Phoenix-area restaurants and consumers trying to deal with crazy food prices

Phoenix-area restaurants are dealing with rising costs and having to pass on those costs to consumers, who are still trying to find bargains while eating out.
Published: Feb. 21, 2022 at 6:20 PM MST
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SCOTTSDALE, AZ (3TV/CBS 5) — Some say it’s one of the best-kept secrets in Scottsdale. It’s a little family-owned restaurant called The Breakfast Joynt where diners start rolling in at 7 o’clock every morning. “What are you known for,” 3 On Your Side’s Gary Harper asked. “We’re known for our biscuits and gravy. We make our gravy from scratch every day. Our biscuits are fantastic,” Dave Phelps said.

Phelps owns The Breakfast Joynt and has been in the restaurant business for more than 30 years. He’ll be the first to tell you the restaurant industry these days is like never before. “Things are not like they used to be here at The Breakfast Joynt?” Harper asked. “Not even close,” replied Phelps.

What’s changed? Well, food prices. Phelps says it’s costing him more to buy supplies these days because prices are as high as they have ever been. “Bacon went from $48 to $78. Ham went from $2.04 a pound to $3.24 a pound. Sausage was $27 and now it’s $47. Eggs went from $24 a case to $44 a case,” Phelps said, shaking his head.

And unfortunately, Phelps says he’s been forced to pass those higher costs on to consumers just to stay afloat. And consumers say they’re feeling it every time they eat out whether it’s at The Breakfast Joynt or any other Valley testaurant. “It’s very aggravating,” one customer told us. “We try to go to where we can get the best bargains.”

But those bargains are hard to find and there’s no indication food costs are going down. “Why is food so expensive?” Harper asked Kathleen Merrigan. She’s the former deputy secretary of U.S. Agriculture and served under President Barack Obama. “It’s expensive because of COVID,” she said.

She tells 3 On Your Side that food prices were probably going to go up slightly anyway. However, COVID-19 exploited and sped up the process. “Workers coming across to help with produce couldn’t get passed borders. Meat processing plants collapsed because they’re so concentrated. And workers got sick because they’re working so close together. So, a lot of it is combined to put us in the situation we have now,” said Merrigan.

If that’s not bad enough, she says farmers and ranchers are in a crisis of their own and are being forced to pass on higher prices to consumers. “Labor costs have gone up. The price of fertilizer has skyrocketed. Animal feed is much more expensive,” she said.

And then, of course, there’s the cost of transporting food. Think about it. Gas prices are a dollar more a gallon than just a year ago. “All of those increases are due to transportation costs and those are way up. It’s really been tough to get drivers to stay in trucks,” said Dennis Hoffman, who is an economics professor at Arizona State University.

Finally, the cost of food is up because of wages. Arizona’s minimum wage just went to $12.80 an hour and for many grocery or restaurant workers, that’s still not enough. Phelps says he’s heard it all too often. “I’ve had several people when I tell them I’m going to start you at $18 an hour. They say, ‘No thanks,’ and I’m like, ‘What?’ So, it escapes me,” Phelps said.

And get this, because people are reluctant to work, Phelps had to temporarily close his second restaurant due to a staffing shortage. So, he and others in the food industry are forced to pay extreme wages, which are passed on to you.

Phelps says he’s already had five menu increases in two years and he’s doing everything he can to not raise them again. “Failure is not an option. This (running restaurants) is what we choose to do. So, this is where we’re at,” said Phelps.