As costs rise, Bay Area restaurants weigh an unpopular step: raising menu prices

The cost increases on many ingredients are dramatic, in some cases triple what they were just a few months ago. They’re among the myriad ripple effects spurred by pandemic-related supply chain issues and the nationwide staffing crisis.

In the case of Bluestem Restaurant & Market, the San Francisco restaurant was paying $20 for 15 dozen eggs in 2020 and now pays $68 — a 240% increase, though it’s unclear exactly why. According to the latest Consumer Price Index figures from the U.S. Bureau of Labor Statistics, prices for all consumer goods in the U.S. increased 6.2% from October 2020 to October 2021 in the U.S., and by about 12% for eggs.

“These kinds of jumps, I’ve never seen anything like this,” said Mica Talmor, owner of Oakland Israeli restaurant Pomella. “I don’t think we can survive without raising prices.”

So far, Pomella has gradually raised prices on a few items but plans to raise many by at least 5%. Talmor has noticed the cost of organic beans double, for example, while the price of her imported tahini has also gone up because of it’s among the goods stuck at the ports. That makes hummus, a staple of her restaurant that’s typically thought of as simple and affordable, suddenly quite expensive to produce.

Talmor also wants to raise the prices on all to-go orders to make up for the rising cost of compostable packaging. She’s still figuring out how to logistically implement it, but she expects to charge an additional 50 cents per takeout item.

“It’s been hard — raising prices is not as easy as you think,” she said. “You don’t want to upset your customers, and already, customers perceive us as expensive.”

Dinosaurs, a San Francisco mini chain serving Vietnamese sandwiches, posted a letter to customers this fall explaining why its prices were going up by 15% to 20%. Its special banh mi filled with three kinds of pork jumped from $8.50 to $10.75.

The restaurant outlined several examples driving the decision: 50-pound bags of sugar went from $48.50 to $60, cases of rice noodles went from $68 to $76 and cases of biodegradable cups went from $86.50 to $135. According to the latest Consumer Price Index figures from the U.S. Bureau of Labor Statistics, prices for all consumer goods in the U.S. increased 6.2% from October 2020 to October 2021 in the U.S.

Rachel Caygill, owner of Oakland home-based outfit Greenhouse Bakery, typically doesn’t look at her invoices until the end of the month so she was shocked to see numbers increase so quickly. The cost of flour rose by 30% and butter by 10% — two key ingredients for a bakery. She thought about raising prices across the board by 50 cents but didn’t want to seem too pricey.

“It’s hard to pay more than $3 for a cookie,” she said.

Instead, she’s baking lightly smaller cookies to keep them at $3 and tacking on $1 to specialty pastries, such as a seasonal croissant stuffed with butternut squash, leeks and Gruyere cheese.

Simco Restaurants, which operates several San Francsico waterfront restaurants such as Fog Harbor Fish House, used to sell a lot of lobster rolls. But the crustacean’s rise in price led the restaurants to stop serving it altogether, said chief operating officer Bob Patrite. Crab is also increasingly expensive, so the popular crab fettucini is now a crab and shrimp fettucini, which allows the price to remain $29.

“We’re not going to keep raising prices on dishes, so there’s a time we say that the price we need to charge doesn’t make sense,” he said. “That’s when we remove the dish or start re-engineering dishes.”

Patrite said he’s especially seen the prices skyrocket on anything that needs to be shipped, such as oils or East Coast seafood. But even local ingredients are more expensive, such as the flour Caygill buys or the produce at Pomella.

That’s partially because the cost of gas is up by nearly 40% in the Bay Area, according to the Consumer Price Index, and ultimately everything must get delivered some distance, Talmor said. In other cases, it’s because the drought resulted in smaller yields. Plus, the nationwide labor shortage means warehouses are lacking packers and purveyors are short on delivery drivers. Many vendors are paying their employees more to be competitive, which means they may have to raise their prices as well. At Pomella, for example, Talmor raised the pay for all employees by about 10% this year to attract workers.

In an effort to be more aware of constant price fluctuations, Bluestem Restaurant & Market owners Stacy and Adam Jed implemented new back-end technology when they recently reopened their San Francisco restaurant. They’re using data entry software XtraChef, which now integrates with their point-of-sale system Toast, allowing them to easily compare the cost of a menu item versus what they’re charging.

In some cases, they’re making small menu price adjustments daily — and the tool also lets them easily see when a specific ingredient is getting so expensive that they might want to swap it out for something else.

While they used to focus their attention on price changes for pricey proteins like beef, the software is showing them how much staple ingredients have changed as well. Besides eggs, a bag of Kennebec potatoes used to be $17 and now it’s $38.

“Things you wouldn’t keep your eye on,” Stacy Jed said, “you now need to keep your eye on.”

Janelle Bitker is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @janellebitker