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Toronto’s top chefs get creative as cost of food goes up

2012/03/05


In the face of rising food costs, Lynn Crawford has fought to keep her prices low while maintaining the quality she is known for.

Her $49 prix fixe four-course dinner is perhaps one of the great bargains in the world of Toronto gastronomy.

On a weeknight she could be offering a grilled flank steak with heirloom purple carrots or a slow-roasted lamb with spicy tomato relish followed by artisanal cheeses and an apple walnut cake.

Not bad, considering that the celebrity chef and TV host’s last job was as the former executive chef at the Four Seasons Hotel New York — the epicentre of the pricey power lunch where $49 might barely cover the tip in the hotel’s popular caviar lounge.

“We’ve always tried to offer value and quality,” says Crawford. “Of course, it’s also a business so you have to watch the bottom line and rising food prices don’t help.”

March marks the second anniversary of her 65-seat Leslieville restaurant Ruby Watchco. And for a full two years, Crawford has maintained her $49 menu, despite higher costs.

“We are still using grass-fed beef, leg of lamb, the best cuts we can get,” says Crawford.

But chefs such as Crawford are fighting an uphill battle with rising prices and picky, recession-weary customers looking for value.

According to Statistics Canada, food prices have been rising rapidly. The cost of bread was up by 9.9 per cent in January compared to a year earlier, while vegetables were up by 8.3 per cent, followed by meat at 6.5 per cent.

That means chefs such as Crawford either have to hike prices to make up for the declining margins, or take a lower profit. They can also get creative by offering smaller portions, or substituting cheaper cuts of meat.

So far Crawford hasn’t gone that route.

“You never jeopardize the quality of the product,” she says. “We make sure nothing goes to waste, that we control inventory properly.”

According to the Canadian Restaurant and Foodservice Association, rising food prices, followed by labour costs are the top two concerns of restaurateurs. However, 53 per cent of respondents in a survey released by the association in February said they expected to hold menu prices steady for the next six months and were hesitant to pass on costs to consumers.

David Sparling, a professor and chair of Agri-Food Innovation at the Richard Ivey School of Business says high energy costs and greater wealth in developing nations have caused food prices to explode dramatically over the last several years.

“There is a huge shift in where food is being consumed to China and India especially,” says Sparling. “Higher disposable incomes mean that more people are consuming greater quantities of meat, milk and cheeses.”

Soaring energy costs also contribute to higher prices because of transportation and refrigeration costs, says Sparling.

“It impacts every level of the food chain.”

At George Restaurant in downtown Toronto, celebrated chef Lorenzo Loseto’s 10-course tasting menu will set you back $140 per person plus tip and taxes and wine.

But Loseto says well-to-do clients look for value just as much as anyone else, especially when prices for exotic cuts of meat such as bison have jumped by as much as 25 per cent, he says.

“You have to be absolutely a lot smarter about what you’re doing,” says Loseto.

Building relationships with farmers and suppliers are key to maintaining low prices. The locavore movement — buying fresh local food — cuts down on energy costs and ensures fresh food at reasonable cost, he says.

But some items are now so overpriced that Loseto refuses to put them on his menu, while other staples have become loss leaders.

“Fresh truffles are way overpriced as well as some types of caviar. I’m not comfortable paying for it and not comfortable charging for it.”

Good quality lamb, meanwhile, is normally a $28 main.

“But if I sold it at that price I would have to take a loss,” says Loseto. The dish is not currently on the menu.

To make any kind of profit it would have to sell for $35, but he is worried about price resistance from consumers.

“You can only charge so much and you still want the customer to have a great experience,” he says.

Richard Ivey’s Sparling says restaurants at every level — not just high-end diners — are being affected by higher costs.

“Margins have gotten thinner, and instead of passing on costs they end up with a lower profit margin,” says Sparling. “It’s a very difficult environment.”

Statistics Canada reports an average pre-tax profit margin of just 4.5 per cent for Canadian restaurants.

Manufacturers have also stealthily downsized some of their product offerings used by chefs and retail customers contributing to general food inflation.

“That eight-ounce bottle of sauce may now only be six ounces, but it’s the same price. It all adds up,” says Sparling.

In some cases, soaring food costs have meant zero profit for retailers such as renowned pastry chef Don Duong, who some consider the best in the business.

He’s made cakes for Queen Elizabeth, Pope John Paul 11, and for Prime Minister Stephen Harper’s birthday. He was also the pastry chef responsible for feeding world leaders at the 2010 G-20 Summit at the Metro Convention Centre. But last year higher food costs meant he likely lost money — at least on the wholesale side of his pastry business.

“I would have been lucky to break even,” says Duong, citing high flour and dairy prices. Not to mention chocolate. Duong, the owner of Dessert Trends Bakery and DT Bistro- Patisserie goes through 15 tons of the finest European chocolate every year. Several years ago the price was steady at about $6.50 per pound, but Duong figures he is now paying as much as $9 per pound.

Duong will try to hedge his dollar costs by buying in bulk, but he also needs to have the freshest materials possible.

“It’s a bit like the stock market trying to figure out if the Euro is up or down, because of the impact on your import costs,” he says.

At the wholesale level he sells his sumptuous mascarpone mini cheesecakes at $3.95, but it costs closer to $5 for labour and materials to make what he considers the perfect slice.

“You make money on some things, and you lose money on other items. Hopefully you make a profit at the end of the day,” says Duong philosophically.

Fortunately for the chef, there is high demand for his famed bespoke wedding cakes that sell for as much as $5,000 or more and could take a month to finish. His casual dining restaurant and bistro on Harbord St., now undergoing renovations, is also a favourite neighbourhood hot spot.

Despite higher costs, Chefs such as Duong and Canadian consumers have actually been fortunate because price increases have been relatively moderate compared to the rest of the world.

In Egypt, crippling food prices and frustrated citizens were thought to have contributed to the revolution. But that’s not quite the same scenario in Canada, where even though food costs have risen, as a percentage of overall household spending it has actually dropped dramatically over the years.

In 1969 Canadians spent 18.7 per cent on food according to Statistics Canada. In 2009 it was only 10.2 per cent.

“We’ve been extremely lucky because we’ve been a bit sheltered,” says professor Sparling. One reason is the rising Canadian dollar which has made imports cheaper.

But don’t look for food to get cheaper in the long run.

“As an industry it will continue to be a difficult time, but it also sparks a conversation as to eating locally sourced foods that might not also be cheaper and fresher, but will also support the local economy,” says Sparling.

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