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We said food was going up.

Price hikes biting retailers
Owners trying to contain costs
By Tucker Shaw Denver Post Dining Critic
Article Last Updated: 07/24/2007 09:22:28 PM MDT
http://www.denverpost.com/lifestyles/ci_6445086

"How far ahead do I plan?" jokes Jim Pittenger. "Dude, what day is this?"

Pittenger, proprietor of Biker Jim's Freakishly Small Concession Stand in
Skyline Park, doesn't have much time for long-term forecasting.

"I have the tools and know-how to plan more, but there's always something
else going on."

Pittenger serves 200-plus customers a day at the Concession Stand and his
original Biker Jim's Gourmet Dog cart downtown.

But in a food economy reeling from major price increases (just check your
last grocery bill for evidence), Pittenger and other Denver-area
restaurateurs are worrying more than ever about the bottom line.

Uncertainty is nothing new in the volatile food service business, where
ingredient pricing can change by the hour and the number of customers and
how much they'll spend is all but impossible to predict.

But this year is different. As fuel costs and other pressures send overhead
costs skyward, even industry vets who have weathered economic storms in the
past are worried.

"Inflation is insane right now," says Jesse Morreale, co-owner of the
popular East Colfax eatery Mezcal and the soon-to-open También in Cherry
Creek. "There was always a month or two out of the year where we would see
citrus costs go up, for example. We would plan for it. But now we are
seeing costs not going down."

Alex Seidel, chef-owner of Fruition, agrees: "When you see all your meat,
all your seafood, and all your produce going up, then you know it's a
trend."

The numbers don't lie: According to the latest report by the U.S.
Department of Agriculture, beef cost 5.8 percent more in May 2007 than it
did in May 2006. Milk, 7.5 percent more; citrus fruits, 19.2 percent; eggs,
29.6 percent. The increases are on track to be the highest since 1990.

"People are more educated about food these days," Seidel says. "But I don't
think they're aware of the ins and outs of why prices are high."

Many restaurateurs tie the upswing in prices to increased fuel costs.

"We have definitely seen prices go up in items that travel," says Jon
Nassif, owner of local chain Green Fine Salad Co.

While the price of many locally produced products has remained stable,
Fruition's Seidel says out-of-state products have steadily become more
expensive. "It's been gradual over the past year and a half. Last year's
gas crunch gave everyone sticker shock. That was the first time I ever saw
fuel surcharges on deliveries."

And the reach of high gas prices doesn't stop at the supply line, Morreale
says. It's cutting into patronage, too.

"As soon as people start to feel squeezed at the pump or in other areas,
one of the first things they'll give up is eating out," Morreale says. "And
the last thing we want is to have a regular turn into someone who only
comes in every few weeks."

Other pressures - such as increased federal scrutiny of imports including a
recent near-ban on Chinese seafood, still unresolved immigration issues,
and the recent minimum-wage hike - are affecting, or threatening to affect,
the industry's bottom line.

And what it means to run a small restaurant business is changing. "I have
to spend much more time today on cost control than 10 years ago," says Sven
Hedenas, chef at 14th Street Bar and Grill in Boulder. "I'm here to cook,
that's my job, but I spend more and more time on business now. It's
essential."

The last thing Hedenas or any other restaurateur wants to do is raise menu
prices, for fear of losing customers.

"We'll do everything possible internally before we change our prices or
portion sizes," says Nassif. "Raising prices is always our last-ditch
effort to offset costs. But the business is like Vegas. We're the house.
The house has to win, or we wouldn't be in business."

The house often has to do some nimble thinking to stay in the black. "The
halibut that cost $22 last year is going to be $26 this year," Seidel says.
"If we have a high-dollar item we have to be smart about what else we put
on the plate. And some things I just can't do, like artichokes. Last year
they were $36 a case, now they're $56."

Morreale absorbs price increases on other, higher-volume items on the menu.
"Rather than add 5 bucks to the entrée or combo prices, we looked at
margaritas and mojitos. If we increase those by a quarter, it can help
offset the costs of the other stuff. So we can leave the combos alone."

Amelia Mouton of Taco Nation in Fort Collins is also feeling the pinch. Her
outfit recently raised taco prices to $3 from $2. "It is hard to find a
balance. This is our first week with increased prices, and though the first
couple days were tough, I am not fearful of the future," she says.

Pittenger has so far avoided an increase, thanks to booming sales. "It
costs me 5 cents more per dog than last year, but I'm making up most of the
difference in volume," he says. Still, his $5 lunches may soon jump to
$5.25. "I do fear pricing myself out of the market, but I'm pretty
reasonable for what you get, even at a quarter more."

Some, like 14th Street's Hedenas, struggle to stay optimistic. "The next
couple of years is going to kill some businesses," he says. "We'll really
see what direction things are going in. I see things more streamlined, with
even more franchises."

But Hedenas will continue to compete. "I hope that there is a way to make a
profit and still cook old-fashioned, honest food. I just have to spend more
time on the business side."

But continued price increases seem inevitable to some.

"We don't have a $13 appetizer yet," Seidel muses. "But I'm sure one day we
will."

Dining critic Tucker Shaw can be reached at 303-954-1958 or at
dining@denverpost.com.