“When I started this restaurant [in March 2021] a 40# case of wings was $60–$70, now we are paying nearly $160,” writes Balduf. “Fryer oil used to average at $16 for 5 gallons, now it is well above $30.”
Don Knight, whose family owns Knight’s Steakhouses on Dexter Rd., downtown, and in Jackson, plus Knight’s Market on Miller, says his costs are up 40 percent on beef and 20 to 30 percent on chicken breasts. “Some of the prices we have to charge now are just ridiculous at the market,” he says. “You feel like you’re robbing people.”
The steakhouses have had to raise prices and do “some menu engineering,” Knight says, to feature items like pork tenderloin that haven’t gone up so much.
Kevin Gudejko, president and CEO of Mainstreet Ventures, which includes Palio, Real Seafood, and the Chop House, downtown, feels the same pressures. “I’m just going to have to really seriously look at some significant price increases just to stay even with where I was,” he says.
“Guests are already a little bit sticker shocked,” says Balduf by phone. He’s currently “tweaking” his menu. “What we’re thinking about doing next week is limiting the amount of food we sell per day. And then once we sell out, running a secondary menu with a more profitable product.”
Wholesale costs rose because of “the pandemic, obviously, with the [meat-processing] plants shutdowns,” says Knight. “Now they’re back up to almost 95 percent of 2019, but they’re still having trouble finding workers.” And “the price of feed for the cattle is way up.”
Will costs keep rising? “I don’t think they’ll go up a lot more—I hope,” replies Knight. “But I think it will stay this level for another year.”
Restaurants also are having trouble hiring. “It’s hard to find people to work anywhere right now,” Gudejko says.” I’ve not talked to anybody anywhere in the state [who’s got enough staff], and I’m on the board of the restaurant association.”
“That’s a huge thing,” says Balduf. “I’ve had a job posting up for about two months. I think I’ve only gotten about four applicants.”
Many workers have left the hospitality industry for more stable jobs, and “with all this stimulus money and the unemployment extensions, it’s tough to get people back to work,” Knight says. He’s now paying hostesses $15 an hour and busboys up to $18 with tips. “And that’s sixteen-year-old kids.”
Knight says the pandemic has impacted the family’s restaurants differently. “Our sales are way up right now at the Dexter Rd. location and our Jackson, Michigan location,” he says. “We’re getting close to 2019 sales.
“Downtown not so much,” Knight continues. “We survived downtown on events at the University of Michigan, the Michigan Theater, the State Theatre. The last few weeks have been great, and you got graduation and all that, but I’m worried about the summer down there.”
“We’ll be here,” says Gudejko. “We’ll battle it through again. But at the end of the day, it’s going to mean some price increases.”
What if a lot of folks continue to work from home and never return to work downtown and eat lunch at restaurants? “That’s one of our biggest worries,” says Knight. “Downtown, I don’t know if I’ll sign that next [lease] extension.”