Power outages during Hurricane Beryl forced many restaurants to throw out refrigerated foods.
Other extreme weather events like the derecho in May and last year’s record-breaking temperatures have also negatively impacted the state’s food and beverage industry, Texas Restaurant Association Southeast Director Christina Garavaglia said.
According to a November 2023 study from global market research firm Ipsos, over two-thirds of respondents from 29 countries said food was the area most impacted by inflation.
“After [the pandemic], so much product became so much more expensive,” said Chef Steve Huag, owner of Magnolia Cajun Comfort in Pearland.
Huag, a chef for 30 years, opened Magnolia Cajun Comfort in 2020—the same year the pandemic started, which he said brought challenges for his industry.
Huag said his grocery bills today are “ridiculous” and he has had to raise menu prices and switch vendors to find the most competitive prices. as the cost of food staples has increased.
What's happening
A June 2024 report from the Texas Restaurant Association, or TRA, which counts 8,000 restaurant members across the state, showed that while operating costs and labor have somewhat stabilized, food cost spikes, and decreased traffic and sales continue to stress restaurants’ profit margins.
Garavaglia said it is “indisputable” that food costs have risen “significantly” in the past two years. However, the TRA saw a leveling off of costs in the first quarter of 2024, she said.
Despite this, several restaurants in Pearland, including Mingo’s Latin Kitchen, Fire Stone Pizza Bar and The Box Bakery Kitchen have closed since January.
In the TRA’s June report, around 44% of its members said both their traffic and sales have decreased since last year.
Restaurants as a result began focusing on value to try and bring those numbers up, Garavaglia said. She said she believes this lead to grocery costs outpacing the costs of purchasing a meal at a restaurant. Despite this, restaurants were still struggling.
“Folks were not necessarily making that big of a calculus by going and eating out. It was the more economical choice,” Garavaglia said.
In their own words
Two months ago, Huag said he started saving $200 a week on dairy by using a new vendor. Huag said before the pandemic he paid $35-$40 for a case of chicken but now pays nearly $100 per case. He said seafood has also gotten “extremely expensive.”
As operating costs increase, restaurants often end up passing the cost along to consumers, Huag said. As a result, he said he’s raised his menu prices three times since opening.
“At the same time, you can’t be crazy with your menu pricing either because people say, ‘Let’s not go there; they’re too expensive,’” Huag said.
Hometown Seafood General Manager Chris Loftis said restaurants facing higher prices should shop around but be mindful not to sacrifice on quality.
“What we don’t want to happen is to get something that’s cheaper and say, ‘Oh man, this is awesome,’ and then the quality is not great,” he said.
Zooming in
Huag and Loftis said they had to close their restaurants for several days due to Hurricane Beryl and toss refrigerated food when they lost power, which Loftis estimated cost Hometown Seafood more than $5,000 in food.
According to a TRA June report, 75% of Texas restaurant operators said they were impacted by extreme weather in the past six months.
The impact
Now that costs have leveled out, the TRA is seeing more restaurants offer value meals and promotions to attract diners seeking affordable meals, Garavaglia said.
Hometown Foods, for example, has offered more promotions, including happy hours, discounts and specials, Loftis said. He added that the goal is to make eating out more affordable to customers.
What's next?
Garavaglia said she’s still optimistic about the future of the restaurant industry because of future labor growth trend predictions. By 2030, Texas will need to fill 250,000 more jobs in the restaurant industry.
The TRA is offering grants for Texas restaurants affected by Hurricane Beryl and any natural disasters since then. So far, the organization has received 50 applications, Garavaglia said. The Southern Smoke Foundation, run by food and beverage workers, has also fielded thousands of applications for financial assistance from restaurant employees since Beryl.
McCade Moonshower, a server at Magnolia Cajun Comfort, said he was interested in learning more about the foundation’s grant as his paycheck was halved following Beryl’s impact.
