Why Are Restaurants So Expensive Now?

Maybe you’ve noticed that going out to eat in a restaurant is more expensive than it ever used to be. The last time inflation was this high in our country, people were still talking about who shot J.R. (Dallas was a top TV show in 1982 and J.R. Ewing was shot by his sister-in-law/mistress Kristin Shepard just two season earlier.) In New York City and other metro areas, it’s not uncommon for a cocktail to cost as much $14-18 and you practically have to take out a second mortgage if you want a piece of grilled branzino. So why are prices so high in restaurants? There are a few reasons.

Labor Costs

The federal minimum wage is $7.25 an hour, but some states have set their minimum wage above that. Many restaurants are paying both their front of house and back of house staff more money. With the labor shortage hitting restaurants right in the gut, owners have had to incentivize new hires with higher wages and even signing bonuses. You can bet your bottomless mimosa that you will be the one making up that difference.

Food Costs are Rising

You see it when you go to the grocery store and restaurant owners and chefs see it too. Chris Pappas, CEO and founder of a national distribution company that supplies 34,000 independent restaurants says a container of tomatoes coming from Italy is five times more expensive than it used to be. All of those container ships sitting in ports are ripe with imported food. You want a fresh tomato sauce? Be ready to dig deeper into your pocket.

Supply Chain Issues

Those shipping containers aren’t just full of tomatoes from Italy. They also hold takeout containers, glassware, silverware, and pretty much anything else a restaurant needs to operate. If the cheaper cardboard to-go box is stuck in the supply chain, then the restaurant will have to find something else and if it’s more expensive, that cost will find its way onto your check at the end of your meal.

COVID, Duh

COVID has added a whole new batch of expenses for the restaurant industry. Two years ago, restaurants weren’t buying hand sanitizers for every table and KN95 masks for their staff. Social distancing has required some restaurants to cut down on the number of tables they can have. The pandemic has made people less likely to go out to eat and fewer customers means less money which means prices have to go up. Restaurants are also relying on delivery apps more than ever since so many customers feel more comfortable eating at home rather than in a crowded restaurant. Those delivery apps take as much as 30% for each order placed which is another reason a restaurant owner is forced to raise prices.

Making Up for Lost Time

At the beginning of the pandemic, restaurants were pretty much either completely shut down or they were ghost towns where tumbleweeds rolled through the front doors more often than customers. Restaurant owners are still trying to make up those losses. One of the ways to do that is to charge a dollar more for a hamburger, fifty cents more for cheese and two dollars more for cocktails.

Experts expect inflation to stick around for several more months, which means we won’t see any relief in restaurants anytime soon. Or maybe never at all. It’s not likely that restaurant owners are going to see inflation go down and suddenly decide they want to lower their prices and start making less money. In the meantime, customers will still go out to eat because it’s part of our culture. After two years of pandemic life, eating out is something that can make things feel kinda/sorta normal. Well, the new normal, which is probably what a $20 martini will soon be.