00:00Prices are up across the board, and so many things have been affecting this.
00:05Clearly, yes, we're talking about beef, poultry prices, all those ingredient costs, food supply, even on supply side, packaging.
00:16We also are facing increases of produce, and a lot of this is coming from various sources.
00:22We have tariffs that are pushing up the prices of not only imported wines, but imported ingredients that a lot of restaurants use in their food preparation.
00:32We have pressures from local agriculture as well because of the immigration crackdowns and the difficulty of finding labor and the effects of those immigration crackdowns on farmers.
00:49And then, you know, we have increased rents, utilities, labor costs are way up.
00:57It's just a really challenging time for restaurants at Thanksgiving when we're trying to keep things affordable for our guests.
01:03Caroline, to that point, I mean, how much can you push up the prices at this point?
01:08You're obviously operating in sort of the upper stratosphere of offerings when it comes to restaurants.
01:13Do you have a consumer base that can absorb some of the higher prices?
01:16You know, I always say it's a really interesting thing for restaurants in that a lot of our pricing ends up being affected by perception,
01:24because if we could charge what we really need to charge to cover all of our costs adequately, our prices would be much, much higher.
01:32And we are definitely feeling a push from our clientele in terms of how much they are willing to spend.
01:40Look, it's really expensive to go out to dine right now, anywhere you go.
01:43It's expensive to go to the market.
01:45So we're trying really, really hard not to raise our prices.
01:49I mean, our costs are up for Thanksgiving this year, but we have not raised our prices for our Thanksgiving to go,
01:55because we just know that there isn't a tolerance for it on the consumer side.
01:59So we're working harder.
02:02We're making less.
02:03And for restaurants, a lot of people don't realize profit margins are incredibly thin.
02:08So the fact that anybody can even turn a profit right now is is kind of a miracle.
02:14Most restaurants are not.
02:15And we're seeing a lot of closures because of that.
02:18You have I mean, your prices aren't off the charts for New Yorkers looking at your menu.
02:25So the the main courses are between 20 and 40 dollars, essentially.
02:31But do you end up having to cater to just the top quintile of consumers, Carolyn,
02:37because it looks like the bottom 80 percent is going to have a difficult time forking that over?
02:42Yes. I mean, it definitely becomes a question of those who have and those who have not who can afford to go out and spend that kind of money on dinner.
02:52And, you know, we see it in terms of repeat customers, in terms of our guest flows, because people are just dining out less.
03:01They're just going out fewer times.
03:03They're they're spending less when they're out.
03:04And it really affects our our revenues and our bottom lines, restaurants all over California, all over the country,
03:13because we really we we really thrive on volume.
03:17We need volume.
03:18And so I notice also, at least on the AOC menu, a six percent charge is added to all checks to cover the cost of health care benefits for eligible employees.
03:27Is this something more independent restaurants are doing because clearly health care is at the forefront of affordability conversations?
03:39It is. A lot of restaurants are doing this and it's not it's it's not any sort of political statement.
03:45It's also a way of keeping this cost separated and segregated for our guests and for keeping it out of various various revenue calculations.
03:57You know, in terms of rents that are based on percentage of sales, other kinds of costs that are based on percentages of our sales.
04:07We can keep that service charge out of that calculation.
04:10And instead of marking up our menus, 20, 25 percent to cover the health care charge, the cost of the health care, plus plus those additional fees.
04:22We actually keep that a little bit lower for our guests and keep it at six percent.
04:26Carolyn, this is an administration that's also been more keyed in on the issue of affordability, especially given some of the mid-midterm election losses that it had as part of that.
04:35They've been talking with Brazil and the rolling back the tariff on things like coffee, on beef, on fruit and cocoa.
04:42When you've been talking to some of the suppliers, have some of that started to trickle into costs elsewhere?
04:47We haven't seen that yet ourselves.
04:53And, you know, it's not as if everything we buy is from that particular country.
04:58I mean, we buy a lot of products from France, Italy, all around the European Union, Mexico.
05:05And so, you know, we're still seeing an increase in a lot of costs.
05:08And a lot of the importers that we deal with are actually absorbing these costs.
05:13So they're making less.
05:14Some of them are closing down because they're getting pushback from their customers who are buying it to resell it.
05:21And it's just it's creating an inability to keep your business open and keep these companies afloat.
05:27One question I had, and I'm not sure how much it applies to you because you're clearly focused on wine, right, at least at AOC.
05:35That's not a reference to Alexander Ocasio-Cortez.
05:40It's a reference to it's a wine phrase that I'm not familiar with.
05:46But that's what my producers tell me.
05:47Do you do you have people drinking less alcohol?
05:51Because that's a trend that we've been seeing around the country with the legalization of cannabis and these like anti-anxiety drinks.
05:58We were talking yesterday about one called Trip.
06:00Do you have people that are running up smaller bills when it comes to the booze?
06:05Yeah, you know, people are definitely drinking less.
06:08I think I think we're down about 20 percent in terms of what the public is consuming in terms of alcohol.
06:15A lot of restaurants are actually trying things like non-alcoholic cocktails, which are a great way to provide something for those guests to be able to enjoy that doesn't have alcohol in it.
06:28But that also feels like they're having something celebratory and something sophisticated.
06:34But some people are still spending money on on pairings for dinners that are just that are non-alcoholic that can be just as expensive as alcohol.
06:43So some restaurants are figuring out ways to make up for that.
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