Taking the temperature of the restaurant industry as Colorado returns to normal
It’s been nearly two years since March 16, 2020, the day Governor Jared Polis ordered restaurants in Colorado to close the next morning in an attempt to slow the spread of COVID-19.
Reading the March 16 news is like being transported back in time via a fast-moving DeLorean. As the pandemic evolved, the shutdowns were designed to bring the little-understood new virus under control. And like any good sci-fi movie, there’s this feeling of dread in the pit of your stomach because you already know what’s going to happen next.
The cycle of restaurant closings and reopenings with reduced capacity and other restrictions since then has had a grueling impact on the industry.
According to the January 2022 Colorado Restaurant Association (CRA) Restaurant Economic Impact Survey of 174 operators, more Colorado restaurants will close in 2022 than in 2021 due to rising operating costs, labor shortages, lack of federal aid, and the lingering effects of the pandemic, even as cases of Omicron variants are declining.
The CRA investigation found that “the cost of doing business is skyrocketing, resulting in fewer hours of operation, higher menu prices and job losses”.
Higher costs driven by inflation
Greeley-area restaurateurs say catering demand has rebounded, if not to 2019 numbers, at least surpassing 2021 sales. They are grateful to be in business, attributing much of that to dedicated teams and dedicated community support.
Although they welcome customers again, they recognize that a meal has a higher price. Some restaurants have reduced hours, often cutting lunch service or shortening the work week to help with budgeting.
Brenda Lucio and her husband, Richard, own seven restaurants in Weld, Larimer and Denver counties, offering a range of traditional Mexican and Southwestern themes. She said 2020 was a bust; they stopped comparing those sales numbers a year ago. But in late February, Lucio said their sales were up 20% from a year ago.
She acknowledges that these numbers reflect 5% increases in menu prices that are driven by inflation, which impacts both food and labor costs.
Business is also booming at Matt Larson’s Kenny’s Steak House and his new venture, The GOAT Sports Bar, which he and his son opened in early 2021, but profit margins remain tough.
“We can’t get supplies of paper, small containers of sauce, or food safety gloves, and when we can, they’ve all doubled in price,” Larson said. “Customers don’t see all the costs associated with a $30 steak dinner.”
Corey Schwartz owns two Schwartz’s Krautburger Kitchens. Evans’ home location has been primarily take-out for more than 30 years, a business model that has helped his business stay afloat during the pandemic. Until recently, he kept the dining room at his five-year-old Westlake mall closed, only offering curbside orders. He saw orders drop there.
Schwartz said what makes business difficult is that they can’t source the most basic catering items, like mustard packets and cup lids.
He thinks it’s the result of so many restaurants relying on takeout to support their business. Takeout containers are hot items and 50% price increases are typical. It can get the most expensive ones, but as a small local restaurant, it doesn’t have the priority vendor pricing for the big chain restaurants. It also affects what he pays for disposables and other essential supplies.
Food prices have also increased and customers see the effect directly when looking at the menu.
Aaron Wooten won’t cut portions, which other restaurateurs in the area echo. But after seeing 40% increases across the board, Wooten hiked prices at Greeley Chophouse because he felt it would hurt his customers if he didn’t deliver what they expect from his high-end steak house. .
Wooten used to sell crab cakes for $11, but now it’s $20 because chunk crab has gone up 340%. He doesn’t make money on the dish but wants to keep his restaurant’s menu as it always has.
The inflation isn’t just targeting high-end items like crab that are shipped across the country in landlocked Colorado.
Aimee Hutson is struggling to source the quality products she has ordered in the past for Aunt Helen’s cafe.
“We are trying to get our chicken, there is no more stock and when we replace a lower quality product, it costs 20-30% more. The frustration is real,” Hutson lamented.
Lucio is reluctant to impact his guests, but thinks they fully understand why costs have increased.
“They just see it going to the grocery store and trying to provide their own meals at home,” she said.
A changing of the guard; work-life balance
Larson said he has the full staff of Kenny’s and The GOAT, but is one sick day away from being shorthanded.
“Employees aren’t lazy, but they’re willing to get a little soft. The pandemic has made us soft,” he said, referring to instances where employees are exposed to COVID and stay home despite being healthy. “I get the quarantine, but it’s difficult.”
Area restaurateurs are offering a range of incentives or reward programs for dedicated core staff who have stayed with them during the pandemic.
After one year of employment, Lucio pays hourly employees working more than 30 hours a week a range of benefits. She praises her managers for maintaining the culture of healthy workers. Of the 285 employees they have furloughed at their seven catering establishments, 260 have returned.
Small businesses are up against big national chains hiring at $15 an hour, Hutson said. His business has seen a big rebound since February, especially in corporate catering, which makes him think people are returning to the office. But more employees would make management easier.
Gourmet Grub Scratch Kitchen chef/owner Justin Brown sees the situation as a changing of the guard in the industry that’s likely caused by stress. But he also attributes current labor shortages to the closure of culinary schools, stunting the flow of qualified graduates to work at stir-fry or broiler stations.
“I can’t hire anyone off the street with minimal experience to take the leap. Two years ago we had a good number of people, but they left the industry.
Brown compares the situation to other hands-on training, noting that the learning process in the pandemic era was difficult with a Zoom format.
“It’s like teaching a vet tech or a nurse or a doctor to learn without the hands-on part,” he said.
He believes a culinary school in the area would be a good start.
Despite the stress, Brown isn’t going anywhere. He recognizes that there is no overnight process for deflation and increasing the supply of workers.
As the pandemic wanes, Wooten also credits his staff for the Chophouse’s success. He admits he pays them more — his payroll has increased by 45% over the past year. It is open four evenings a week for dinner, with Tuesday evenings reserved for private groups.
Her 19-year-old daughter has stepped in to take the reins, giving her hope for the future. Wooten said the younger generation doesn’t have as much baggage and there is more camaraderie and team spirit. He also believes that his daughter is an excellent leader.
The Chophouse’s pre-COVID days of dining seven days a week, plus five days for lunch and brunch on Sundays, have been scrapped for now, but its employees’ quality of life is better. They have two days off a week and earn more money, he said.
The overriding difficulty for the service industry is dealing with other humans.
“What COVID has done, it’s allowed every human being to have their own opinion of how things should be, and if they don’t go that way, they have an even stronger opinion,” Wooten said.
Its staff have handled terrible situations. “People are yelling at servers because the side is bad. The human condition is undermined; we are at our wit’s end, emotionally, mentally.
Until the economy stabilizes again, Larson wants customers to be a little more understanding.
“You never know what kind of day someone had, but then they go after people in the service industry. We are all doing our best, so please be kind,” he asks.