SF restaurants face product shortages and skyrocketing costs

‘The supply chain crisis has impacted us in almost every way imaginable’

Imagine sitting down for dinner at a restaurant and being told you’ll need to eat your soup with a fork, drink your wine out of a water glass or pay a couple extra bucks for your favorite burger.

What might seem like a one-off gaffe to some guests is actually indicative of an unsettling reality for many San Francisco restaurant owners. Those that survived the grueling pandemic are now grappling with an upended supply chain, leading to product shortages and skyrocketing costs.

“The supply chain crisis has impacted us in almost every way imaginable,” said David Nayfeld, chef and co-owner of two restaurants in The City. “The only way to respond is to adjust your expectations and the expectations of guests.”

The world largely ground to a halt for over a year, and with it so did the traditional patterns of the global supply-demand curve, which depends heavily on moving goods across the world.

What’s followed in recent months has been a relatively expeditious recovery that’s outpaced the broader supply chain’s ability to bounce back. Coupled with difficulties hiring and retaining workers, entire industries are stuck waiting for basic necessities in order to survive and paying a premium while they do.

San Franciscos restaurants are no exception.

Owners told The Examiner that it’s become nearly impossible to restock cutlery, glassware and other dinnerware, items that restaurants churn through quickly as a result of basic wear and tear. They said things that used to take no more than eight weeks to arrive now could take as long as five months.

More substantial projects like redesigning an interior space or building out a parklet with permanent infrastructure are all but impossible on any predictable timeline, too. In some cases, that means merchants are stuck paying for the overhead costs associated with a space but are unable to operate it at full capacity, if at all.

According to the National Restaurant Association, wholesale food prices are “trending sharply higher” nationwide by as much as two percent every month. Even agriculture-rich California isn’t safe from the ballooning costs.

Most restaurants import at least some of their product, and even those who work exclusively with small, local distributors are facing increased price tags due to the rising costs of labor, said Nayfeld. He regularly imports olive oils and cheeses from Italy to serve at his restaurant, Che Fico Alimentari, but those products are held up for weeks with shipping delays.

Tony Marcell, who owns LUNA on Valencia Street and Wayfare Tavern in the Financial District, said the cost of animal proteins has risen significantly, enough to affect his bottom line.

“It’s like nothing I’ve ever experienced,” said Marcell, who has operated restaurants in The City for nearly 22 years. “The waves of the pandemic have each brought on new challenges, and each one is uniquely different but extremely trying nonetheless.”

Line cook Vicente Martinez chops parsley at LUNA on Friday, Oct. 15, 2021. The cost for fresh produce and animal proteins has risen significantly. (Kevin N. Hume/The Examiner)

Line cook Vicente Martinez chops parsley at LUNA on Friday, Oct. 15, 2021. The cost for fresh produce and animal proteins has risen significantly. (Kevin N. Hume/The Examiner)

Collectively, these disruptions threaten to upend the restaurant industry’s ability to recover from the pandemic.

With such uncertainty, businessese can’t plan ahead for special events around the holiday season — typically a surefire way to bring in much-needed revenue — for fear items won’t arrive, and they’re unable to capitalize on burgeoning customer demand without the infrastructure in place to support the influx.

“We are in a really difficult situation,” said Laurie Thomas, Executive Director of the Golden Gate Restaurant Association and owner of two restaurants in Cow Hollow. “People see restaurants that are full that are lucky to be in neighborhoods, mine are a part of that, but we are still making up for being closed for seven to nine months last year.”

Those unfamiliar with the restaurant business might struggle to understand why these sorts of delays and supply chain cost increases matter. But for owners who already operate on razor-thin margins and barely pulled through the worst of the pandemic, this could be the kiss of death.

To survive, they must strike a delicate balance between how much of the rising costs they’re willing to pass along to the customer and how much they can tighten their own belt without jeopardizing the quality and experience of their establishments.

“Prices have all had to be raised due to the rising cost of food and labor,” said Nayfeld. “They still haven’t been raised enough to overcome the challenges, but we are doing our best to thread the needle.”

Thomas said customers might start to see shrinking portion sizes alongside rising price tags on menu items. Marcell said his restaurants are still running at reduced operating hours, and Nayfeld hasn’t re-opened the larger of his two spaces because of supply chain and labor issues.

Many restaurant owners say the only way out is with more help from local, state and federal governments. They’re calling on Washington D.C. to step in where it can, namely by renewing the Restaurant Revitalization Fund to give another financial boost to restaurants which would allow them to keep more people employed and stimulate local economic spending for the many months of recovery to come.

“We are a long way from normal operating business,” Thomas said.

cgraf@sfexaminer.com

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