Even as inflation slows, a Chicago restaurant owner still feels the pinch
CHICAGO (CBS) – Consumer prices rose less than expected in November, a sign that inflation is cooling a bit.
But costs are still up more than 7% since last year.
One of the areas still rising: Food. CBS 2's Jackie Kostek spoke to one restaurant owner in Pullman who's feeling the pinch.
CBS 2 last spoke to the owner of Lexington Betty Smokehouse about inflation in the summer. Since then, she said she's had to increase her menu prices twice.
Take the cost of eggs. Dominique Leach remembers paying $13 for a case a couple of years ago. Over the summer, a case was $33. Now, she's paying $60 a case.
Kostek: "What would you say to someone who says, 'Oh good news. Inflation is cooling.'"
Leach: "I would say, 'You must not own a restaurant.'"
Leach is the owner and mastermind at Lexington Betty Smokehouse. Back in July, she was doing her best not to pass along higher costs onto customers. She hadn't resorted to so-called "shrink-flation" tactics, meaning she isn't serving less food for the same price, but has raised prices to reflect higher costs.
"You know, we forget about the amount of money that's being spent on the day-to-day operations," Leach said. "On paper goods, takeout containers, bags. All of those things are creeping up."
The November Consumer Price Index report released on Tuesday showed consumer costs were up 7.1% year over year, down from 7.7% in October. Still, when you look at the numbers more closely, the rate at which food prices are rising has slowed, but the cost of food overall is up 10.6% since a year ago.
"This was the smallest increase we've seen in a year, so that's a really good thing," said Scott Bauer, a market analyst and the CEO of Prosper Trading Academy.
Bauer added the problem is that wages have not kept up with inflation, which means the average American has effectively taken a pay cut.
"So even though people are maybe making a little more, they're only making 2 or 3% more," he said. "Inflation is still up 7%."
For her part, Leach has bumped up her employees' wages. But she said what is keeping her restaurant afloat isn't necessarily the restaurant itself, but her catering business.
"That's really the backbone of the restaurant operation," she said. "It looks really different. Yesterday, for example, I went in, knocked out a party of 150 alone and so days like this really make up for some of the deficit that we're seeing at the restaurant."
CBS 2 asked Leach if her restaurant could stay afloat without the catering business. She said she doesn't know how any restaurant survives without the support of that kind of business.