Few things are more essential to El Potro Mexican Bar & Grill than guacamole.
The creamy green spread comes with onions, cilantro, and a hint of lime to complement nearly every dish the restaurant chain serves, from steaming pans of fajitas to enchilada entrees. It tops tacos, garnishes burritos, and even enriches the spice rub on the Cajun burger.
“We function on avocados,” said Joe Carreiro, the general manager of El Potro’s four locations, scattered in Greater Boston. “It’s our bread and butter.”
But a case of three dozen premium avocados costs El Potro around $200 today, compared to $79 before the pandemic. The price shock trickles down to the menu, where a side of guac goes for almost $10 — double the 2019 $4.50 price.
It’s an unsettling consequence of the economic chaos cascading down the supply chain and into commercial kitchens, Carreiro and fellow Massachusetts restaurant owners say. Americans already have felt the pinch from food costs at the grocery store, where inflation has driven up the price of produce and meat by double-digit percentages, according to the Bureau of Labor Statistics. Slowly but surely, the same problem has made its way onto the bill at neighborhood burger joints and luxury steakhouses, just as customers are shedding COVID worries.
The first pandemic shock wave arrived early for restaurants, when diners vanished and outlets shuttered. Now comes a second (or perhaps even third) existential threat that is more conventionally economic but dire to this critical industry.
“We’re facing a situation where folks want to think that restaurants are operating like pre-2020,” Carreiro said. “They’re expecting service to be the same. They’re expecting prices to be the same. But the reality is it’s not.”
On average, restaurants nationwide have seen food costs climb 17 percent from April 2021, according to David Portalatin, a food industry adviser for the market research firm NPD. But customers have only seen a 9 percent increase in menu prices, meaning eateries have swallowed half of the inflated costs. (The data do not account for shrinkflation, a phenomenon where portion sizes decrease but prices rise or remain flat.)
At El Potro, for example, butcher bills are 60 percent higher now than in early 2020, and steaks that once sold for $16 in the restaurant cost almost that much to buy wholesale. The restaurant had to impose four price increases since late 2020, after just one such hike between 2008 and the start of COVID.
“The American consumer loves restaurants, and we recovered just as much of the demand as we could after [COVID] restrictions were lifted,” Portalatin said. “Unfortunately, we’ve gone through somewhat of a reset. There’s no doubt that restaurant operators still face some pretty stiff headwinds.”
Food prices are just one piece of the complicated puzzle that restaurateurs must navigate to stay afloat amid seemingly endless waves of the pandemic. Today, they’re free from stringent capacity restrictions, vaccination requirements, and the perils of Omicron winter. But finding workers remains as difficult; record-breaking gas prices push up transportation costs; and shipping delays are widespread. Pallets of asparagus and circles of soft cheeses, for example — ordered carefully from various corners of the world — are often stranded at faraway ports.
Washington has been little help of late. Last year, the federal Restaurant Revitalization Fund doled out $28 billion to help cover costs such as rent and payroll, while still leaving roughly 200,000 applicants unaided. A proposed second round this year promised an additional $42 billion. But in May, it failed in the Senate. And despite protests from lawmakers including Senator Elizabeth Warren, it’s now “dead in the water,” said Nancy Caswell, the executive director of Massachusetts Restaurants United.
More than 4,000 of the 17,000 restaurants in the state have already closed during COVID, MRU estimates found, and the lack of continued government help has made restaurateurs desperate. Independently owned eateries are overextending themselves, Caswell said, paying for inventory with credit cards or incurring exorbitant interest on loans they thought the RRF would cover.
Ahead of another pandemic summer, many restaurant owners believe the days of government aid are in the past. The “new normal” is here, and eateries no longer expect that sympathy — from customers and officials alike — will come their way again.
“In a time when there’s little good news, the RRF could’ve helped” cover nearly a year of payroll, said Sandrine Rossi, the owner of Frenchie and Collette Wine Bistros, who applied for at least $500,000 and was turned down. “But this is what we have to work with.”
To survive, Rossi reduced hours. She closed her brunch service at Collette due to staffing issues, foregoing a much-loved meal where mimosas were often paired with smoked salmon tartine and poached eggs. Thankfully, dinnertime customers still arrive in droves for swordfish and French white wines.
A glass goes for a pretty penny, Rossi admitted. She buys each bottle for up to $25 today, at least $10 above pre-pandemic times, and that cost translates to the bill.
“I’m grateful some people are not scared to spend money, especially on good wines and cocktails,” Rossi said.
That’s mostly true across the board. Diners, bored by the malaise of lockdown life, have embraced power lunches and romantic dinners again. Restaurant traffic in April was 11 percent below pre-pandemic levels of April 2019, but significantly improved from the depths of COVID, data from NPD found. Households with annual incomes under $50,000 or those with children have come out less than others, though traffic from adult-only groups was up 1 percent this April compared to the last.
A full recovery in traffic is expected but not imminent, Portalatin of NPD said.
Amid the uncertainty, restaurants have struggled to predict when demand will return, an added headache for businesses already strapped for cash.
Laurence Wintersteen, the co-owner of Horse Thieves Tavern in Dedham, tracks the weather and events, like concerts and graduations, to prepare for heavy traffic. It helps him figure out how much food to order (and when). Still, his methods have proved unreliable in this new landscape.
“We can’t figure out what’s driving people to eat out anymore,” he said. “They’ve fallen out of a routine.”
Ian Calhoun, the owner of Mooncusser in Back Bay, found success by requiring reservations and removing his a la carte menu. The shorter monthly tasting menu — with tuna crudo and local scallops — allows Calhoun to stock ingredients more easily and to more precisely map out his staff needs.
The restaurateur, who also runs 80 Thoreau in Concord and Cusser’s Roast Beef and Seafood Back Bay, was among the lucky ones who received RRF funds in 2021, though the money did not mark the end of his woes. Calhoun now opens Mooncusser’s four days a week instead of six and eliminated its bar menu, since only three people are working the kitchen. Calhoun described himself as “optimistic but realistic.”
“We have to not seek to be what we were in 2019 or 2011 but what works now,” he said.
But what works now may not work in a year — or even a month, owners say.
The restaurant industry has served as an indicator of economic and social health during the pandemic, recuperating and then faltering again with each wave of COVID. Businesses now fear that the overwhelming costs and shrinking workforce will become permanent and that inflation will become a fact of life, rather than an exception.
The Federal Reserve is hiking interest rates to tamp down prices, but Caswell of the MRU, the restaurant trade association, said the state should provide relief. Dig into the state tax coffers or the COVID-era American Rescue Plan money to help eateries, she suggested. “I want Governor Baker on the matter.”
Because one day, restaurant owners worry, diners may not be willing to pay for a pricier beer or an extra $2 for chicken wings.
“We’ll reach a point where the air comes out of the balloon,” said Portalatin of the NPD.