Hanover restaurants grapple with rising costs due to inflation

Business owners feel the effects of inflation differently depending on the products they sell.

by Ben Korkowski | 28 minutes ago

Main Street businesses have been hurt by inflation and the resulting price hikes.

On February 10, the United States Department of Labor reported an inflation rate of 7.5% on an annual basis, a figure that was significantly out of step with the Federal Reserve’s 2% target rate and the highest since 1982. Businesses in Hannover have been affected by the rising operating costs, and business owners are taking various measures to adjust to price increases.

According to economics professor James Feyrer, inflation is “anything that raises prices” and is measured using increases in the consumer price index.

“With inflation at 6% over the past year, the typical consumer now goes out and buys the same things they bought a year ago, while spending about 6% more, in dollars,” said Feyer.

According to Feyrer, federal support programs in response to the COVID-19 pandemic — which have prompted people to spend more money on goods rather than travel, restaurants and other services — are among the reasons the economy is currently experiencing high inflation. In addition, he said the Federal Reserve’s low interest rates had put strong upward pressure on the economy, leading to shortages leading to higher prices.

For restaurants located in the Upper Valley, many of which were already affected by labor shortages, the effects of inflation were felt in the prices of food ingredients. Anthony Barnett, owner of Dunks Sports Grill, Jesse’s Steakhouse, Molly’s Restaurant and Bar and Snax, said he has seen food prices rise “across the board”. He said chicken wings were almost twice as expensive as they were before the pandemic, and at one point beef prices were up about 30%. He added that every day he receives communications from suppliers about rising costs.

“Just this morning I got an email from our coffee vendor saying the prices were going up,” Barnett said.

Still North Books & Bar owner Allie Levy ’11 said she found herself in a unique position running both a traditional bookstore and a cafe. She explained that on the book side, there hasn’t been much inflation due to the publishing industry planning titles and budgets months in advance.

“It’s sometimes very difficult for publishers to change the price once it’s been announced,” Levy said.

However, Levy said the coffee side of Still North’s operations has seen rising prices: the costs of many perishable and non-perishable products, such as coffee mugs, lids and napkins, have gone up.

Barnett explained that when adjusting restaurant menu prices, he makes decisions based on actual ingredient costs, customer impact and business reputation. For example, for chicken wings, Barnett said for every dollar of wings currently sold, 65 cents is needed to purchase the meat itself, whereas typically food is targeted to be priced with a ratio of about 30 to 33 cents.

“We should be charging a lot more, but we don’t want guests to have sticker shock,” Barnett said.

Barnett said he only increased prices for Jesse’s Steakhouse and Molly’s among the four restaurants he owns, adding that he tries not to increase menu items by more than $1 or $2 per change menu.

Both Levy and Barnett said keeping prices fixed can be a point of attraction for their businesses. Levy said she hasn’t raised prices yet and is trying to avoid doing so. Barnett noted that price maintenance could attract consumer demand from competing companies.

“If we don’t raise prices and our competitors do, then all of a sudden the $9 burger at Dunks looks really appealing when Murphy’s, Pine and Molly’s are all charging $15,” he said. he declares.

The Federal Reserve is beginning to take steps to reduce inflation over the medium to long term, according to Feyrer. He added that in the short term he thinks the Federal Reserve will start raise interest rates — it signaled it would in March — and halt its asset purchase programs.

“The Fed has the tools to bring inflation down and seems willing to use them,” Feyrer said. “It’s just a question of how long it will take.”

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