How Chefs Are Dealing With the Tanking Dollar
Recently, I realized that I could no longer afford my favorite stinky French cheese (not that I ever really could, technically). The prices of staples like wheat and eggs have gone up, but the cost of imported goods like dried mushrooms, wine, and cheese seem even higher than you might expect lately—imported cheese, for one, is up about 30 percent. I'm going cold turkey on my Époisse habit. More importantly, chefs around the city are changing their menus to adapt.
At Kellari Taverna, Mediterranean fish has been replaced by more affordable seafood, and Greek feta, once crumbled over many dishes, is now only on the tomato salad. Over at Artisanal Bistro, the price of the Dover sole is up. Craig Hopson, chef at One If By Land, refuses to do away with his imported mushrooms, so he includes a lower-cost salad in his prix fixe to eke out a profit. And at A Voce, chef Andrew Carmellini might not offer white truffles in season this fall—they're just too expensive.
The devaluation of the dollar against the euro means that imported ingredients are increasingly expensive—in some cases, prohibitively so. The exchange rate has made the balancing act of keeping a restaurant profitable more precarious than ever.
"It's killing us!" exclaims Gregory Zapantis, the Greek-born chef at Kellari Taverna. "A few years back, it was equal—one dollar to one euro. Now the euro is $1.60."
Some restaurateurs are raising prices, but every chef I talked to recognized the limitations of that approach. "How much can you charge for a glass of wine? Everyone's going to think we're crazy. No one will pay $22 for a glass of wine," says Zapantis.
Chef Hopson agrees. "Dining in New York is expensive," he says. "But $40 for a plate is extreme. You have to create tasty food that's also price-conscious."
Even items like truffles, which are ordinarily exorbitant, have their limits. Last year, Carmellini charged "only" $100 for his main-course specials with white truffles, the same price as the year before. The difference was that his wholesale price had gone up by 40 to 45 percent, so the $100 entrée wasn't a money-making proposition for the restaurant. This year, if prices stay high, Carmellini might take a pass on the white-truffle season for the first time. "I just can't see charging someone 250 bucks a plate, which is what you have to do to get even a low profit margin," he says.
Karl Storchmann, an economist at Whitman University who specializes in wine economics, explains that the dollar has fallen substantially for two reasons. First, a huge trade deficit: The U.S. imports more than we export, and we have to pay in foreign currency for those imports. Second, the government spends more than it has, putting us in hock to the Europeans, Japanese, and Chinese to pay for Bush's tax cuts and the war in Iraq.
The short answer, says Storchmann, is that a costly war in Iraq equals pricey wine at home. Drat! Al Qaeda wins again.
But the dollar/euro imbalance doesn't mean that all those mushroom hunters, cheesemakers, and vintners in Europe are rolling in the dough. In fact, the cost is borne throughout the supply chain, from the farm to the restaurant.
"If the dollar loses 30 percent in value, that might mean that imported food and wine will—after a time lag of a few months—get more expensive for us," says Storchmann. "But it is unlikely that prices will grow by 30 percent. I would assume that both parties split the costs more or less evenly—that is, prices would go up by 15 percent for us. The rest of the cost will be borne by Europeans."
In other words, Europeans can't charge prices commensurate with the exchange rate because then they'll lose their buyers in the U.S.
John Magazino, owner of specialty food importer Primizie Fine Foods, is one of those U.S. buyers. He's the largest American importer of fresh truffles—he sells to Carmellini—but he also traffics in ingredients like Italian tomatoes, pasta, and fresh fruit. Magazino finds himself in an uncomfortable bind these days. He needs to buy items from European producers and sell them to restaurants in the U.S. while managing to make a little money himself. He certainly doesn't want to gouge the restaurants, since without them he wouldn't have a business.
"Everyone's feeling the pinch, from the person growing it to the end user," Magazino says. He's experienced market fluctuations like this several times in the last 10 years, but he says that current conditions are the worst he's seen.
"But New York is still one of the great food cities, and chefs are still willing to pay top dollar for quality ingredients," he adds. "We're all riding it out and working as tight as we can to ensure that we can make it through, and hopefully soon the economy will turn around." I didn't mention that Storchmann predicted that it's likely to get even worse.
But Magazino is looking on the bright side, and maybe New York eaters should do the same. The importer points out that chefs might soon be offering pasta with lovely San Marzano tomatoes instead of truffles and butter. One of the side effects of our economic downturn might be that we learn to really appreciate simple food again; maybe it's time to get over the age of pork belly and truffles.
At the very least, chefs are being forced to get creative, searching harder for under-the-radar items, and incorporating more domestic ingredients into their menus.
Svetlin Tchakarov, the general manager at Artisanal, said that while they're keeping the imported Dover sole at the higher price because it's a customer favorite, they're now featuring Gruet, a New Mexican sparkling wine, and looking for domestic alternatives to some cheeses.
After being forced to give up most Mediterranean seafood, Zapantis has fallen in love with the fish he gets from Long Island in the summertime. And he's happy to have discovered Wisconsin blue cheese as an unlikely alternative to feta.
"Always in my life, I'm optimistic!" Zapantis says. "It's a problem, but the coin has two sides—this is a saying that I learned the other day. The euro is very expensive, but by buying locally, we help our own economy."
One If By Land's Hopson found an olive oil from Australia that he happens to like even better than the one he was using before, but he's stuck with his imported mushrooms and cheeses, insisting that they're too much of a treat to deny people.
Hopson acknowledges that the situation has forced him to be more resourceful: "If you don't want to charge $22 for a glass of champagne, you've got to find a less expensive label that is still giving the customer a valuable experience. You have to find the best of the rest."
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