
Pricing a menu is complicated. Profit margins on a large steak or whole fish are often slim, but can be offset by cheaper-to-make dishes like pasta and pizza, which tend to have higher mark-ups. Restaurants that sell a lot of alcohol may be able to offer lower prices on food because high profits from the bar help make up for it.
Restaurateur Troy Clayton, who owns Geranio Restaurant in Alexandria and also consults on menu pricing for D.C.-based Restaurant Consultants Inc., says most mid-to-high-end restaurants aim to keep their food costs somewhere around 30 percent of total sales.
Clayton says the prime drivers of menu price hikes are food costs. Other factors, like a rent increase or staff changes, can also affect what diners pay. Still, Clayton says it’s not common for new restaurants to dramatically or systematically increase their prices within the first six months to a year. “Experienced restaurateurs probably don’t need to do that,” he says. “They’re opening a new restaurant, they’ve done their homework, they know what their cost of goods is going to be before they publish the menu prices.”
For upscale restaurants, diners probably don’t notice a couple extra bucks in the same way they would notice a bump in their Starbucks coffee or Chipotle burrito. But some price increases you just can’t help but notice. Like the ones at Fabio Trabocchi’s new Italian restaurant, Casa Luca. Trabocchi declined to comment about his prices, but they’ve become a recurring topic of discussion in the online chats of Washington Post critic Tom Sietsema and Washingtonian critic Todd Kliman.
After one recent discussion of whether Casa Luca’s prices are justified, Kliman wrote: “I understand what it means to have a big-time talent in the kitchen, and Trabocchi is among the biggest not just in this city, but in this country. And I also know something about the cost of high-quality ingredients. And still I look at some of the prices at Fiola, and now [Casa Luca], and shake my head.”
Almost everything at Casa Luca is now more expensive that it was on the opening menu. Pastas that were initially all a flat $16 now range from $18 to $26. The campanelle pasta with prawns, spicy eggplant funghetto, and shellfish brodetto has gone up $10—more than 60 percent. In his “First Bite” column at the end of July, Sietsema listed entree prices as $16 to $28. Now fish and meat entrees rarely dip below $30 and go as high as $38.
Trabocchi’s Penn Quarter restaurant, Fiola, is also more expensive that it was when it opened in April 2011. Then, Trabocchi said no entree would be more than $30. Two and a half years later, there’s almost no entree below that. On one recent menu, “ocean and farm” entrees ranged from $42 to $48, and pastas from $26 to $38.
Critics have scrutinized Trabocchi’s prices before. In 2008, as chef of Fiamma in New York, Trabocchi significantly raised prices on tasting menus not long after a glowing New York Times review. Critic Frank Bruni publicly questioned whether Fiamma had purposely kept prices low while critics and diners were evaluating the new chef; Trabocchi said rising ingredient and fuel surcharge costs plus increased portion sizes caused the increase.
Prices at other new restaurants have trended higher, too. Range’s menu changes frequently, and while many dishes remain the same price or have gone down in a handful of cases, meat and fish dishes are noticeably more expensive on average. Initially, more than half of those offerings were below $20; now, none are. Chef/owner Bryan Voltaggio says via his publicist that the reason is that portion sizes and ingredient costs increased. Voltaggio has also boosted the prices on every cocktail from $11 to $12. Bottles of punch have jumped from $35 to $42.
At Del Campo, price increases are limited mainly to the asado grilled meat section. Twelve-ounce bacon-wrapped filet mignon medallions went from $42 to $49, veal sweetbreads from $22 to $28, and a 48-ounce dry-aged Piedmont Ridge Tomahawk ribeye for two is now $98 instead of $80.
Del Campo chef and owner Victor Albisu says meat-driven restaurants are subject to variances that other restaurants aren’t. When a specific fish at a seafood restaurant goes up in cost, he says, it can more easily be replaced by a different, less expensive or higher-yielding fish. But at a steakhouse, there are limited cuts and grades of beef.
“Meat prices fluctuate, and at times, so do some of our asado menu prices,” Albisu says. “Just as I’ve had to increase prices, I have also decreased prices. We do not control meat prices.” Albisu says Del Campo’s skirt steak, originally $52, was lowered to $42 over the summer. When prices again went up, he adjusted it to $48. “Meat is an expensive product with low profit margin, and when market prices increase, restaurant owners have two options: find a lower-quality product, or adjust pricing to cover costs. I won’t serve lower-quality products.”
Beef prices, in particular, are going up and have fluctuated as much as 40 percent for some cuts this year, says Capital Meat Company co-owner Frank Alafoginis. His company distributes meat—some from local farms—to more than 250 restaurants in the D.C. area (including Del Campo) and sets new prices each week. This year, flooding in Colorado led to a shortage in lamb, raising prices. Last year, droughts in Texas affected the beef market. Other seasonal supply and demand issues also influence price: Big retail chains will buy up summer grilling items like strip steaks months in advance, driving up the market for restaurants. In early winter, filets go up because of high demand during the holidays. On top of that, there are year-over-year increases due to rises in everything from corn to fuel to the minimum wage.
For many smaller local farms offering sustainable meats that already cost a premium price, fluctuations are less dramatic. Clay Trainum of Autumn Olive Farms in Virginia, who sells heritage-breed pigs to 35 to 40 D.C.–area restaurants, including Del Campo, says his prices have been steady for about two years. Bev Eggleston, whose EcoFriendly Foods processes and distributes sustainably raised and humanely butchered pigs, cows, poultry, and other animals to dozens of restaurants across the region, likewise says he hasn’t raised his prices for years.
“I beg to differ that it’s really simply food prices are going up. That’s too simple of an answer,” Eggleston says. He argues that restaurants that buy high-quality local meats like his and set up their menus smartly shouldn’t need to raise prices.
“When they say, ‘Well, prices went up,’ they’re behind the times,” Eggleston says. “Commodities are just now starting to move, and so they’re moving. If they’d always been in the farm-to-table movement or always buying whole animals and using lesser parts, then they’ve already figured this out.”
But even Black, who prides himself on his sourcing and hasn’t uniformly raised prices, wonders how long he’ll be able to hold out.
“We’ve always tried to maintain the integrity of our price, so our pricing is predicated on our costs, and sometimes we’ll eat little costs here and there to keep our price where it is,” Black says. “Sooner or later, you have to give in. Sooner or later, you have to raise the price.”
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