Milwaukee Restaurants Struggle with Menu Price Hikes

Local restaurants are confronting the problem of the rising costs of goods and raw materials, a devastating long-term impact that hasn't abated since the end of the pandemic.

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Eat/Drink

When the government shutdown ended on November 13, many businesses heaved a sigh of relief. Restaurants, however, did not. Any troubles triggered by the shutdown were largely intangible additions to hefty challenges restauranteurs have faced since 2019: Inflation, volatility in the cost of ingredients, reduced customer traffic and the rise of an eat-at-home culture.

“I think the way [the shutdown] did affect us was, it messes with people's psyche,” says Chef Greg Leon of Amilinda. “Whenever anything disrupts people's daily life, it affects people wanting to go out and eat.”

Mitchell Wakefield, co-owner of Tess, agrees on the limited impact. “We had one or two reservations that cancelled because they were expecting out of town guests, and their flights were cancelled or delayed. That's the only thing I'm aware of we experienced [from the shutdown].”

Rising Costs

A larger problem is the rising costs of goods and raw materials, a devastating long-term impact that hasn't abated since the end of the Covid pandemic. According to the U.S. Bureau of Labor Statistics, goods and labor costs for restaurants have gone up 35% over the last four years. The bureau estimated a 30% hike in menu prices would be needed to maintain the typical restaurant's already slim 5% profit margin. Initially, restaurants attempted to absorb costs; the inflation rate of food consumed away from home lagged behind that of food until this year. The menu price hikes needed to make up the difference were untenable.

Dan Sidner, co-owner of Black Shoe Hospitality, which includes Maxie's, Blue's Egg and Story Hill BKC, points to beef as a particular pain point. “Brisket is one of our biggest sellers at Maxie's. We were buying the beef for brisket, pre-Covid, [for] about $6 a pound. A year ago, we were paying $10. Now it's close to $20 a pound. I simply cannot double the price of that menu item.” Beef has been a headline-grabber, but so have eggs and shellfish, coffee and chocolate. And it's not just food. “Dish detergent that was $50 a case back in 2019 is now $220 a case,” says Sidner. “And we run through just as much of it as before. The numbers on the paper goods went up dramatically during Covid and never went back down.”

Menu price hikes were inevitable. Sidner estimates prices have gone up at his restaurants by 10% over the past three years. Both Wakefield and Leon have increased the price of their entrees. Says Leon, “We take into account the price of the protein, because that's the most expensive element, and then run our pricing formula from there. It's something I struggled with for a long time, because I don't want Amilinda to become a place you only go to for special occasions.” Customers have been patient with the price increases. Says Sidner, “The feedback I get is very understanding. We see it in all the restaurants.” Wakefield agrees: “Luckily it's something customers are well aware of because it has been in the news so much lately.”

Reasonable Cutbacks

To contain increases, owners are looking at their menus, introducing dishes they can bring in at reasonable cost, and phasing out those that require steeper price hikes. Black Shoe cut back on beef dishes at Story Hill BKC and took it off the menu at Blue's Egg entirely. Sidner and his business partner, chef Joe Muench, are finding alternative cuts of beef that will still deliver on quality. As for Amilinda, Leon says, “We've always had the type of menu that evolves. Every week we go in and look at some dishes, look at what's selling, what's not, what we're tired of looking at. We're used to doing that. What we do now is look at prices. We've taken fish off the regular menu, and specialty goods from Europe, we'll use less than we normally would.” His curtailing the use of imported goods is due to another financial wrinkle: The on-again/off-again tariffs the Trump administration has been imposing have made week-to-week costs for some goods unpredictable.

Another lingering result of the pandemic has been the widespread adoption of carryout and delivery, which has an outsized impact on full-service restaurants. According to an April report from the National Restaurant Association, nearly 75% of all restaurant traffic is now off premises—drive through, carry out and delivery. Restaurant owners are being creative to compensate for lower dine-in traffic. Sidner and the Black Shoe team have leaned into event catering and expanded their bakery services. Wakefield has continued the carryout service Tess instituted during Covid. "We hadn't done a lot of carry out—as a fine dining restaurant, it wasn't really our thing. But everyone had to pivot and do what they could to stick it out or just shut it down. We were able to get online ordering set up quickly and people responded to it. It's one of the best things and smartest things we ever did.”

Drawing Back Customers

To draw customers back, owners emphasize the experience of restaurant dining, offering live music, happy hours, special weeknight menus and half-price bottles of wine. Says Sidner, “It still has to be worth it for guests to leave their house, to come and have a nice evening out. The food doesn't just need to be great, the service needs to be great and attentive, and the atmosphere needs to be great. People need to feel like they're treating themselves.”

Loyal customers are finding ways to economize without staying away entirely: They'll share appetizers or have a pre-dinner drink at home instead of ordering both cocktails and wine at the restaurant. It's the loyalty that Leon prizes most in the relationships he has built with his regulars. “We were there to help you celebrate your anniversary, and your birthday, your graduation and your engagement—and now restaurants need your help. Just go sit at the bar and have a drink or have an appetizer. Any support you can give them, local neighborhood restaurants will appreciate.”