How can restaurateurs survive inflation?

Inflation is the highest it’s been in 40 years, and the prices Angelenos pay for locally made food, from street dogs to kimchi, are heading in one direction: up. While businesses that cater to well-heeled foodies can pass those higher costs onto consumers with no loss of business, that’s not how it works for those serving budget-conscious diners, and they are now faced with tough decisions on how to save money.

“It’s really hard,” says Socorro Manzano, owner of Tacos Manzano restaurant in North Hollywood. “It’s not just in the food industry, it’s in a lot of industries that we live [in] this situation right now. This means that inflation not only affects the import price of the ingredients she uses for Oaxacan dishes, but all parts of her business – wages, energy, supplies – at the same time.

Tacos Manzano in North Hollywood serves cuisine from the Mexican state of Oaxaca to customers who have begun to cut back on orders as prices rise. Photo by Megan Jamerson/KCRW.

Manzano says she struggled during the pandemic shutdown in early 2020, but stayed afloat working with the city to provide hundreds of meals a week to homebound seniors. Then his brother Jesus, co-owner of the business, caught COVID-19 and died in July 2020.

Manzano says she was able to carry on with the help of her daughter and the North Hollywood community. “This community has been helping us a lot for 20 years,” she says. “Me too [was] concerned about their situation too.

The restaurant reopened and found its place, but in 2021 Manzano began to see the effects of inflation. First it was the price of take-out boxes. Then she cut her personal income to increase the salaries of her ten employees. Now prices for staples like beef tongue have quadrupled from $3 a pound to $12. Overall, from 2021 to 2022, wholesale farmgate prices nationwide rose 11%, fresh vegetables 45%, eggs 161% and chicken 24%, according to the Bureau. of Labor Statistics of the United States.

Manzano raised prices in May between 50 cents and $1. A single taco is now $2.25 and a combo plate of chicken mole with rice and beans is $13. Customers immediately cut spending, ordering one less taco or skipping a drink for a free cup of water, Manzano says.

But even though people are spending less, Manzano says she still has a steady stream of regulars, which she attributes to the sense of mutual loyalty built between the community and the restaurant over the decades.

“They are here every day to eat our food, they love our food, they love our taste, and they understand that we do our best for our customers,” Manzano says.

Places with strong customer loyalty like Tacos Manzano have the best chance of surviving inflationary pressures, says Cal State San Luis Obispo economist Christiane Schroeter.

She advises small food producers to see if they could do without those very expensive ingredients like beef tongue that make it difficult to keep track of their current recipes. If they can substitute ingredients a bit, Schroeter says, “it might actually lead to a result that consumers are going to embrace even more.”

Oscar Ochoa tries exactly this kind of innovation. He sells fresh salsa and hot sauce at LA farmers markets through his business El Machete.

One of its most popular items is a $9 pint jar of avocado salsa, and the price of the avocados needed to make it has skyrocketed over the past year. A year ago, he paid $45 for a box of 48 avocados. Now the prices are often more than double, at $95 a box. “I pay about $800 more a month just for the lawyers,” says Ochoa. “One of my challenges becomes: how do I offset that $800? »

El Machete owner Oscar Ochoa (left) and employee Ian Martinez sell fresh salsa and hot sauce at the Los Angeles State Historic Park Farmer’s Market in Chinatown. Photo by Megan Jamerson/KCRW.

Ochoa took a look at her ingredients for wiggle room, just as Schroeter recommends. It went from pink Himalayan salt to Mediterranean sea salt and from red onions to white. That alone saved him about $250 a month. But then gas prices rose to an average of more than $6 a gallon, a big blow to Ochoa’s budget since he visits three farmers’ markets in different parts of Los Angeles each week.

Running out of options, Ochoa eventually raised prices by 50 cents in May. He says he felt responsible for warning customers several weeks in advance that the increase was imminent. But Ochoa has an advantage over companies like Manzano: well-heeled customers who paid $8.50 for a pot of salsa and can usually pay $9 without discounting.

At a recent market at Los Angeles State Historic Park in Chinatown, he sold all the fresh salsa he brought in his giant cooler.

“I feel like we’re in the business together,” Ochoa says of her clients. “Without them, I would not survive.”

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