With heirloom tomatoes running as high as $5 per pound and exotic mushrooms out-pricing a quality filet, chefs like Ralph Poness of the Singing Beach Club in Manchester by the Sea, Mass., are finding innovative ways to balance cost and creativity.
“We have herb gardens and a full rooftop garden at the club with 12 varieties of tomatoes,” said the executive chef. “Tomatoes, exotic herbs and grains, once off the beaten path, used to be reasonably priced. But since they have caught on in the mainstream, prices have shot up. I can offer the membership what we grow on premises. The only cost is my time and effort.”
And Poness’ efforts to provide the freshest food possible don’t stop there. Some summer mornings he’ll stop by a local farm to pick a flat of berries for that day’s menu or take a walk down to the beach when the striped bass are in season and catch what later becomes dinner.
“I’ll show it to the members, and it’ll be on the menu that night,” said Poness, also a licensed captain. “Or maybe a guy will stop by with a 60-pound blue fin. The members get to see it and have it for dinner. You can’t get more direct than that.”
Because he writes his menus daily, Poness, a member of the Chef’s Collaborative, an organization working with chefs and growers to celebrate local foods and foster a sustainable food supply, takes advantage of what’s in season. When a costly item comes along? He just talks to members.
“For me the easiest thing is direct contact with the members,” he explained. “And because of our size I can say, ‘I’ve got this available, it will bring the price up [this much]. Do you mind?’ From a chef’s standpoint, this is wonderful.”
Why Costs Are Rising
What isn’t wonderful is news that current economic projections indicate food prices will nearly double this year.
Weather patterns, cyclical droughts and disasters have always been an unpredictable factor in food supply and cost. But, the new story for 2007 is the energy issue, says Ephraim Leibtag, an economist for the USDA Economic Research Service.
“This year’s food prices are rising faster than they have for a long time. Costs for materials like dairy, corn and wheat will accelerate,” he stated. “Normally, prices increase about 2 to 3 percent. This year will be around 4 to 5 percent.”
According to Leibtag, the ethanol producers have driven up demand for grain, in particular corn, an essential in the food-supply chain. With corn production up—in 2007 U.S. farmers planted 92.9 million acres of corn, the highest since 1944—and per bushel prices doubling, a domino-like chain effect begins. Greater demand means higher prices; livestock feed is more expensive, which means poultry and beef prices rise, as do milk and dairy products.
Here’s another wrinkle. Some farmers are eliminating other crops, such as soybeans, in favor of corn, which puts a higher price tag on soybean products, soybean oil and other fats and oils, explained Leibtag.
“It does indeed look like the rising wholesale food prices, which are expected to show a relatively strong gain this year, are putting a pinch on restaurants,” agreed Annika Stensson, a spokesperson for the National Restaurant Association. “Operators are dealing with this issue in a variety of different ways. Some absorb the costs for now, some are forced to raise menu prices, while others cut down on other expenses and find alternatives to more expensive ingredients.”
Nick Zakharoff, executive chef of the Harvard Club of Boston, is used to seeing spikes in food costs. “There are seasonal spikes, and after 9/11 there were a lot. But now, the prices have skyrocketed out of control,” he said. “We’re always looking for new vendors and to find a new and better way.”
However, despite national trends, Zakharoff’s food costs are down.
“My food costs are 2.5 percent under budget, and at the end of June, they were 27.5 percent, down four points from last year,” he noted. “I know food costs are going up, so I am careful about what we buy and we’ve been adjusting all along.”
Zakharoff has other tips for club managers and chefs looking to decrease food costs. “Insist on all-natural, quality items,” he suggested. “In the long run, it’s better to pay $10 for something quality than $8 for something average or sub par. Why not offer a balanced variety of lamb and veal chops and nice pasta dishes that still command a lot of revenue but are less expensive? Use less protein and add more grain, like a nice risotto. Strive for artistic balance and achievement.”
Prudence is the word, according to Zakharoff, who emphasized the importance of minimal waste, defined portions, controlling employee meal costs, and creative menu planning.
Zakharoff also emphasized deliveries must be checked at the door because of how important it is to ensure the products’ freshness and quality. By ordering “ultra fresh,” such as a box of fresh, vibrant lemons, you can extend shelf life, meaning less waste.
“Make sure herbs are not wilted. And the lesson in shelf life is huge when it comes to seafood,” he said. “We insist on high quality foods and buying ultra fresh, which gives extra shelf life. Eight days versus four days means a lot.
“At the end of the day we need to be more careful and more balanced when looking at prices,” he said. “We need to be smarter.”
Buying from Local Farms
A growing number of chefs, similar to Poness and Zakharoff, are looking for the freshest of the fresh, which usually means looking locally.
In fact, buying from local farmers is the number two top culinary trend this year, according to the National Restaurant Association. Not to mention, 73 percent of Chefs Collaborative members surveyed said buying local positively affects the bottom line.
“Local is the new food frontier,” says Renee Brooks Catacalos, a University Park, Md.-based co-publisher of the Local Mix newsletter and www.realpeopleeatlocal.com, which provides information on locally grown foods in the Mid-Atlantic region.
“[Patrons] get to smell, see and verify taste,” she explained. “Patrons like a story to go with the food. They like knowing where the food comes from and who grew it. It gives them a connection to what they are eating.”
Catacalos goes on to share tales about adventurous chefs driving in the middle of the night to buy melons from the eastern shore or developing relationships with local seamen for seafood.
Take Todd Gray, owner of Equinox Restaurant in Washington, D.C. “He grew up with Chesapeake local delicacies like sugar toads,” she says. “There’s only a short window to get them. When they’re in, he e-mails his patrons, ‘Sugar toads are here.’ That kind of thing happens with local relationships. And I believe there are some price breaks when you buy local.”
And, what started as a trend toward sustainability and organic foods has now become a movement, according to Charles Dorn, of the Dorn Group in New York City.
“Now it is not a trend, but a way of life, and it has a profound effect on clubs,” Dorn said. “It is so prevalent now that half the products are not available from vendors because the large chains buy them up. What that means is, a chef from a private club may find items difficult to get or the prices go way up.”
Dorn, who was general manager of the Union Club in New York City for 13 years, also suggested establishing relationships with local farmers.
“We started doing that at the Union Club about 10 years ago,” he said. “This is an evolution of what Alice Waters of Chez Panisse in Berkeley started in 1971.” (Waters revolutionized cuisine with an emphasis on fresh, organic, local goods.)
However, local growers can’t always keep pace with clubs, especially larger ones, such as Pittsburgh’s 2,700-member Duquesne Club.
“We buy bulk produce from large California wholesalers and eliminate the middle man. We are too big for local farmers,” explained Keith Coughenaur, Duquesne’s executive chef. “They can’t supply what we need. We’ll place a big order, and then they’ll be out.”
The Duquesne Club serves 700 meals a day. And do they struggle with rising costs? The answer: yes and no.
“We’ve seen increases in beef … and dairy is going up. Shrimp and crab are stable and actually have gone down some,” he said. “Still, we are challenged by rising costs, and we struggle with the common problems: pilferage, inventory control, and waste. We have been working on point-of-sale for the last year and a half, making sure everyone is charged properly.”
Cutting While Increasing
Although Coughenaur handles most purchasing through competitive bidding, there are some constants. For example, the club always buys Elysian Fields lamb and beef because of consistently good quality.
But, savvy operating procedures, such as good, strong inventory controls, keeping things under lock and key, and creative menu writing help keep costs down, Coughenaur explained.
Five years ago the club began raising menu prices by 2 to 5 percent annually. “The members don’t mind because we’re still competitive,” he said. “We’re lucky we have a higher food percentage than restaurants, so we can keep prices lower even with the increases, which has kept the wolves at bay.”
There’s a tendency in clubs to be way behind the times in terms of price increases, according to Zakharoff. “Find out what others are charging. We need to know what’s going on out there,” he said. “Clubs need to sharpen their pencils and make sure they are meeting costs. Every club is different. You have to be very careful.”
Kathleen Phalen Tomaselli is a freelance writer based in Washington, Pa.
Tracking Commodities, Forecasts and Farm Projections
USDA
Daily Farm Price Reports
USDA Economic Research Service
Farm Commodity Forecasting
USDA National Agricultural Statistics
Planning Ahead: Agricultural Forecasts
The USDA Economic Research Services has predicted the following:
- Increased prices on fats and oil, especially soybean oil.
- Higher beef, pork and chicken prices, especially poultry, because more corn is being used for feed.
- Higher corn, grain and soybean prices.
- Continuing strong demand for consistent, high-quality beef in the domestic hotel and restaurant market.
- Higher milk and dairy product prices for the remainder of 2007 and into 2008.
- Dry milk product supplies will remain tight through 2007 and into 2008, and then prices are projected to rise sharply.
Industry Tips for Lowering Costs
Cross-utilization
Find ways to cross-utilize products. Finding creative menu solutions by using similar products and by-products can help beat rising costs.
“Multiple uses of similar products reduce waste and increase efficiency,” said John Nessel, president of Restaurant Resource Group in Lexington, Ma.
Creative and cost-saving menus
Try balancing pricey menu items, such as tenderloins and exotic side dishes, with a popular seafood item or a nice pasta dish. For example, consider offering tilapia or butternut squash versus expensive mushrooms.
Executive Chef Keith Coughenaur of Pittsburgh’s Duquesne Club also suggested using lesser cuts of meat like flat-iron steaks in creative ways.
Portion Control
Measure all items, said Harvard Club of Boston’s Executive Chef, Nick Zakharoff.
Portion size is critical. If you have lobster, decide how much is in each portion. If it’s 2 ounces, then have a cup that holds a 2-ounce portion.
Also, decide and be specific about how many pieces—for example, three scallops or two shrimp—you’re going to offer.
Employee meals
Look at employee meals, says Zakharoff, who is responsible for 100 employee meals a day.
“We choose $4 per pound or under for employee meals,” he remarked. “I recently found wild sockeye salmon at $1 a portion. That’s a great buy.”
Member freebies
Remember free events still affect food costs. Make sure you get credit for the event, says Zakharoff. They can chew up one-to-two points, he says.
Watch for hidden vendor costs
Be careful of fine print energy surcharges, said Charles Dorn of the Dorn Group.
“I’m working with a club that hadn’t noticed a $75 per month charge,” he says. “So $800–900 floated into the food and beverage cost. Most often, when you say, ‘I’m not paying it,’ they take it off the bill.”
Check out purchasing groups and buying clubs
Entegra (www.entegraps.com), Avendra (www.avendra.com), and VGM Club (www.vgmclub.com) offer the buying power of larger organizations with volume-level discounts, explained Dorn.
Buying groups such as these can help smaller businesses keep costs down. But, there are no sales representatives—pay 3 percent more with Avendra and you can have a sales rep—and you often have to buy 80 percent of your items from the buying group.
Pay bills on time
According to Dorn, you have the most leverage for better quality and prices if you pay your bills on time. When you don’t pay on time, vendors could send mediocre products.