Fast Food

What is the future of the restaurant industry?

This is the first in a three-part series exploring how economic issues are affecting various sectors of the regional food industry.

HILLSDALE — Anthony DiCaria had cracked open the doors of Cook and Larder, his Hillsdale cafe, in June to let out the construction dust when customers started lining up. 

“There I was, in dirty clothes, paintbrush in hand, and people were coming in, asking if I was serving coffee,” he said. “The community has been nothing but supportive from day one.”

Even with that community support, restaurants are struggling.

In its 2022 State of the Restaurant Industry report, the National Restaurant Association found that the supply delays or shortages of 2021 have continued in 2022. Average wholesale food prices are up 11 percent from this time last year. And more diners are staying home to save money, which translates to average monthly restaurant sales of $1 billion less than during the second quarter of 2022.

For Melanie Hunt, who employs 50 people between her two restaurants, Blueberry Hill Market Cafe in New Lebanon and Norte Azul Cantina in Stephentown, the two rounds of government assistance through the Paycheck Protection Program in 2020 and 2021 were a “godsend.” But each round covered only six to eight weeks of payroll, not food costs or operating expenses. And when the federal aid was gone, Hunt was back to square one.

“Our sales went down to 40 percent during the first year of COVID. They’re up now, but not near where we were before the pandemic,” Hunt said. This has meant covering the losses of the past two years with savings from her business and personal savings.

Less staff, more DIY

The varied challenges facing restaurants include staffing shortages. Hunt hasn’t been able to find a sous chef, so she can be found working the line every day. She also rolled up her sleeves to do the construction work, alongside her brother, when she tripled the size of the formerly diminutive Norte Azul last year.

DiCaria, whose house-made grab-and-go concept means he can operate with a much smaller staff than a full-service restaurant, has found himself in a similar situation. 

“I’m very fortunate to have great help in the kitchen, but do I need more help? Yeah, absolutely,” he said. 

For now, he mitigates the shortage by working as a barista and cashier. Because of the labor shortage, he has limited the restaurant’s operating hours to Thursday through Sunday.

Blueberry Hill Market Cafe in New Lebanon

Blueberry Hill Market Cafe in New Lebanon

Melanie Hunt

Cook and Larder in Hillsdale

Cook and Larder in Hillsdale

Anthony DeCaria

Blueberry Hill Market Cafe in New Lebanon (left) and Cook and Larder in Hillsdale. (Credit: Melanie Hunt / Anthony DeCaria)

Amy Lawton, owner of Zinnia’s Dinette in Craryville, has eliminated the need for dedicated servers by using a model in which customers order at the counter and pick up their food when it’s ready. She also keeps limited hours, Friday through Monday. 

“When I have one or two more people that are closer to full-time, I would love to open the other days,” she said. “But realistically right now, I’d rather do a good job on four days than a terrible job all the days.”

Reduced hours, a limited menu, and a dose of DIY have also been key to surfing the waves of the pandemic for Youko Yamamoto, owner of Tanma Ramen in Kingston. Yamamoto, whose restaurant operates on a reservations-only, four-days-per-week model, keeps a tight rein on the use of gas, electricity and paper in her restaurant. She also does a lot of her own dishwashing.

Supply chain disruptions

Because most restaurants develop recipes with certain products or product types in mind — for example, fire-roasted tomatoes — a sudden change in the availability of particular ingredients can cause menu outages or inconsistency in the quality of a dish, both of which can lead to dissatisfied customers and even the dreaded bad Yelp review.

Overall. product availability has improved in 2022, but continued supply-chain disruptions mean most restaurant managers are spending several hours a week hunting for the lowest-cost ingredients from a network of local and national distributors.

“It’s more flexibility than has been (previously) demanded of the restaurant industry, which already demanded a lot of flexibility,” Hunt said.

Ingredient shortages at the national level might seem to benefit Hudson Valley farms and encourage the use of more local products in restaurants. But the growing season in New York only runs from late May through October, and most regional farms aren’t equipped to handle the volume needed to supply a large or busy eatery.

Hunt estimates a third of what she currently uses in her restaurants is sourced from the Hudson Valley, including all of her greens — from SAF Produce Co. in Berlin — to eggs from Feather Ridge Farm in Elizaville.

She’d like to purchase more regional products, but said, “If I’m going through 400 pounds of brisket on a weekly basis, who’s going to provide that for me locally? Do I buy local when heirloom tomatoes are in season? Yes. I buy all I can get when I can get it, but this is upstate New York. Our growing season is short.”

While raising menu prices might seem like an obvious solution, the perception of value — what customers believe is a fair cost for what they’re served — keeps many Hudson Valley restaurants from charging more.

Courtney Malsatzki, director of operations at Phoenicia Diner, said “it’s very important to us to be affordable to people from all walks of life. So although our costs have risen a lot, we’ve only made some increases that were necessary, and probably not as much as we should have.”

Tanma Ramen in Kingston

Tanma Ramen in Kingston

Provided by Youko Yamamoto

Tanma Ramen in Kingston

Tanma Ramen in Kingston

Provided by Youko Yamamoto

Youko Yamamoto, proprietor of Tanma Ramen in Kingston, has raised prices $3 per bowl and has taken on duties like dishwashing in an attempt to make ends meet. (Credit: Provided by Youko Yamamoto)

At Tanma Ramen, which serves “medicinal-level” vegan and meat-based noodle bowls made with organic ingredients like cabbage, ginger, pork back and duck feet, Yamamoto has boldly gone where few restaurateurs have dared to go this year: she raised her prices by $3 per bowl.

“I hope this will hold us for a while,” she said. “I don’t need a crowd. I just need people who understand and can appreciate what we’re doing.”

Creative extras to attract business

In an attempt to attract new and returning customers, many eateries, like Lawton’s and Hunt’s, host live music on weekends or special events like flower-arranging workshops. Others are increasingly offering catering services for weddings, small parties, corporate functions and local fundraisers to cover the shortfall in foot traffic.

Phoenicia Diner made a concerted push to expand its catering options this year. “There’s a lot of film shoots in the area, so we started delivering those,” Maslatzki said. The restaurant has also hosted private and community events in its outdoor area, such as a pig roast and “meet the farmer” dinners, a collaboration with Cornell Cooperative Extension.

Malsatzki said Phoenicia Diner “got lucky” when it released a cookbook just before the pandemic hit. “Those book sales really helped us in the first couple of months when nobody knew what was going on,” she said.

It also gave Malsatzki and her staff insight into the value of branded merchandise. They’ve since developed a range of items like a pancake mix, coffee mugs, T-shirts and sweatshirts, baseball hats, stickers, and key chains. “We try to have all kinds of fun things that people can kind of take with them to remember their time in the Catskills,” she said.

Winter is coming

For all their “make it work” ingenuity, many Hudson Valley restaurateurs are worried about what’s to come this winter, from new COVID variants that could cause customer apprehension and employees to call out sick to the cost of heating oil, which has more than doubled in price since last year. And without further government stimulus, there’s no longer a financial buoy to keep these businesses afloat.

“My hat’s off to anyone in the restaurant industry these days, no matter how successful or unsuccessful people think they are,” Hunt said. “If they’re still in it, they’re successful.”

Hunt and many of her colleagues have quietly wondered if the restaurant industry as we know it is over, or at least approaching an era of reinvention. So far, she says, the questions far outnumber the answers, and the only solution for overburdened restaurant staff is to roll with the tide.

“I wouldn’t give (up) the first year,” she said. “I was like, ‘I don’t care if I end up with nothing at the end of this.’ I’ll never give in.”

Even destination restaurants like Phoenicia Diner have struggled with industry disruptions. Merchandise and cookbook sales have helped the popular diner stay profitable, though its director of operations says it probably has not raised costs “as much as we should have.”

Even destination restaurants like Phoenicia Diner have struggled with industry disruptions. Merchandise and cookbook sales have helped the popular diner stay profitable, though its director of operations says it probably has not raised costs “as much as we should have.”

Courtney Malsatzki

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