JUMPING FOOD PRICES

Economy: Restaurants biting back

To keep cash-strapped customers full, eateries are swapping expensive ingredients for cheaper fare

By The Associated Press

Struggling with soaring food costs and cash-strapped customers, restaurants across the country are swapping expensive ingredients for cheaper fare and adding new dishes that won’t break their bottom lines.

Call it a menu makeover: Steakhouses are adding buffalo meat alongside filet mignon, pizza joints are trying new cheese products, and seafood spots are replacing pricier entrees with humbler dishes like catfish.

The changes come as record oil prices and surging global demand for staples like rice, fish, poultry and wheat have pushed wholesale food prices up almost 8 percent in the last year, the biggest hike in three decades, according to the National Restaurant Association.

Food commodities prices mostly have come down from record highs reached earlier this year, but wholesale flour prices still have doubled in the last year, while egg prices have shot up 70 percent and cheese 25 percent.

“This is definitely an unprecedented period of wholesale food inflation. Operators must focus on cost, and one way is using different ingredients,” said Hudson Riehle, senior vice president of research at the 380,000-member National Restaurant Association.

At Chuck E. Cheese, management is seeing benefits of swapping ingredients. The chain’s 490 locations recently began using a “reformulated” pizza cheese, helping the company cut costs and turn in positive first-quarter earnings.

Richard Frank, CEO of parent company CEC Entertainment, said the high-moisture mozzarella blend gives customers a “cheesier product” that spreads better and allows the chain to use less cheese on some pizzas.

“It’s not a product we targeted because of cost ... but it has helped us offset some of the cost pressure from cheese,” he said.

Sysco Corp., the largest food distributor in North America, is helping customers cope with high food prices. For example, the company suggests less expensive meat cuts, butter blends and other cost-saving substitutions.

“You can go from a filet mignon to a cut of meat that when prepared properly tastes just as good or better but has a smaller price point,” Sysco spokesman Mark Palmer said.

At Ben Benson’s Steakhouse in midtown Manhattan, wholesale costs of prime beef have shot up 50 percent in the last year, forcing the 36-year-old establishment to raise the price of its signature 18-ounce sirloin steak from $40 to $46.

“The cost of beef is staggering,” said owner Ben Benson, who has added new menu items like buffalo, boar and elk to help offset the increases. “They sell very well. It’s not a big percentage, but they cost us a little bit less and we sell it for almost the same, so it hedges a little bit.”

Industry professionals insist they’re not sacrificing quality for cost when they substitute ingredients or menu items.

Clark Wolf, a restaurant consultant, said the idea is to “reconfigure dishes that have an end result of being appealing food that we can afford to sell.”

“What you don’t want to do in an uncertain economy is make people think they’re getting ripped off,” Wolf said.

So far, the changes haven’t seemed to faze consumers. Although rising food costs, record oil prices and falling home values have hit Americans hard, they still spend an estimated half their food budget at restaurants because of convenience and time pressures.

“Even though cash is tight, consumers are pretty reticent to back off on their restaurant habit,” the National Restaurant Association’s Riehle said.

For some, swapping food items simply isn’t an option.

Jack Johnson, owner of a barbecue restaurant in Springfield, Ill., said pork prices have shot up by a third in the last year but that he can’t replace pork because it’s his most popular item. As a result, a pulled-pork sandwich that cost $4.95 last year costs $5.45 today.

Still, given that other restaurants are facing even more cost pressure for eggs, cheese and bread, Jackson considers himself lucky.

“At least I’m not in the pizza business,” he said.