Rethinking the Recipe: The New Math of Running Restaurants | General Food & Drink | Hudson Valley | Chronogram Magazine

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Rethinking the Recipe: The New Math of Running Restaurants

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Kitchen & Coffee in Beacon. “Paying fair wages and treating staff fairly builds loyalty,” says cofounder Ben Giardullo
  • Kitchen & Coffee in Beacon. “Paying fair wages and treating staff fairly builds loyalty,” says cofounder Ben Giardullo

What happens when the cost of doing business goes up, tight margins get tighter, it’s hard to find new staff, existing staff need raises to afford to live in your community, and you can’t charge customers more?

This is the existential crisis the restaurant industry is facing across the country right now. Certain pockets of the nation, including the Hudson Valley, are feeling the pinch most intensely.

We looked at the data, and spoke to several restaurant owners and chefs to get a sense of just how bad things are, and how (or if) they plan to make ends meet.

The Numbers

During the height of the pandemic, the peril that restaurants faced was front-page news. The National Restaurant Association appealed to Congress after surveying 6,000 restaurant owners and 250 supply chain businesses in November of 2020, and found that 87 percent of restaurants were reporting an average 36 percent drop in sales revenue. Restaurants only average five to six percent in annual profit in a good year, making that drop unsustainable.

Last year, more than 110,000 bars and restaurants closed in the US closed, either temporarily or permanently. Two-and-a-half million jobs were lost, and sales fell by $240 billion in 2020 from the forecasted $899 billion. When the restaurants that survived were able to reopen again, many believed they were well on the road to recovery.

“We made it through a friggin’ pandemic,” says Courtney Malsatzki, general manager at Phoenicia Diner and Dixon Roadside. “We all thought after that, surely things would get better quickly. But I have never seen so many friends in the industry concerned about staying above water. The price of ingredients is going up, restaurants are struggling to hire, and some customers—don’t get me wrong, 99 percent of our customers are amazing—have such high expectations after being home for more than a year, that it’s hard to meet them.”

Ingredients

Restaurants provide hospitality and experiences, sure. But what that experience is built on is food. No one wants to walk into their favorite restaurant and find that the price of their preferred menu item has surged 40 percent. But if the prices reflected market reality, that’s exactly what would happen.

In a Facebook post that went viral on June 29, High Falls Kitchenette in High Falls explained that prices were up 47 percent for beef, 40 percent for chicken breast, 100 percent for chicken wings, 25 percent for shrimp, and 51 percent for pork.

“Prices are all over the map for produce for us, and can vary 20 percent week to week,” says Malsatzki. “The weather this summer has been completely unpredictable, so the prices of limes and avocadoes in particular have been fluctuating a lot. We’ve been luckier with our meat purveyors, because we have been sourcing from the same local farmers for years, and they do everything they can to keep their prices steady.”

The staff of Dixon Roadside in Bearsville. Courtney Malsatzki, general manager at Phoenicia Diner and Dixon Roadside says produce prices are all over the map. “Prices can vary 20 percent week to week,” she says.
  • The staff of Dixon Roadside in Bearsville. Courtney Malsatzki, general manager at Phoenicia Diner and Dixon Roadside says produce prices are all over the map. “Prices can vary 20 percent week to week,” she says.

Even prices on necessary items like gloves and take-out containers are surging, says Lagusta Yearwood, owner of New Paltz’s the Commissary and Lagusta’s Luscious, a vegan chocolate shop with outposts in New Paltz and New York City.

The job of every chef and general manager is to manage costs for ingredients, without passing on too much of that inevitable fluctuation to the customer. That often means changing the menu frequently for farm-to-table restaurants like Phoenicia Diner and Dixon Roadhouse, where prices typically run around $12 to $22, and rethinking specials for restaurants like Willow by Charlie Palmer at Rhinebeck’s Mirbeau Inn & Spa, where dinner entrées range from $17 to $120, and the rest of the menu is static for six months.

“We work with five or six vendors, so every day we do comparison shopping,” says Edward Kellogg, general manager and partner at Mirbeau. “We run daily specials, and if there’s a good buy on something like crabmeat, which has been doubling in price for the past two months, we’ll buy it quickly and run it as the special as a way to manage costs.”

Labor Challenges

Finding people willing to make and serve food is another enormous problem facing the hospitality industry.

Employment at restaurants and bars was down 1.5 million jobs, 12 percent by about year over year as of July, according to the most recent numbers available from the National Restaurant Association. Additionally, a survey in May found about 72 percent of operators at restaurants of all types reported problems recruiting and retaining workers.

It seems that the people who spent their lives in hospitality, given some time off, simply aren’t eager to return. And when they do, they realize they don’t want to stay. The Bureau of Labor Statistics shows that every month, the “quit rate” for those in food services is higher than any other field. In May, it hovered around 5.7 percent.

At Commissary, where Yearwood says they used to get 50 applicants for every job, they’re getting maybe 10, many of whom are no longer be interested by the time—generally a day or two later.

“These days, we’ll have maybe two interviews for every open job, whereas we used to have a line of people,” Yearwood says.

A short-term solution for many, has been resorting to bringing in young teenagers to do the jobs that used to go to folks in their 20s and 30s.

“We have a lot of 14- and 15-year-olds bussing, serving, and even hosting,” Malsatzki says. The learning curve is “steep,” she admits, and the pay? “The same.”

For Ric Orlando, the pandemic is only highlighting problems that have been endemic in the industry, and the culture at large, for decades. Orlando, previously executive chef at New World Bistro says he took a buyout a year ago, just as the pandemic was taking off. “It was the best thing I’ve done for myself in years,” he says.

While the pandemic has introduced new complications to employing people in restaurants, Orlando says the issue is rooted in our misperceptions about the culture of food. “The Food Network has been screwing with the reality of kitchen work for decades,” Orlando says. “I started working in kitchens in high school, and I was instantly drawn to it. It’s 90 percent factory work though. It’s not for everyone. You could spend years peeling carrots and not making money. For hundreds of years working in kitchens has been an apprenticeship. It requires passion and a certain type of mindset. When I got started, you would have been laughed out of the kitchen if anyone beside the executive chef called themselves a chef.”

Becoming a chef—even a well-respected cook—requires years of practice, skill development, and dedication, he says.

But the other harsh truth is, “even if you make $15 an hour cooking or serving tables, and you love it, you can’t afford to live in Kingston, or any of the other towns around here,” Orlando says. “Rent is going up, and so is the cost of living. People expect to have smartphones and cars. Back in the day, phone bills were $8 and rent was dirt cheap. The built-in overhead these days is much higher than it was when I was getting started.”

Gentrification

As Orlando says, even on $15 an hour, which is increasingly becoming the norm at restaurants, with chains like Chipotle, the Olive Garden, and McDonalds promising pay of up to $17 an hour, rent averages out to be more than $2,000 a month in the Hudson Valley, and continues to rise.

Mirbeau is offering signing bonuses, and bonuses to current employers for referrals, Kellogg says.

Some restaurants and owners are rethinking pay scales. “$7.50 doesn’t cut it for a server, and it hasn’t for some time,” says Josephine Proul, chef and owner of Local 111 in the Columbia County village of Philmont. “I’m in a smaller, blue-collar town, and I want the people who work here to be able to afford to live here. Adults automatically make $25 an hour, and we add a 20 percent service charge across the board. It’s my way of honoring the fact that people are taking care of you in this space.” (Teenage staff make minimum wage at Local 111.)

People still can, and often do, tip, she says.

Others are reevaluating what they ask of their staffers.

“I’ve been working in hot kitchens for decades, and I realize it’s not for everyone,” Yearwood says. “Some of our most popular dishes, like our ramen with creamy broth and seasonal toppings, required so many steps to prepare, we have taken it off our menu. We don’t have enough staff to be able to do it without placing an enormous amount of stress on them.”

Yearwood has adjusted the entire Commissary menu, with the goal of creating an atmosphere of relaxation and hospitality for customers, without making what she is beginning to see as inhumane demands on her staff.

The Future

This is, many say, where the industry needs to go.

“We’ve been paying above industry standards for years,” says Ben Giardullo, cofounder of Kitchen & Coffee in Beacon. “And even though we’re a bakery, we don’t ask anyone to come in overnight, because who wants to do that? Paying fair wages and treating staff fairly builds loyalty. And we also have to rethink the model of how we serve people, and what we serve. I’m opening a new place next door, and everything I’m seeing around me is helping me plan the staffing and menu.”

At Phoenicia Diner, they’re taking an active role in transporting, and even housing, staffers. “We’re really lucky because about half of our staff of 45 or so has been with us for at least eight years,” Malsatzki says. “They’re willing to work with us and do what it takes to get things done. For us, that often means ride-sharing. We make sure people without a car can catch a ride. And it means my house manager Dina and I sometimes do double duty if we don’t have the staff, working the back end and the floor.”

They even recently rented an apartment. “The Diner is so far out, we just decided to rent it for the year because so many of our staffers are getting pushed out over higher rents,” Malsatzki explains.

Some, like Orlando, are leaving their jobs, while staying in the industry. “Now I’m a solo practitioner, and I do private dinners and pop-ups,” Orlando says. “And I’m working on a line of hot sauces, including one in partnership with Nine Pin Cider, and doing cooking classes.”

Behind-the-scenes gymnastics on the parts of chefs and owners, rethinking menus on the fly, paying people more, and reimagining the model for restaurants will help. But if they’re going to succeed, they need customers who are willing to tip those hard-working servers, and also willing to overlook the occasional bump in the road.

The next time you’re ready to fire off a one-star Yelp review? Maybe think twice.

Turning the Tables: A Sidebar

Amid fears of a labor shortage in some sectors of the American economy, two narratives have emerged. One blames the shortage on workers being lazy; the other highlights the low pay, poor treatment, and scant benefits as the primary causes. 

In fact, the pandemic exacerbated the economic insecurity of many restaurant workers. During lockdowns, about 60 percent of restaurant workers didn’t qualify for any unemployment assistance because their base pay was too low. As lockdown eased, tips were down between 50 and 70 percent in states across the nation. This could be one reason why one-third of hospitality workers don’t plan to return to the industry after the pandemic.

Restaurant owners are trying to come up with ways to bring workers back. “Right now you’re seeing more in terms of wages and benefits being offered than ever before,” says Melissa Fleischut, president and CEO of the New York State Restaurant Association. “Additional benefits are being offered in terms of health care or paid vacation or 401k. It’s just a way to try something new and attract employees in a way they’ve never had to before.”

But restaurant worker advocacy groups such as One Fair Wage (OFW) and Restaurant Opportunities Center United (ROC) say all restaurant workers must be paid a minimum wage, separate from tips, to ensure workers in the industry don’t continue to fall into poverty—one of many adverse outcomes of wage work that depends on tips. It’s also the solution, they say, to what is being referred to as a labor shortage.

This May, 72 percent of restaurant operators said recruiting and retaining workers was their biggest challenge in operating. According to a June report entitled “It’s A Wage Shortage, Not A Worker Shortage” by One Fair Wage, 90 percent of restaurant workers in New York say they would’ve stayed in the industry if they were given “full, stable living wages” (compared to 78 percent who reported the same nationwide).

A lower wage that forces workers to rely on tips has been linked to higher rates of sexual harassment—the restaurant industry has the highest rate of sexual harassment—and disproportionately low wages for people of color. On average, workers of color earn less in tips than their white counterparts. Eighty percent of women in the restaurant industry have reported being sexually harassed at work, according to a study by Restaurant Opportunities Center United. There are just seven states that require tipped workers to be paid a minimum wage; those states have half the rates of reported sexual harassment in the workplace.

An excerpt from “Is It a Restaurant Labor Shortage, or a Broken Restaurant Industry?” by Amayah Spence, published on August 13 on Therivernewsroom.com.

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