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Restaurateurs Remain Positive Despite Rising Food Costs

By Tiffany Rider - Senior Writer

November 20, 2012 - As with many retailers, the holiday season is an important time for restaurants, especially those that offer space for holiday parties or catering for private events. Several restaurateurs are saying their overall business is up this year over last year, despite rising food costs.

Wholesale food prices were up at their highest in more than 30 years in 2011, according to the National Restaurant Association. While this year’s food prices saw relatively tepid increases, industry sales are still projected to reach a record high of $632 billion for 2012.

Dave Ursini, owner of Naples Rib Company at 5800 E. 2nd St., recently
opened a daytime take out window where individuals can purchase lunch
entrees, salads, sandwiches and pastas, as well as party packs and buckets
for an office lunch or group get together. According to Ursini, his
business is trending upward, though rising food costs are going to have
an impact. Ursini’s preference to address the issue, he said, is to
maintain current portions with a minimal cost increase, as opposed to
cutting portions. “I’d rather do that than cut portions,” he said. “At
least my customers have said that. A lot of people have cut back on
portions. The customers are smart and they realize they’re not getting
what they used to get."
(Photograph by the Business Journal’s Thomas McConville)

Parkers’ Lighthouse, located at Shoreline Village in Long Beach, is seeing that forecasted upward trend reflected on its balance sheet. Sales are up this year compared to last year, according to Assistant General Manager Stacy Lee.

“Every year our sales department does an excellent job of booking holiday functions for December, corporate parties as well as private parties from groups ranging from 10 to 150,” she said. “We have several areas in the restaurant that we can accommodate groups, so we have a lot of flexibility.”

Those areas include the Lantern Room on the first floor, which can accommodate about 60 guests; a space on the second floor, which holds about 50 people; and the Queensview Steakhouse, which can hold about 100 people seated and approximately 125 for cocktails and appetizers. The restaurant has been prepping for its Thanksgiving prix fixe menu as well as the December holiday season, she said.

“Our restaurant is decorated for the holidays since we have a lot of holiday functions,” Lee said. “We like to get festive in the restaurant. Every year we host our Santa’s Breakfast in conjunction with Long Beach Memorial and Miller Children’s Hospital.”

Another Long Beach restaurant getting festive for the holidays is Tantalum, located at 6272 E. Pacific Coast Hwy. in the Marina Pacifica shopping center. “As soon as Thanksgiving is over, we will decorate for the holidays with white lights and classy décor, said General Manager Kristen Schwarze.

The restaurant has live entertainment six nights a week, and a live disc jockey set for after entertainment on Friday and Saturday nights. “We always have stuff going on,” Schwarze said. “We have a huge New Year’s Eve party. Our theme this year will be masquerade ball. Our staff will be dressed up. We will host a bigger band [and] move our stage to the middle of the restaurant.”

Tantalum does some holiday catering, but its primary business is in-house. Last year was the restaurant’s busiest holiday season for some time, Schwarze said. “Just from how we’ve been doing this year and the reservations I already have for large parties – we do have three private rooms – I expect it to be at least the same,” she said. “As of right now, it looks like it will be a bit busier than last year.”

Each of the private rooms can hold up to about 35 people for seated dining, she said, and about 50 for cocktails. Tantalum can also open up two rooms to accommodate up to 70 guests for a larger party.

“My staff, my event coordinator, my management have all been in this restaurant for at least five years or longer. We are really confident and know what we’re doing,” Schwarze said. “We are expecting it to be busy and a lot of fun.”

Smaller restaurants are focused on catering or small parties. Kafe Neo, located on 4th Street at Termino Avenue, can host parties of 10 to 15 people, according to co-owner Gus Sverkos. “I think it will be a busy season since business has been improving overall for us,” he said in an e-mail. Sverkos expects calls to come in for catering and parties after Thanksgiving.

During the holidays, Kafe Neo is adding more specials including authentic Greek garlic potato spread called skordalia with beets; gemista, which are tomatoes and peppers stuffed with wild rice; and pasticcio, which is Greek lasagna. “We are updating our menu as we speak,” he said. “We will be releasing the new Menu after Thanksgiving. A lot of the same items but along with specials that were very popular and we decided to add them to the menu. We are also going to more organic and hormone free certified products.”

HCVT - Certified Public Accountants

Ali Kobeissi, owner of Open Sesame in Belmont Shore, said he would be happy if his business meets the numbers he had last year. However, the problem he sees happening now with his restaurant and others on 2nd Street is the lack of balance between restaurants and retail along the business corridor.

“Business overall has been slow for everybody,” Kobeissi said. “Relatively speaking, we are still the busiest. Numbers are slightly lower than last year, and that is expected because of the competition and other things. I’ve noticed lots of restaurants on the street are hurting. I would say more than 60 to 70 percent of the restaurants on the street are hurting. If my business dropped a little bit, everybody is really hurting.”

What has kept Open Sesame “solid,” he said, is the loyal customer base. But he goes back to the lack of high-end retail in Belmont Shore as the reason discretionary dollars are being spent elsewhere. “Most of our local dollars go to South Orange County when it comes to high-end shopping,” he said. “That’s why I opened Sway, so we can keep the local dollar local.” Sway is his international shoe and accessory store on 2nd Street, opened in 2009.

“On the other hand, we are still receiving lots of reservations for catering and holiday parties and stuff,” he said. “We will be adding breakfast soon. Also we are starting delivery, hopefully set up in two or three weeks. We are also adding new fish items on the menu, and we are entertaining the idea of doing some happy hour as well. You have to be creative these days.”

Buono’s Pizzeria owner Frank Buono said his customers have been calling to make their holiday catering plans earlier this year than last year. “[Overall business] seems to be a little better than last year,” he said in an e-mail. “We have already booked several large parties.” This year business is up nearly 10 percent over 2011, he said, also expecting catering to be up by at least 10 percent as well.

This year Buono’s Pizzeria has created what Buono called “PizzaBianca,” his “holiday masterpiece.” The pie is made with the restaurant’s famous crust, topped with ricotta, provolone and mozzarella cheeses, sautéed spinach, sundried tomatoes, prosciutto ham and fresh grated Parmesan cheese. Buono’s Pizzeria maintains its flagship location in San Pedro at 1432 S. Gaffey St. and has two locations in Long Beach – one at 250 W. Ocean Blvd. in the downtown area, and another at 401 W. Willow St.

Business has also been trending upward at Naples Rib Company at 5800 E. 2nd St. According to co-owner Dave Ursini, sales are up by a few percentage points and catering bookings are coming in earlier than expected. In addition to its large catering business – half of the restaurant’s food is eaten outside of the location – Naples Rib has a banquet room that seats approximately 55 people for either daytime or nighttime private events. The space is part of the regular dining area for the weekend crowds, Ursini said.

The newest addition to Naples Rib is a take-out window outside the restaurant. “You can ring a bell and order lunch,” according to Ursini. “Our old take out was focused on larger orders. Now we’re doing individual meals starting at 10 a.m. daily, to-go only. We don’t open for dine-in lunch during the week.”

While business is doing well, the big focus in the restaurant industry is costs have gone up significantly on food, Ursini said. Naples Rib has felt the pressure to keep prices down, so the company has been working on a lower margin, as many restaurants have been doing as the economy slowly recovers.

“Because about one-third of sales in a restaurant go to food and beverage purchases, food prices are a crucial component for operators,” Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA, said in a statement. “Last Year, we saw wholesale food prices post their strongest annual increase in more than three decades. In 2012, we will see continued increases in the cost of some commodities, while price pressures will ease for others.”

Sooner or later, price increases have to happen because the businesses aren’t going to be able to absorb the food costs much longer, Ursini said. “I think the public is going to have to understand,” he said. “Smaller businesses like me hold back as much as we can until we can’t absorb it anymore. . . . I’d rather do that than cut portions. At least my customers have said that. A lot of people have cut back on portions, [but] consumers are smart and they realize they’re not getting what they used to get.”