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Saves you time. Saves you money. Makes you smarter.The News Tribune, Tacoma, WA -
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Mark Lennihan; The Associated Press   
Glenn Marino Gomez, a butcher and broiler at Ben Benson's Steakhouse, grills buffalo rib steak on Tuesday in New York. Wholesale costs of prime beef have shot up 50 percent in the last year, forcing the 36-year-old establishment to raise the price of its signature 18-ounce sirloin steak from $40 to $46, and add new menu items like buffalo, boar and elk to help offset the increases.

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Food prices force restaurants to cut costs, change menus
JOHN GILLIE AND STEVENSON JACOBS; john.gillie@thenewstribune.com The Associated Press
Published: May 7th, 2008 01:00 AM | Updated: May 7th, 2008 06:30 AM
Struggling with soaring food costs and cash-strapped customers, restaurants across the country are swapping expensive ingredients for cheaper fare and adding dishes that won’t break their bottom line.

Call it a menu makeover: Steakhouses are adding buffalo meat alongside filet mignon, pizza joints are trying new cheese products, and seafood spots are replacing pricier entrees with humbler dishes such as catfish.

The changes come as record oil prices and surging global demand for staples such as rice, fish, poultry and wheat have pushed wholesale food prices up almost 8 percent in the last year, the biggest hike in three decades, according to the National Restaurant Association.

Food commodities prices have mostly come down from record highs reached earlier this year, but wholesale flour prices still have doubled in the last year, while egg prices have shot up 70 percent and cheese 25 percent.

“This is definitely an unprecedented period of wholesale food inflation. Operators must focus on cost, and one way is using different ingredients,” said Hudson Riehle, senior vice president of research at the 380,000-member National Restaurant Association.

The organization recently surveyed restaurant operators and found surging food costs ranked as their No. 2 concern after the economy. A year ago, labor was their second-biggest worry.

At Tacoma’s Southern Kitchen, general manager John Waller said he’s seen huge price increases in staple items.

“Everything’s going sky high,” he said. Vegetables and meat in particular are escalating rapidly. Though he hasn’t raised the prices of the restaurant’s southern-style fare yet, he’s warned customers that price increases are coming.

“I think our customers know that gas and food at the grocery store are going up, so it won’t be a surprise if they have to pay a dollar more for some of our menu items,” he said.

Washington Restaurant Association Chief Executive Anthony Anton said many of the association’s 5,000 members are adjusting their menus and featured specials to highlight items whose prices have been stable.

“Until just recently, the price of pork hadn’t risen as fast as beef or chicken,” Anton said, “so you’d see more pork featured on the menus.” Unfortunately, pork prices have turned upward in the last two weeks.

“Our average restaurant makes about a 4 percent profit, so when you see your second-largest cost after labor rising, you have to take action to stay in business,” he said. Food prices to restaurants are expected to rise about 9 percent this year, Anton said.

Some items are substantially higher. “Flour is up 100 percent. Fats and oils are up 50 percent, and rice is 49 percent higher,” Anton said.

“Washington restaurants are trying to hold the line on prices, but because wages have been rising here, most of them already are running fairly lean operations,” Anton said.

At Ben Benson’s Steakhouse in midtown Manhattan, wholesale costs of prime beef have shot up 50 percent in the last year, forcing the 36-year-old business to raise the price of its signature 18-ounce sirloin steak from $40 to $46.

Back in Tacoma, at Dock Street Landing, general manager Bill Mosher said the restaurant is working hard to control waste. “We’re looking at everything,” he said. “Raising prices will be the last resort.”

Chuck E. Cheese restaurants recently began using a “reformulated” pizza cheese at its 490 locations, helping the company cut costs and turn in positive first-quarter earnings. Richard Frank, CEO of parent company CEC Entertainment Inc., said the high-moisture mozzarella blend gives customers a “cheesier product” that spreads better and allows the chain to use less cheese on some pizzas.

“It’s not a product we targeted because of cost … but it has helped us offset some of the cost pressure from cheese,” Frank said, adding that customers haven’t voiced any complaints about the change.

In Tacoma’s Proctor business district, Pomodoro Italian Restaurant general manager Erin Behnke watches periodic e-mail price updates from the restaurant’s food wholesaler to plan menu specials. When halibut prices rose steeply, she said, that fish came off the restaurant’s specials menu.

Sysco Corp., the largest food distributor in North America, is helping customers cope with high food prices, for example, by suggesting less-expensive meat cuts, butter blends and other cost-saving substitutions.

“You can go from a filet mignon to a cut of meat that when prepared properly tastes just as good or better but has a smaller price point,” Sysco spokesman Mark Palmer said.

Anthony’s Restaurants operating officer Jeff Arnot said the price hikes for certain items have prompted the Northwest-based chain’s menu planning department to research alternate menu selections.

“So far, we’ve been absorbing the price increases, but we’re changing the mix of items to feature more lower-priced dishes,” he said.

John Gillie: 253-597-8663

blogs.thenewstribune.com/business

Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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