Restaurants see hope on 2023’s menu

The doomsday prophets got it wrong.

Just days after the COVID-19 pandemic forced restaurants across the nation to shut down indoor dining in March 2020, chef and industry activist Tom Colicchio predicted that 75% of U.S. restaurants would close for good. Even though he later revised his estimate to 40% to 50%, the Independent Restaurant Coalition went further, forecasting that as many as 85% of independent restaurants might go out of business.

The easing of health-related restrictions in late 2021 and 2022 were followed by staffing shortages, supply-chain slowdowns and spiraling inflation.

Closures still are happening, either attributable to that combination of adversities or simply because of the natural churn that has always been a business reality. But in the Boulder Valley, Northern Colorado and across the country, many restaurant operators are simply rolling with the punches, cutting waste and inefficiency in ways that probably should have been done long ago, and remembering anew that customer satisfaction is key to everything.

Now at the dawn of 2023, Adam Vander Sande can bluntly declare that “I’m pretty dang optimistic.

“It certainly has been a challenging environment, but as with most things, everybody’s in the same boat, so it’s an even playing field,” said Vander Sande, chief operating officer for Hot Corner Concepts, the company behind Austin’s American Grill locations in Fort Collins and Greeley, The Moot House and Big Al’s Burgers and Dogs in Fort Collins, and Comet Chicken in Fort Collins and Loveland.

The solution, he said, is “sticking with what made you successful: things like great hospitality and great food. Sure, logistically, eggs cost more, butter costs more, labor costs more – but you can figure that out.”

Andrew Sun, who has owned Sushi Hana in Longmont for 18 years, also sees better times on the horizon.

“Right now the price of food is still high,” he said, “but it’s slowly, not very fast, coming down, little by little.”

The wholesale costs for many ingredients in Sun’s sushi and sashimi, such as tuna, salmon and yellowtail, have spiked, he said, in many cases doubling since before the pandemic. “Tuna was $13, $14 a pound,” he said. “Now it’s $26, $27 a pound. At one time it was as high as $30, but now it’s coming down.”

He buys eggs by the case, which hold 15 dozen. “They had been around $32 to $35 a case,” he said, “but now, especially because of the avian flu, they’ve been as high as $129 a case. They’re also coming down – maybe $98 now.

“Rice has doubled too, and it’s not coming down yet,” Sun said, blaming labor shortages in rice-growing areas of California and Arkansas.

Labor challenges have confronted Sun as well, he said, with workers from chefs to dishwashers demanding more.

As a result, he said, he’s been forced to raise menu prices 15% to 18%. A dinner-sized bento box that sold for $39.95 before the pandemic runs $49.95 now.

“I have no choice,” Sun said. “If I used frozen stuff, I could do it without raising prices. Fresh costs more, and you cannot order too much. You have to look at how much you can use in a day. But the taste is much better.”

Sun has had to trim his profit margin from 25% before the pandemic to about 7% now, he said. “I could close shop and walk away, but better times are ahead. So here’s what I do: Work harder, make less, survive.”

To keep menu prices from rising even more, he has cut his workforce from 12 to eight. “I can’t say I love it,” Sun said, “but if I start losing money I’ll cut the labor cost more. I use very professional people.”

He has employed automation for dishwashing and paperwork and plans to close on Tuesdays because “I’ve been working seven days a week for the past 18 years, and I don’t want to get burned out.” 

Automation and other efficiency measures also have helped at Hot Corner Concepts, Vander Sande said, adding that menu prices at those restaurants have increased about 5%.

“We look at creative ways of how we can not pass that cost on, including using technology for more efficient outcomes,” he said. Restaurants “have been slightly behind other industries in adopting technology, but the pandemic was the catalyst and reminded us that we’ve got to catch up.”

His restaurants used two software systems prior to COVID-19 but employ “seven or eight now,” Vander Sande said, encompassing everything from seating and online ordering to handheld devices and kitchen displays that “automatically let all the chefs know things like ‘I need seven salmon, eight strips, four cornbreads.’ And in the back of the house, we look at somebody taking 4,000 steps in a day to go from point A to point B or to get an ingredient; how can we set up a continuous cycle to create more efficiency? If a waiter makes eight trips to the kitchen, how do we cut down to four or three? You eliminate 15 seconds here, 30 seconds there to create efficiency.”

Vander Sande echoed Sun’s observation that, as with every industry, labor has impacted the bottom line. “It’s a challenge, but nothing we can’t figure out,” he said. “Figuring out that piece has been the most challenging. We’re starting to see encouraging signs across the board. The labor market is still really tight, but we’re seeing some relief on that.”

Part of saving on labor has come about through one of the biggest post-pandemic changes in the restaurant industry, he said, one that was driven largely by customers.

“Through each shutdown, people went through new avenues of how they could still have a dining experience,” Vander Sande said, adding that the carryout business boomed as a result.

“At Big Al’s and Comet Chicken, we really built those models to be carryout, so that’s gone from 30% to 50% of those businesses. On the full-service side” – Austin’s and The Moot House – “it’s gone from 10% or 20% to 20% or 30% through things like catering, business lunches, or family meals being picked up by somebody getting off work or after soccer practice.”

In all, Vander Sande said, the challenges have “not perfectly unwound, but we’re seeing improvement every day, from the supply chain to consumer confidence.

“As to what the runway looks like for 2023, I feel pretty good about it.”

Added Sun at Sushi Hana, “We have loyal customers who have been with us for years. That’s what keeps us going.”

Source: BizWest