From the food you eat to the products you buy, surging inflation has crept into the daily lives — and budgets — of Americans, regardless of socioeconomic status. For small business owners, the tentacles of inflation are even more pronounced, leaving them to precariously toe the line between rising costs and whether to raise prices.
Data released earlier this week by the Bureau of Labor Statistics showed the consumer price index, which measures price changes in a basket of commonly purchased goods and services, had increased 8.5% from a year ago, largely falling in line with Wall Street predictions. Excluding the often volatile prices of food and energy services, the so-called core CPI increased 6.5 percent compared to March 2021.
Surging levels of inflation translate into higher prices that consumers have to pay for everyday items. The price increases being felt by Americans have not been this prevalent since stagflation stymied the economy in the late 1970s and early 1980s.
Perhaps there is no better way to see the inflation’s impact than to consider what Niko Semertsidis, the owner of longtime Old Brooklyn staple in Cleveland, Gus’s Family Restaurant, now has to pay for a case of fresh eggs.
“Eggs are one of our main features here,” Semertsidis said. “Last year at this time, it was $16 a case and now we’re up to $47 a case. In one year, that’s an increase of well over 150%.”
Considering the Ohio restaurant only serves breakfast and lunch and you begin to get a clearer picture of just how deflating inflation can be. And that’s just part of it.
Bacon and meat prices have increased well over 100%. To-go boxes and other paper goods have increased 150%. The coffee deliveries are now subject to a $15 service charge on top of costlier product and mileage fees, Semertsidis said.
The compounding price increases and supply chain constraints have been difficult to navigate, Semertsidis said.
“I’m trying trying to cut costs any way I can. I’m trying to find the best deal that’s out there, even if it’s me running out and [buying products retail], that’s what I’ll do,” Semertsidis said. “On top of everything else that we have to do in the restaurant, especially in a small restaurant like this, it gets stressful to try to figure out what the next solution is. It’s always a problem and problem solving that.”
George Mateyo, the chief investment officer at KeyBank, said business owners like Semertsidis are faced with the difficult task of striking an increasingly more delicate balance.
“[Inflation] hurts consumers. It hurts businesses. It generally becomes a problem for a lot of people, frankly,” Mateyo said. “ It’s very hard. They have to worry about higher wages to keep people employed because they want to keep the restaurant open. They have higher prices for materials and goods and so forth, but they also have higher wages. They don’t want to alienate their customers so they have to manage both sides of the equation.”
When it comes to mitigating the effects of inflation, unfortunately, it largely comes down to wait it out, Mateyo said. Business owners can better manage their inventory and employ other cost-cutting measures but, largely, inflation is out of their control.
“You may have to be flexible with your staff. You have to ask your customers to share some of the pain with you,” Mateyo said.
Earlier this year, Semertsidis made the difficult decision to implement a minor price increase across the board. However, as the case in the restaurant industry, implementing any price increase comes with expenses: Menus have to be changed and re-printed, online listings and other in-store displays have to be altered, and marketing materials have to be updated.
For a neighborhood staple like Gus’s Family Restaurant, price increases aren’t just business decisions. They are personal decisions too.
“It was a hard thing for me to do. I have customers that come in every day and they see that difference,” Semertsidis said. “Every day, it’s a couple of extra bucks. That hurts them. That hurts me. I don’t want to have to do that. But at the same time I’m here to try to make a living and provide for my family. We’re just trying to survive like everybody else is.”
That kind of levity and dedication to the customer is why Gus’s Family Restaurant has fed Cleveland for more than 30 years. And it’s the reason why Semertsidis wanted to get into the hospitality industry to begin with.
“I’ve been wanting to do this since I was 6 years old. It’s a cliche but it’s not work for me,” Semertsidis said.
This story was originally published by Jordan Vandenberge of WEWSin Cleveland, Ohio.