A raw look at fine dining
The restaurant industry can’t seem to catch a break and fine dining is no exception.
Since the pandemic began, about 90,000 US restaurants have temporarily or permanently closed.
Those that did survive are now facing historic inflation and prolonged supply chain disruptions — with wholesale food costs up 17% from the same period last year.
The challenges have been heavily reported, often with local, mom-and-pop establishments playing the protagonist. For good reason. These small businesses are operating on much slimmer profit margins, and catering to much more cost-sensitive customers. It’s easy to understand. And it’s easy to root for.
What has rarely been mentioned — at least thus far — is the impact on fine dining.
In March, Bloomberg did a price comparison of the most expensive sushi restaurants in New York City. At the far end of the scale was Masa, a three-star Michelin, omakase-style sushi restaurant that has just raised its chef’s counter pricing from $800 to $950 per person. That’s before tax and without drinks. When the check arrives a single diner will easily pay more than $1,000 for their meal.
Even before the price jump, Masa was the most expensive restaurant in North America. With the hike, it now ranks third in the world.
Chef’s Pencil is an international food magazine that actively tracks pricing of the most expensive Michelin restaurants across the globe. Their updated list, released this April, makes a case that fine dining is not exempt from the challenges faced by their peers — with just over half of the restaurants included in their Top 15 upping menu prices since last November.
Joining Masa were Amsterdam’s Ciel Bleu (two stars), France’s Guy Savoy (three stars), Denmark’s Alchemist (two stars), Sweden’s Frantzen (three stars), Japan’s Kikunoi Honten (three stars), and Singapore’s Shoukouwa (two stars), among others.
While their primary clientele is often thought to be shielded from the effects of inflation, fine dining was not exempt from COVID-19 or the supply chain issues it levied — now further stressed by the war in Ukraine. These restaurants have also experienced similar staffing pains — with talent leaving the industry, or at the very least, the city limits.
However, coverage of their price increases often takes on a very different tone. As does commentary on the relief some of these restaurants received at the pandemic’s peak.
Masa was awarded $5 million from the US Small Business Administration’s Restaurant Revitalization Fund — the max amount allotted for a single location. Among the other high-dollar recipients in New York are household names like Blue Hill, Peter Luger, Eleven Madison Park, P.J. Clarke’s, and Momofuku restaurant group.
Many were quick to flag that the funding seemed to favor high-end restaurants in wealthy neighborhoods, with only 28% of Restaurant Revitalization grants going to low-income areas. And at much lower payouts.
But even with the grants, what is the future of fine dining?
The cost of a Michelin-star meal has always included highly trained staff and costly ingredients. (The latter of which is being even more acutely felt by sushi restaurants, like Masa, facing dwindling fish populations.) However, as Eric Ripert, chef and co-owner of New York’s Le Bernardin (three Michelin stars), points out it must now also account for the increasing price of utilities, salaries, and even more basic ingredients.
His recent example to finedininglovers.com? Limes. In October 2021, a case of 100 limes cost $37. This April, that same case is going for $137.
A number of chefs, like Ripert, have been diligent about finding paths to offset these costs. However, the steady increase of expenses has others eyeing menu prices — choosing to go higher instead of compromising on customer experience.
So, does fine dining warrant a role in the inflation narrative?
I say yes. Do these restaurants have more flexibility to absorb costs? Arguably yes. However, they’re certainly not immune to the effects of long-term inflation. And in that sense, their stories are not so different from the more casual establishments they’ve been pitted against.
Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.