Hard Times Café? High Prices Squeeze Restaurants

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CHESAPEAKE, Va. -- Food prices in the U.S. are expected to increase across the board, putting a pinch on businesses and consumers.

Some people have already had to tighten their budgets.

Tori Jones of Chesapeake, Va., told CBN News her family's grocery bill has shot up from $300 a month to $500 a month.

"It's been hard, it's been really hard," she said. "We just try to cut back."
 
For single mother Alex Urruita, feeding her family is even harder since losing her job a year ago. 
 
"I get less groceries for the amount that I spend," she told CBN News.

"I leave spending easily $50 on just a few items to get dinner for tonight and the next night," she explained.
 
According to the U.S. Department of Agriculture, U.S. consumers are expected to pay 4 to 5 percent more at the grocery store. Restaurant prices are set to rise 3 to 4 percent.

Restaurants Feel Strain

In September, consumers paid about two and half percent more to eat out than last year.

"It seems like the amount of the meal is cut back some so sometimes if you don't see the prices increase, then it's the amount that sometimes that is smaller portions," Chesapeake resident Jimmy Berry commented.

Urruita agreed, saying eating out is not as cheap as it used to be.

"Even fast food restaurants have kind of gone up," she said. "You go through a drive-through and get a combo meal, it's around $7 for that."

"Really, the restaurant industry has been caught between a rock and a hard place," said David Maloni, principal and chief commodity analyst for the American Restaurant Association.

"They have measured customers who are strapped and you have commodity costs, their major import costs rising for them, so it's certainly hard," he added.

Higher food prices at home often translate into higher prices for eating out. The situation is forcing a lot of restaurant owners to come up with some pretty creative ways to get customers in the door.
 
Jeff Brown, owner and operator of Cotton Southern Bistro in Chesapeake, told CBN News that food prices have soared in just about every category.

"Sugar, high. Flour for pasta, high - just flour in general that you use, just your basic core ingredients, potatoes," he explained.

Affordable and Nutritious
 
Brown points to those costs plus high unemployment and rising fuel prices as reasons why restaurants must change the way they do business, especially when it comes to marketing strategies.
 
"The people going out spending $40 to $50 a plate of food is very narrow to people that are going out looking for $10, $15 entrees," Brown said. "People are looking for ways to eat, stay on budget."

To cope with rising food prices, a growing number of restaurants have been forced to raise their prices. 

But Brown is on a mission to make eating out affordable and nutritious. 

"What we do is we work harder to use a fresh product and that way it lowers our costs of goods, and we try to pass it on to our customers," he explained.

For example, Brown said he buys a fresh box of collards for $10 a bushel whereas if he buys them already cooked, they cost $35.

Purchasing them fresh allows Brown to pass savings on to cash-strapped consumers.

"We do $5.99 blue plate specials for lunch; offer them a nice home-cooked meal with two sides," he said. "That's something cheaper than going to fast food, which is a lot of processed foods."

"We do kids-eat-free on Tuesday nights, which offers us a way to partner with parents," he added. "It's expensive to feed two or three kids. It's expensive."

Bringing It Home

Still, for many budget and health-conscious consumers, eating at home works best.

Prior to losing her job, Urruita said she wasn't very skilled in the kitchen. Today she enjoys preparing home-cooked meals, a practice that's helping her family to eat better while saving money at the same time.

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Charlene  Aaron

Charlene Aaron

CBN News Reporter

Charlene Aaron serves as a general assignment reporter and helps anchor for the CBN News Channel.  Follow her on Twitter @CharNews and "like" her at Facebook.com/CharleneIsraelCBNNews.