When the going gets tough, independents get creative

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Casa Nueva in Athens, Ohio, recently faced an 11-percent increase in dairy costs and a 52-percent hike in wheat prices. Sunset Grill in Nashville, Tenn., and its sister restaurants Midtown Cafe and Cabana have absorbed a 20-percent increase in the price of bread, a tabletop staple. Meanwhile, J.J.'s Restaurant in Kansas City, Mo., was hit by 15-percent price increases for imported cheeses and meats.

Restaurants face a daunting challenge of maintaining quality and a healthy bottom line while struggling with skyrocketing commodities costs. However, without the buying power and deeper pockets of many chains, independent operators seek creative solutions to manage costs and drive traffic.

Some operators have been able to save on food costs by joining buying groups. J.J.'s proprietor, Jimmy Frantzé, belongs to Leading Restaurants, a national buying group that reduces costs for independents by ordering enormous volume. He also is a member of Kansas City Originals, a local independent restaurant organization that offers some buying power. Brian Uhl, executive chef of Sunset Grill, Midtown Cafe and Cabana, works with a similar group, called Nashville Originals.

One member of another branch, Tucson Originals, does nothing but shop prices and put items out to bid, says Albert Hall, chef-owner of Acacia at St. Philips in Tucson, Ariz. But one size does not fit all buying groups, and buying relationships sometimes get sticky because different restaurants favor different suppliers. Chef Bob Kinkead of Kinkead's in Washington, D.C., believes such buying groups work best for nonfood items, like paper and cleaning products.

Running more than one restaurant can enhance buying power. "We have three restaurants [in Nashville], so I haggle with [suppliers] quite a bit," Uhl says. "Seven to eight months ago, dairy prices started jumping up, and I negotiated for a fixed price for a year."

Buying local also can offer some cost advantages, several restaurateurs say.

"We try to use our local farmers that produce meats, poultry and freshwater fish, and they do pretty well about not raising prices," Uhl says. "And we've always tried to use local produce as much as we can, but we're pretty much at the mercy of the market."

Frantzé of J.J.'s in Kansas City says he thinks his bread prices have been more stable than he expected because he deals with a local vendor. And Chris Bruno, marketing coordinator for Casa Nueva in Athens, Ohio, is convinced that working with local suppliers cuts down on transportation costs.

Some independent operators say that a constantly changing menu based on seasonal ingredients gives them a flexibility that helps them keep costs in line.

Kinkead's now minimizes the use of butter- and cream-based sauces to cut down on dairy costs. The restaurant also has reduced some portion sizes, switched to meat cuts and fish varieties with lower demand and chosen less costly wraparound items, such as its vegetable or starch garnishes. However, because the restaurant specializes in seafood, there are certain things Kinkead feels he must serve.

"I have to have lobster on the menu, but I can change the preparation to one that costs less," he says.

Hall already changes the menu at Acacia four times a year and is considering two more menu changes. He also has added a menu of small plates that are about a quarter the size of typical entrées and priced around $12 each, compared with $18 to $30 for regular entrées. That strategy of giving customers a smaller meal at a lower price has worked well at casual-dining chains, such as T.G.I. Friday's, which recently made its "Right Portion, Right Price" lineup of smaller dishes a permanent part of the menu.

Other operators have saved by keeping a tighter control on meat portions or considering other cuts of meat. Frantzé of J.J.'s says his staff is cutting steaks to exact measurements. Uhl has switched some meat cuts, such as lamb sirloin instead of lamb rack or a hangar steak in place of a filet. He also says he now uses an entire half hog per week instead of ordering a case of ribs or tenderloins.

Still, the issue of menu price increases is almost unavoidable in the quest to stay afloat amid rising commodities costs. At Acacia, Hall raised menu prices 3 percent last November and anticipates another 5-percent increase this month in response to food costs that have risen 18 percent to 22 percent since last September. J.J.'s has increased the prices for its steak, and Casa Nueva says it likely will raise prices in June, hopefully by less than 10 percent.

However, despite the necessity of menu price hikes, independents still tread carefully so they don't drive away cost-conscious customers.

"You can't take a $30 menu item and increase it to $45," Kinkead says.