3 years after pandemic closures, are restaurants back to business as usual?

It’s been more than three years since the Ohio Department of Health ordered bars and restaurants to close their doors to in-person dining as the COVID-19 pandemic ravaged the state. Since then, restaurant owners and workers have had to contend with rising food costs, supply chain issues, inflated third-party delivery fees and staff shortages. And while things seem like they’re relatively back to normal, some of the lingering effects of the pandemic remain.

I recently spoke with three local restaurant owners – as well as a University of Cincinnati economist who specializes in the restaurant industry and the president of the Ohio Restaurant Association – to get a sense of how the Greater Cincinnati's restaurant industry is holding up. 

At the Table: Never miss a bite. Sign up for Keith's weekly newsletter

Are menu prices still going up?

In many cases, yes. Restaurant menu prices increased 8.4% between February 2022 and February 2023, according to the U.S. Bureau of Labor Statistics. The bureau also found that menu price growth is running near four-decade highs. 

Anthony Sitek, along with his wife, Haley Nutter-Sitek, owns Crown Restaurant Group, which oversees five Cincinnati restaurants, including Losanti, Crown Cantina and Rosie's Italian. He said they've had to raise menu prices around 10% total during the past three years to make up for increased food and labor costs. According to Sitek, a filet at Losanti has gone up a dollar in the past three years, a ribeye by 75 cents. 

The main issue with food costs is how unpredictable they are, said Sitek. “The one that is driving me nuts right now is produce,” he said. “Iceberg lettuce went from $25 a case to $125 a case over the last two months. One week it’s cheap, the next week it’s not." He said the prices of items such as asparagus and potatoes have also fluctuated wildly in recent months, the latter going from $25 per case up to $90 per case.

Are supply chain issues still a big problem?

Though the situation is not as bad as it was a year ago, supply chain issues continue to affect restaurants three years after the pandemic started, said Sitek. And restaurants have a much harder time dealing with them than many other industries do.

"(Restaurants) are very vulnerable to supply chain issues and spikes in prices of eggs or spikes in the price of beef," according to Michael Jones, an economist with the University of Cincinnati. "Their margins are low. They don’t have the same kinds of margins as other industries do. It’s harder for them to change prices.”

Sitek did say commodities such as cooking oil and ketchup have leveled off, as have the prices of paper products, including takeout containers. 

Are locally owned restaurants at a disadvantage compared to chains?

The volatility makes restaurant owners hesitant to raise menu prices. But many are wary of doing so since customers at independent restaurants always seem to notice more than they do at the chains.

Larger restaurant groups and chains also have an advantage when it comes to navigating prices, says Barker. “Chains have sophisticated pricing and models and are continually tweaking menus more than mom and pops, who might be more reticent to do that because they know the customers coming in. For them, taking up a price increase on the menu might mean a guest comes in and asks, ‘What gives?’ It is really hard.” 

Are restaurant menu price increases as bad as the ones at grocery stores?

While food price increases at restaurants aren’t as bad as the price increases at grocery stores in recent years, they might be starting to catch up. A February report from the Bureau of Labor Statistics found that food service prices increased 0.6% from the previous month while grocery store prices went up just 0.3% in the same period. 

Why are menu prices going up? 

It’s a combination of rising labor costs and rising food costs, said John Barker, president and CEO of the Ohio Restaurant Association. Labor costs have gone up nearly 30% since the pandemic started, according to Barker. And while that’s good for workers, who are earning higher paychecks and more benefits than they were prior to the pandemic, it's a challenge for some owners, especially the owners of smaller restaurants, who are trying to keep wages and benefits appealing in a very competitive market.

Barker says part of the reason for higher food costs during the past few years was the rising costs of fuel (especially the diesel used for delivery trucks) and energy in general. "Energy costs are higher," he said. "Everything from fertilizer to delivery."

“Food and labor costs are the two most significant line items for a restaurant, each accounting for approximately 33 cents of every dollar in sales," according to a report by the National Restaurant Association. “Other expenses – such as utilities, occupancy, supplies, general/administrative and repairs/maintenance – combine to represent about 29% of sales. ... This leaves a pretax profit margin of roughly 5% for a typical restaurant, which means significant cost increases are not sustainable for most restaurants.” 

Are staffing levels back to normal? 

Here is where we are starting to see some good news.

Based on conversations with three well-known Cincinnati restaurant owners, all of them said their staffing levels were either at or near normal, with a few caveats. While Sitek is fully staffed, finding employees with the right amount of experience is still a challenge. Sitek has also seen an increase in candidates coming back into the restaurant industry after some time off or people coming in from other restaurants looking for a better working experience. 

Joe Lanni, co-founder of the Thunderdome Restaurant Group, which owns restaurants such as Pepp & Dolores and The Eagle, said his restaurants are nearly all staffed, while Maria Papakirk, who owns Camp Washington Chili, said she is still looking for a few more employees to fill positions. The good thing, Papakirk said, is that she’s been able to hold on to longtime employees, 75% of whom have worked for her for a decade or more. 

But staffing is still problematic for many restaurants, according to Jones. “There are close to two vacancies for every unemployed worker out there," he said. "So restaurants are having a hard time filling those roles."

But at least restaurant owners can get people in the door to interview, according to Sitek and Papakirk. Of the job candidates Sitek and his team are interviewing these days, about 50% have never worked in the industry before, 25% are returning to the restaurant industry after working in other fields for a while and 25% come from other restaurants. 

Still, the competition for employees is fierce, and it’s harder to attract new employees, especially those coming from larger chains, Sitek said. “A cook came in from Longhorn Steakhouse who was making $25 an hour,” he said. That cook wanted $28 from Sitek, which he simply couldn’t do. “We are not Longhorn Steakhouse,” he said. “We are doing 200 covers a day, not 1,000.”

Are customers coming back? 

Walk down the street in Over-the-Rhine on any given night and it would seem the answer is a definitive yes. Still, one possible threat that might be looming right around the corner is inflation, Jones said. “We are already starting to see slowdowns in consumer spending,” he said, adding that a lot of people had additional income in 2021 and 2022, “but we are already starting to see signs of that slowing down. I think you will see weakening on the demand side.” Only time will tell on this one.

So, is it OK to order from third-party delivery services like Uber Eats and DoorDash now?

During the middle of the pandemic, many restaurants urged customers to pick up their food in person instead of using third-party delivery services because the fees those services were charging the restaurants were exorbitantly high. So high, in fact, that Cincinnati City Council approved a maximum limit they could charge.

These days, Barker said most restaurants have either accepted or rejected third-party delivery, depending on how much they rely on it and how built-in it is to their business plans. Some have negotiated fees with services that they can live with. But either way, Barker said, "food delivery is here to stay." 

What's next? What does the future hold?

It’s a question that has many answers. Some restaurants are limiting the days and/or hours they’re open to save money on payroll or they’re closing earlier just to give their employees a better quality of life and remain attractive to prospective employees.

Some, like chef Mitchell Arens, are taking up residencies in bars or breweries to cut down on rent. Arens himself operates Grub Local out of The Well, a bar in Covington, and Beards & Bellies BBQ out of Wooden Cask Brewing Co., in Newport.

“The restaurant industry has always been a very dynamic one,” Jones said. “And that has continued to be the case.” 

Restaurants continue to change their menus, doing away with less popular items more quickly than before the pandemic. In all cases, they are continuing to exhibit the nimbleness and ability to pivot that proved so crucial at the height of the pandemic.