Local restaurants affected by economy


Eating out is big business -- worth over $500 billion a year. However, restaurants and their profits are being squeezed as food costs rise sharply.

Eating out may be less filling and more expensive.

If you think your food prices are skyrocketing, consider that a national restaurant chain can go through over one million eggs in a single week. It's been reported that the parent company of Bakers Square saw its egg prices go up $9 million in the past two years.

Small and medium sized restaurants such as San Jose based Sonoma chicken, are getting hit by fuel surcharges on deliveries, on top of sharply higher prices.

"Our vegetable oils went up 200 percent in the last six months, our vegetable shortening. Our flour's gone up about 120 percent. Our rice prices went up over 200 percent," said Sonoma Chicken Restaurant owner Jeff Starbeck.

Restaurants are also watching the size of portions. The scale is their friend.

Chicken breasts are cut to weigh precisely three ounces. Salmon filets are delivered pre-packaged in uniform sizes.

Cutting an ounce out of an order of fries or hash browns is saving one chain a half-million dollars.

"What it's forced us to do is order less more often. We've cut our inventories down. We're working on a smaller margin. We've really crunched the numbers as far as labor costs, cutting the corners where we can where we're not jeopardizing our quality and our price," said Starbeck.

That's helping Starbeck's restaurant from raising prices. But some consumers have seen price increases, and are staying away.

"You go to a restaurant and two of you will spend at least $20-$30, and $20, $30 will give you a couple, three days worth of food at least," said San Jose resident Martin Greene.

And the real winners might be fast food.

"Their real market is going to be people that want to eat out once in a while but can't afford to go to restaurants any more. And people who want to get a lot of food for their money. They're going to be going back to fast food," said Golden Gate University consumer psychologist Kit Yarrow, Ph.D.

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