Restaurants are Strapped for Cash as Food and Cooking Oil Prices Rise
Wingstop, a popular fast-service chicken brand, recently announced they’re changing their name to Thighstop due to a shortage of chicken wing availability (the price of the wing went from $0.98 to $3.22- that’s per wing!). As pandemic restrictions lift, the increased presence in eateries and restaurants means the price of our favorite fried fowl is rising- and one way to combat this, newly minted Thighstop says by buying the whole bird, they can decrease purchasing costs of the bird. (Double the price for the wing, double the price for cooking oil to fry the wing- ouch).
From CNN Business, “”If we can buy all parts of the chicken, not just the breast meat for boneless wings and the wings themselves … we can start to control a little bit more of the supply chain,” Morrison explained.” I personally saw first-hand how a local pub when from selling a half dozen wings for $6.99 is at $11.99- my jaw dropped at the price difference (you can bet I ordered a burger off the menu instead).
It’s Not Just Wings- The Cooking Oil Price To Fry is at an all time high
Even the cooking oil that restaurants purchase to fry wings and other delicious fried foods is becoming a more valuable commodity. The cooking oil prices of a 35 pound, 5 gallon jugs- sunflower, peanut, canola, you name it- across the aisle has increased by at least 200%.
The Herald Review interviewed a Illinois based restaurant owner about the affects of rising cooking oil prices on his business:” Dave Jordan, owner of The Wagon on North Woodford Street in Decatur, and his staff serve many popular items straight from the fryer, including mozzarella cheese sticks, beer battered onion rings, cod fish, shrimp and, their very popular fried chicken.“A couple of months ago, when the price was still OK, I was paying about 26 bucks a box,” Jordan said. “Then it went $30, then $32, then $34, and now it’s $41.””
Most industry research points to a major deficit of edible palm oil coming out of Asian countries like Indonesia and Malaysia- whose palm oil production usually serves over 85% of the total market- has been hit with labor shortages and since the pandemic and cannot produce nearly as much. As a result, the price of new cooking oil has steadily increased over the length of the pandemic- and there is not end in sight to the cooking oil price hikes.
Restaurants have to decide if they will pass along the costs
As restaurants are coming out of the pandemic, they are facing labor shortages, pay increases, new permanent COVID restrictions, and higher food and supply costs, it is no wonder that most restaurants are forced to consider if these costs will need to be passed along to the customer to help pay bottom line bills. Restaurants either have to eat the cost in differential and accept a lower profit margin, or they have to figure out a way to increase the price of the menu without infuriating customers.
For example, Business Insider shows the costs a restaurant owner must battle with: “Alan Natkiel, the owner of Georgia’s Northside, a BBQ restaurant in New Hampshire, said in a company Facebook post last month that the cost of him buying St. Louis Ribs was up 50%, oil prices were up nearly 100%, and food-service gloves were up 300%. He added that he would raise the prices of certain menu items to offset these costs.”
Check out RestaurantOwner.com’s advice to when a business should increase prices: https://www.restaurantowner.com/public/When-to-Raise-Prices-and-How-to-Do-It.cfm
Sell your used cooking oil to a recycler to help recoup the monetary losses
The one bright light at the end of the tunnel is a suggestion from our team to struggling restaurant owners- make sure you are looking at all of your costs and simple ways of reduction. Though most owners consider waste end products like trash, recycling and used cooking oil recycling to be at a cost deficit to their business- a clear waste plan can often reduce costs. Most waste haulers will give discounts for properly sorted trash and recyclables, and there are companies out there (like ours) that deal strictly with recycling the oil fryer oil from restaurants and offer rebates for the grease and fryer oil collected.
The price of used cooking oil fluctuates similarly to the price of new cooking oil as well as the gasoline and biodiesel markets- since they are all part of an interlocked process. New oil is made, sold, used, collected, processed, and resold for biodiesel production. When prices along one part of the chain rise, so do the rest.
Contact MOPAC today to help offset the rising costs of restaurants