Restaurants facing the cost of living crisis: how will they cope?

Saturday August 20, the Casamia restaurant in Bristol completed its last service after 23 years of activity. "I'm 36 and most of my life has been Casamia," says chef-owner Peter Sanchez-Iglesias, who along with his brother Jonray transformed what was once their parents' suburban Italian into a Michelin-starred destination. “But with my brother [who died in 2015, aged 32], I know life is short. Things can be taken away from you quickly and I'm not going to keep Casamia just to boost my ego. Nothing lasts forever."

Before the pandemic, Casamia was "just breaking even," struggling to achieve the industry standard gross profit margin of 70%. This is not unheard of in fine dining.Such labor-intensive processing of expensive ingredients for a small number of guests is a financially insecure form of self-expression.

In the summer of 2020, Casamia underwent a "bold" relaunch intended to bolster its avant-garde reputation and secure its future. Revamped as a dark, fashionable cocoon of music forte, lights and visuals, dinner prices have been reduced from £119 to £180 (wine flight, £120), and to create a better work-life balance for staff services have been reduced to two lunches and three dinners, Thursday through Saturday.The plan was to do theatrical 25-course menus of potato tempura, black garlic mayonnaise, and garlic n pickled oir, or apple pie with smoked ice cream, for just 16 people per service financially viable.

"We wanted more exciting foods, expand the selection of ingredients and reach 70%," says Sanchez-Iglesias, who has promoted the use of, for example, langoustines and sea urchins. “There shouldn't be a lot of limits to doing something creative. Because of the price, we should give everything to customers. I don't want to be held back.

For most of 2021, this reinvention worked. Pent-up pandemic demand exploded and Casamia, led by Chef Zak Hitchman, was "super, super, super busy". . Christmas was disrupted by Omicron and in February the war in Ukraine began, which meant that already high fuel and food prices suddenly skyrocketed. A significant portion of Casamia's target audience has started to think twice before wasting money eating out. Sanchez-Iglesias occasionally saw empty tables in the evening, and worse. "We had the odd Friday lunch where there were only two people booked."

Casamia - which in 2016 moved to the regenerated port of Bristol - had good weeks, but also many where he lost money, sometimes £200, £500 or even £1,000. "We can't charge more," says Sanchez-Iglesias. Lowering the price or adding more blankets was not feasible. The situation was "getting worse and worse".

In May, Sanchez-Iglesias announced the closure of Casamia and the reopening of the site as a new Italian restaurant. He hopes this trattoria will replicate the success of his other Michelin-starred restaurant, Paco Tapas, a bigger, bustling, more laid-back operation with flexible pricing.

"You switch or close," says Sanchez-Iglesias. Large fine-dining restaurants can "still make business sense with a 10%, 15% drop; every business is unique." But with customers limiting their spending and With skyrocketing energy and food costs, small niche restaurants are on a knife edge. It's, says Sanchez-Iglesias, "the scariest since the 2008 recession. The whole industry at this level is threatened. »

Others are less dark. “Fortunately, we are fully booked and people are spending better than ever. We have raised prices but customers don't seem fazed," said a London restaurateur, who spoke on condition of anonymity, fearing they would appear "arrogant". This owner operates in a rarefied world of bills of £300-500 a head. But rumor has it that business in London is generally robust. For six weeks earlier this summer, Ed Thaw had to close Tuesday lunchtimes and reduce midweek covers at his Shoreditch restaurant, Leroy. But only because it was understaffed. "There are a lot of custom clients, but everyone is struggling to recruit."

Last month's trade update from D&D London, which operates more than 40 restaurants worldwide, was optimistic while noting an "uncertain economic backdrop". Significant cost inflation (around 10% per year) was "offset by an increase in average spend" - and not just in London. D&D said pointed out that its restaurants in Manchester and Leeds were very successful.

Such conflicting experiences are common in hospitality.D&D's buying power and marketing reach are very different from those of a small independent restaurant, and the experience can vary greatly.If a restaurant has entered into a three-year fixed energy contract in 2021, it will be in a much better position than its neighbor...