Northwest Austin Edition | October 2022

THE AUSTIN changing RESTAURANT SCENE

Real estate data shows the cost of restaurant space is rising.

$28.31

$30

$26.60

$27.50

$25.40

$24.09

$25

$22.18

$22.50

In the Austin area, at least 37 restaurants have closed in 2022 with many owners citing rising costs and labor shortages. Meanwhile, many Austin diners are reporting higher costs and changes in service at restaurants.

$20.52

The average cost of rent for a restaurant space in Austin increased by 37.96% in the past 10 years.

$20

*THE DATA IS BASED ON QUARTER 2

SOURCE: COSTAR REALTYCOMMUNITY IMPACT

Restaurant Association’s national sur- vey of 4,200 restaurant operators con- ducted between July 14 and Aug. 5. Local restaurant owners said they

rising cost of ingredients aects their bottom line rsthand by reducing the buer between the cost of doing busi- ness and the price on the menu. The Con- sumer Price Index, which

been serving Asian and Indian cui- sine since 2003. The restaurant faces the same supply chain issues and rising cost of ingredients. To cope with shortages in sta, owner Sanjay Parikh placed ads online and spread the word through his local network but has seen little response. “[Those that apply] say, ‘OK, we’ll be there tomorrow at this time,’ but nobody shows up,” Parikh said. During the pandemic, businesses with historical payroll data could apply for a paycheck protection program or receive an Economic Injury Disas- ter Loan. While The House of Three Gorges did not have this data because it opened during the pandemic, Masala Wok did receive federal help, but busi- ness was so poor the loan forgiveness only went a short way, Parikh said. Masala Wok had no choice but to increase its prices by 10%, Parikh said. While businesses are having to raise prices to stay aoat, smaller restau- rants in particular are taking into con- sideration what prices their customers are willing to pay, Li said. Aside from local dine-in restaurants, niche fast-food restaurants such as P. Terry’s Burger Stand also felt the rise in prices. The chain additionally faced the dilemma of having an established cus- tomer base that is used to the burger joint’s staple menu, P. Terry’s CEO Todd Coerver said. Restaurateurs nd themselves look- ing for the perfect price to set on the menu, a range that lies between the total cost of running the business and the price the customer is willing to pay, Coerver said. “We always look at what our com- petition is doing; it’s a very delicate dance,” Coerver said. Aida Tabakovic, who owns Poke House north of Braker Lane with her brother Edin, said the price of the main

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owned Dream Bakery since 2016. The restrictions on businesses from the height of the pandemic are over, but local restaurants in Northwest Austin are still riding out the storm. The number of people patronizing the food service industry is back on the rise with more people dining out and ordering food delivery or takeout, but business is still not back to pre-pan- demic levels, according to OpenTable data, which compared data from 2020- 22 with pre-pandemic data from 2019. In spite of the increase, 83% of Texas restaurant operators recently reported that their restaurant is less protable now than it was in 2019 before the pandemic, said Kelsey Erickson Streu- fert, chief public aairs ocer for the Texas Restaurant Association. This is due to price increases across the board on everything from food to labor to overhead, according to the National

are trying to cope as much as they can, but some city and state- wide factors are out of their control.

51% of every dollar spent on food in Texas goes to restaurants. DID YOU KNOW?

looks at the ris- ing cost of food, shows the price of food went up 11.4% between

“The supply chain disruptions, ination, lack of workers—not just in restaurants but really all up and down the supply chain—have created some real sharp price increases,” Erickson Streufert said. “Same pressures are also impacting our customers and their ability to dine out and creating a really tough economic environment for many of our restaurants.” Rising costs Local restaurant owners said the

August 2021-August 2022. The price of sugar rose 16.7% in that time period. Over the past year, wholesale food prices increased more than 17%—the largest increase in nearly 50 years. Adam Li is the owner of House of Three Gorges, a local Chinese Szech- uan cuisine restaurant near Burnet Road and US 183. “[The price of] ingredients, supplies, everything, oil, rice, vegetables went up, and the price increased signi- cantly. Not by a few dollars but in some cases doubled. It is a big deal,” Li said. Li also faces stang issues. His sec- ond Szechuan chef left one month ago, and he has still not found a replace- ment, he said. “Someone oers a higher salary to your sta and they’ll be gone the next day,” Li said. It is a competitive busi- ness, and recruiters from even out of state make oers, he said. Li said he copes with rising costs by working long hours, multitasking and reducing his prot. He began closing the restaurant between 2:30-4:30 p.m. so his sta can rest. He said he is also trying to reduce dependency on DoorDash and Uber for delivery services, which charge a high price to businesses for oering the service. Located in the Shops at Arbor Walk o MoPac, Masala Wok is a local family-owned restaurant that has

HANDLING HIGHER COST

Texas restaurants are handling rising costs by making modications to their business strategy, an Aug. 5 poll from the Texas Restaurant Association showed.

92%

increased their menu prices

67%

changed their menu oerings

49%

postponed future plans

47%

reduced their hours of operation on days that they’re open

40%

cut stang levels

31%

closed on days that they would normally be open

SOURCE: TEXAS RESTAURANT ASSOCIATIONCOMMUNITY IMPACT

COMMUNITYIMPACT.COM