Prices in New York

[weinoo]

As was starting to get discussed here, prices in NYC restaurants seem to be experiencing a slow, inexorable rise.

Allen & Delancey is but one interesting example; there are only two appetizers under $15 - one is leeks (!!) and the other is hamachi shavings (hopefully, the part they're shaving from is being used as well - pehaps it's the fluke entree?). However, the entree prices are certainly not all that outrageous.

One of our favorite places for a quick, dependable meal is Schiller's. Every time Schiller's puts out a new menu, something on it costs more. What is a nice meal for the two of us, with either a couple of beers or a small carafe of wine, used to cost $50 - now it pushes $60.

Lunch at Momofuku Noodle Bar (unless I'm alone) is always $50 + - but then again, we eat like pigs!

I see so many places where the appetizers have all gone up to between $15 and $20 - is this because they expect people will order a couple of appetizers and share a main, and thus it's a good way to up the average check? And will the $30 entree soon become a distant memory?

So, what's everyone's take on this?

[johnder]

Personally I see a correlation of price increases going along with the price of ingredients. As many chefs/restaurants are moving to local/organic menus, the price of these ingredients is much higher than the normal purveyors/sysco solution.

An example would be Applewood in Brooklyn -- their entrees are in the mid 20's, and while slightly high for Park Slope, I pay that a) because they have a one on one relationship with the farmers, b) almost everything they use is organic and locally sourced, c) food it great and d) supporting a local family run place.

I personally like that fact that the beef tartare I am eating from from Lydia's farm in upstate New York, and the fact that I actually met Lydia. I find re-assurance in that knowledge. I don't mind paying a premium for that.

As far as 30 being the new 20? Yah, I would say people are becoming used to seeing one or two entree's hopping over the 30 mark, but there have been many places over the past 2 years pushing that limit with $28/29 dishes.

Just my 02.

[weinoo]

Personally I see a correlation of price increases going along with the price of ingredients.  As many chefs/restaurants are moving to local/organic menus, the price of these ingredients is much higher than the normal purveyors/sysco solution.

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That's quite true - personally I've never had a problem paying a premium for organic or "locavore" stuff - it definitely makes me feel as if I'm contributing in a small way. And it's not only ingredient driven - there is also all the overhead involved.

After all, the prices at Chez Panisse were probably pushing the envelope when she returned from her eye-opening trips to France and realized that local, sustainable, products were the way to go.

[BryanZ]

I think the "$30 is the new $20" comment was something that Nathan first wrote. At least it sounds like something Nathan would write. I would have to say I agree with it.

The type of dining out in New York I do admittedly skews to the higher end. I live in NJ when I'm home and am a pretty decent cook, so I don't need to get into the city for neighborhood-style meals. That said, I think it used to be a "moderately" priced restaurant was one whose mains were under $20. Now, I consider a "moderately" priced restaurant to be one whose mains are under $30. Of course, if everything is $28-$29 vs. $30-$32, that doesn't really make much of a difference.

The most striking think about A&D's menu in my opinion is that there's not a single green salad or squash soup or what have you for $8 or $9.

[SaltySnack]

My boyfriend and I joke that every time we go out for dinner it is $110. Doesn't matter what kind of restaurant, how little or how much food we order, $110.

However, even that may be creeping up a bit to $120. I haven't noticed the particular prices of appetizers and entrees mainly because we have been trying to limit nights out and utilize more of the Greenmarkets ourselves. Cause and effect?

[weinoo]

The most striking think about A&D's menu in my opinion is that there's not a single green salad or squash soup or what have you for $8 or $9.

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I don't know if there's any salad (green or otherwise) at any place that aspires to be in that league for under $10! And that's one of the price creeps that has really skewed the average check cost a lot higher, imo.

The salads at Rayuela, just up the block, start at $11 (according to Menu Pages).

[ryanj]

I agree pricing is out of whack here. Working in Chicago, Boston and now New York, the price it costs my girlfriend and I to eat out a a so-called "neighborhood" restaurant is a bit eyepopping. In Chicago, for example, we would expect to have an average check in the $80-$100 range, and between the two of us would have at least four drinks. It was hard to do in Boston, less a few favorites along the line. But here in New York, going out is not as easily done for $100. Usually, our check tends to be upwards of $130 for similar experiences that have been had in Chicago and in Boston for $110-$120. The food and atmosphere are pretty similar, however, apps and especially drinks are the two items I feel restaurants really mark up on.

Now, I do understand the difference in rent between here, Boston and Chicago, which explains it partly. For instance, one restaurant I worked at paid $3400 per month, 2000 sf, in a hip neighborhood in Chicago. Fast forward to Boston, our rent was $9000, 2000 sf, in the restaurant row of the city (not Newbury St.) Here in NYC, a Soho, Village or otherwise prime location can easily cost $14000-$20000 for a comparable space. Restaurants have to make money.

[Pan]

I actually think $35 is the new $20, but in a different sense than you've been discussing so far. Back in the day (1970s), I used to consider meals that cost more than $20 expensive, and my mother still has trouble adjusting to the idea that $35 for an Italian meal is, at most, moderate and a good value, not expensive. I can't consider $35 exactly cheap, but I might even go for a "moderately inexpensive" category for $25-35/40. Quite obviously, I still find mains pushing $30 to be fairly expensive, when you consider what the eventual price of the meal will be (and then, things like the prices of the appetizers and whether the restaurant, for example, will serve half portions of pastas for half price come into play). It all has to do with what your disposable income and attitude toward spending money are.

But as for the costs to restaurants, let's not overlook increases in the price of gasoline for delivery and fuel oil for heating!

[weinoo]

But as for the costs to restaurants, let's not overlook increases in the price of gasoline for delivery and fuel oil for heating!

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No way we're overlooking them...I think the increase in the price of gasoline for delivery gets factored into the ingredient cost and that the fuel oil or electricity used for heating and cooling, as well as rent, is a portion of the overhead (insurance, legal fees, advertising, etc.) Basically, everything is going up, and everything is probably just a little more expensive here in NY versus other parts of the country.

[weinoo]

Interestingly enough, the Bruni weighs in on this topic...

That question reflects the degree to which restaurant prices have indeed soared. Finding $20-range entrees in establishments that aren’t bare-bones, harshly lighted, out-of-the-way joints — establishments, say, with wine lists and atmospheres that might encourage you to linger just a bit — isn’t easy. It isn’t easy at all.

The full article can be found here.

He goes on to cite places like Momofuku Ssam Bar, August and Resto as examples of places where the under $20 entree might be found, and then veers off to discuss putting together an affordable meal of small plates in lieu of entrees...I always find that small plates end up costing even more, especially after ordering 10 of them!

And don't get me started on $25 and under...maybe that should be $25 and under - for your entree!

[Pebs]

Just last week Good Morning America did a piece on the increasing cost of dining out nationwide. Even in chain restaurants prices have increase between 4% - 7% largely due to the rising cost of ingredients. However, they singled out NYC. For a fine dining experience in the last four years the average cost per person has gone from around $87 to about $140. They couldn't find a real reason for the NYC increases.

[Fat Guy]

On 10 October, Tim and Nina Zagat had a piece in the Wall Street Journal about prices at New York restaurants. Their research disagrees with what appears to be the consensus on this topic. They report:

Prices are holding steady at everyday restaurants, real deals (à la $24 lunches) can be found all over town, and more neighborhoods now offer a bounty of restaurants that give good quality at reasonable prices. Overall, the rate of inflation in New York City dining costs has been risen just 0.97% since 9/11 -- barely a third of the Consumer Price Index.

and

the average cost of a meal has risen only three cents since last year's survey -- to $39.46 from $39.43, a barely perceptible 0.1% This is thanks to a slew of inexpensive newcomers that keep the cost average steady.

The Zagats do observe, however, that the "best in class" restaurants are getting more expensive.

One thing I'd note is that most very successful restaurants increase prices a little while after they open. Those who dine at the leading edge are always going to perceive a price increase, because it's the natural progression of restaurants in that category. At the same time, there are always newcomers offering lower prices -- this past year or two has seen a lot of innovation in that department.

Incidentally, Frank Bruni blogged yesterday in "Diner's Journal" about $20 entrees.

[oakapple]

The Zagats don't have much credibility in this department. The prices in their survey have always been a joke. After the new book came out, someone noted that they have Eleven Madison Park at $104, which is supposed to be the cost for dinner and one drink, including tip. The cheapest dinner option at EMP is $82. If you have a $10 drink (I don't know if that's even possible), you'd have to leave a skimpy 13% tip to hit $104.

These days, the emphasis in most new restaurants is casual, and that could be holding down the Zagat average artificially. But even so, our sense of "what is inexpensive" is obviously rising. These days, if I go into a restaurant where all of the entrées are in the 20s, I think that's practically a bargain.

At the same time, it's no longer a shock to find restaurants with multiple entrées above $40. I believe the Times had an article recently about the dawn of the $40 entrée as a regular occurrence.

[weinoo]

The cheapest dinner option at EMP is $82. If you have a $10 drink (I don't know if that's even possible), you'd have to leave a skimpy 13% tip to hit $104.

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And that's if you don't even pay the tax !

[Nathan]

that Zagat article was roundly pilloried in the press for "fuzzy math"...basically all that it proved is that either a. Zagat voters don't eat at the restaurants they claim to...or b. they have enormously faulty memories (probably both)...in some cases the purported average check was less than the cheapest dining option at a given restaurant!!!!

[weinoo]

that Zagat article was roundly pilloried in the press for "fuzzy math"...basically all that it proved is that either a. Zagat voters don't eat at the restaurants they claim to...or b. they have enormously faulty memories (probably both)...in some cases the purported average check was less than the cheapest dining option at a given restaurant!!!!

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Absolutely - if you take just the Zagat example of the lunch specials offered during restaurant week, for instance, in 2001 the price was $20.01 - now it's $24.07 - a rise of over 20%...not the purported 0.97% in the article! Fuzzy math indeed.

[Adrian3891]

What I've found most troubling since moving to New York is not the prices at places like Allen & Delancy, which aren't out of line with my expectations for what a higher end restaurant in a recently gentrified area should be, but the prices of some of the casual options. The best example I can think of this is Katz's. Coming from Montreal, where the (vastly superior, but that's another thread) smoked meat sandwich at Schwartz's was expensive at $4.95, $14 for a pastrami sandwich is silly. It's the cost of my entire meal at Schwartz's. It's just not an option to pick up a sandwich for dinner on my way home.

As a side note, I'd imagine that we're using a biased sample of restaurants here when calculating prices. Of course Eleven Madison's prices are going to rise more than the average - it's an extremely popular restaurant with a great new chef. It's not subject to the same sort of market forces that the smaller, neighbourhood place is - especially if that neighbourhood place isn't in a gentrifying area.

[oakapple]

As a side note, I'd imagine that we're using a biased sample of restaurants here when calculating prices. Of course Eleven Madison's prices are going to rise more than the average - it's an extremely popular restaurant with a great new chef. It's not subject to the same sort of market forces that the smaller, neighbourhood place is - especially if that neighbourhood place isn't in a gentrifying area.

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I just chose the Eleven Madison Park example because it's easily verifiable. One can dispute whether the food rating should be 25 or 26, but price is factual. If Zagat respondents got the price wrong for a Greek diner in Astoria, maybe it could slip by unnoticed. But the prices for places like EMP can be fact-checked on the web in a few moments.

What's even more amusing is that Tim Zagat doesn't realize this, and yet it's well known that he does eat at many of these restaurants. When you write in the Wall Street Journal that the price has gone up only 3 cents since last year, you're implicitly suggesting that you consider this information statistically significant.

[Nathan]

the Zagats may very well know that their survey results are all wet...but the entire basis of their schtick is that their surveys are substantively valid...remove any part of that and the entire edifice falls.

[weinoo]

The best example I can think of this is Katz's. Coming from Montreal, where the (vastly superior, but that's another thread) smoked meat sandwich at Schwartz's was expensive at $4.95, $14 for a pastrami sandwich is silly. It's the cost of my entire meal at Schwartz's. It's just not an option to pick up a sandwich for dinner on my way home.

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I don't know that I agree that $14 for a pastrami sandwich at Katz's is silly...pastrami is probably around $20 - $22 a pound - (even in my local kosher deli a little further south, and brisket at Hill country is around $18/lb.); there's easily 1/2 to 3/4 of a pound of pastrami on a sandwich, so the math isn't that fuzzy. And, a pastrami sandwich is a full meal as I think it comes with a nice, gratis plate of pickles and pickled tomatoes!

I almost think that $4.95 for that sandwich at Schwartz's is sillier than the price at Katz's - albeit a great deal!!

[oakapple]

the Zagats may very well know that their survey results are all wet...but the entire basis of their schtick is that their surveys are substantively valid...remove any part of that and the entire edifice falls.

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Yeah, but if you know your own survey is garbage, why write about the one piece of data that is most easily refuted?

[Fat Guy]

that Zagat article was roundly pilloried in the press for "fuzzy math"...basically all that it proved is that either a. Zagat voters don't eat at the restaurants they claim to...or b. they have enormously faulty memories (probably both)...in some cases the purported average check was less than the cheapest dining option at a given restaurant!!!!

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Nathan, do you have any links to those articles? I'd like to check them out.

[weinoo]

Here's one I found...

To begin with, the Zagat's are well known gourmands who are big promoters of the dining industry. That they found prices only moderate doesn't surprise. They are hardly neutral, skeptical observers. Perhaps the more critical eyes of our readers here can help us delve beneath the press release to discover if restaurant prices are actually flat. (Some people call this lawyering, I prefer to think of critically reviewing BLS or press releases as analysis; you can make your own decision).

The whole article can be found here.

[Fat Guy]

Not to defend the Zagats, but that argument, made by a blogger named Barry Ritholtz, is hardly compelling. I have never known the Zagats to skew in favor of the restaurant business -- they are far more closely aligned with the consumer.

While I have little confidence in the Zagats' methods, or in self-reported studies in general, it does seem difficult to dismiss the overall changes that the collected data show from year to year. If people are underreporting meal prices, the amount of underreporting shouldn't necessarily change form year to year. Especially against the background of widespread public perception that things are getting more expensive, I find it very interesting that thousands of Zagat survey participants are reporting level average meal costs.

I was recently talking to a family that owns several established, middle-market restaurants in the area, and they were telling me that they haven't felt that it was possible to raise prices, even though their costs have been creeping up. Their position was that the dining public right now won't tolerate even small price increases at their regular haunts. So they've been focusing on strategies for increasing volume on slower nights, etc. -- and profits are off a bit.

There are quite a few explanations in the Zagat press release for why overall prices may not be going up. It can be found here. In particular, the statement "Credit for keeping the average cost steady goes to a slew of inexpensive newcomers," seems at least worth considering. This is certainly a phenomenon I've been observing over the past couple of years.

[weinoo]

Absolutely - if you take just the Zagat example of the lunch specials offered during restaurant week, for instance, in 2001 the price was $20.01 - now it's $24.07 - a rise of over 20%...not the purported  0.97% in the article! Fuzzy math indeed.

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I just don't understand how this works out to .97%, as quoted from the WSJ article?

The evidence is irrefutable, as far as the lunch specials they are referring to.