Inflation has caught up with Durango’s restaurant industry, forcing some eateries to raise prices for customers or remove certain items from their menus.
Steamworks and El Moro have taken items off their menus as the cost of meat has increased, while Grassburger has had supply issues with milkshake mix.
Fort Lewis College assistant visiting professor of Economics Nate Peach said the inflation problem is caused by multiple factors. He said the Federal Reserve has put more money into the economy since the financial crisis of 2008, and that practice sped up after COVID-19.
“One cause of inflation is there’s just more money out there, prices are going to start going up,” he said. “So the Federal Reserve is literally putting more dollars into the economy. And as that’s happening, that’s going to put upward pressure on prices.”
Peach said the shutdown of supply chains played a major factor in inflation. When suppliers are shut down because of a pandemic, it drives up the cost of goods.
“The Federal Reserve didn’t anticipate properly that China still follows a zero-COVID policy. They’re shutting down entire cities, which means a lot of the stuff that we buy from China or stuff that Europeans buy from China is not getting made at the same amount,” he said.
Cost of labor also plays a factor with inflation. Peach said wages are a large part of a company’s bottom line and when wages are increased, it is reflected in the cost of the product.
“If I’m an employer and I want to attract talent, I’m going to pay a higher wage,” he said. “If I’m successful in that, I probably want to push some of that increased cost on to consumers.”
Steamworks and El Moro are among the restaurants that have taken items off the menu because of inflation. Kris Oyler, owner and CEO of Peak Food and Beverage, the parent company over both restaurants, said inflation has not only impacted the cost of goods but also the cost of transportation of goods.
He said meat has been most affected by inflation. As a result, Steamworks has taken its signature Cajun boil of the menu.
“Crab went from somewhere in the ballpark of $20 a pound to $50 a pound. And we just couldn’t justify putting that dish on the menu for the amount we’d have to mark it up just to even break even,” he said.
Chicken wings have also become outrageously expensive, he said. The cost of transportation and supply chain delays are driving up costs. He said chicken wings have almost doubled from $74 a case to $150.
As a result of inflation, Oyler said he now evaluates prices on a weekly basis to see how much he can raise prices and still keep customers happy.
Homeslice Pizza has not faced the same problems as the other Peak Food and Beverage restaurants. Oyler said there are fewer ingredients in pizza, and those that are in pizza have remained manageable from a price standpoint.
Inflation has also impacted employee retention because the cost of living has become too expensive for service industry workers. Oyler said quality staff members have moved away because they cannot afford to live in Durango even with elevated wages.
“We’ve been increasing wages, we’ve had an internal minimum wage of at least $15 an hour. That’s far and above what Colorado and double the federal minimum wage, but we still had a hard time retaining people,” he said.
Other restaurants have been hindered by inflation but have not had to change their menu. Grassburger has seen a variety of price increases because of the specific ingredients it uses.
Grassburger has also dealt with supply chain issues. Owner Ed Kileen said the fuel to run machinery and transportation has increased and that has lead to a food cost increase.
“And when our fuel, both diesel and gasoline doubled in price, that obviously translates through every product that we purchase to then make food and sell to our customers,” he said.
Wage inflation has affected Grassburger. While higher wages can help employees, it does increase the cost of doing business, he said.
“The best thing that can happen for our industry and for our economy, in my opinion, is get a hold of inflation and hopefully bring inflation down to a reasonable number,” Kileen said. “Maybe it won’t go down to under 2%, like it was, but even if it was 2 to 3 to 4%, it would be much more manageable.”