Why have restaurants – in Minnesota and elsewhere – gotten so expensive?

On this episode, we are joined by Adam Platt, Editor of Twin Cities Business, to break down the causes of why restaurants prices keep going up and what it means for the whole industry. Adam’s piece, “What’s With the $15 Side Salad?“, has gotten lots of attention online and in our magazine.

Adam talks about how skyrocketing labor costs, ever-increasing food input costs, escalating rents and insurance, people going out less and drinking more at home, and more have resulted in restaurants having to continue to spike prices to keep up. Platt explains why a busy restaurant can still be losing money, how restaurants decide what to charge for a salad, why drink prices keep climbing and what the next five years could look like for the industry.

We also discuss Minnesota’s tipped-wage policies, the role of tourism in restaurant economics and why entrepreneurs keep opening restaurants even when the financial outlook is so challenging.

In this episode:

• 00:00 Why have restaurants gotten so expensive?
• 00:36 Inside the latest Twin Cities Business issue
• 05:47 The economics behind the $15 side salad
• 08:26 Why restaurant labor costs have risen
• 11:38 Food inflation and the $75 steak
• 12:26 Minnesota’s tipped-wage debate
• 16:32 The old restaurant cost model is broken
• 18:32 Why the Twin Cities is a tough restaurant market
• 21:02 Why people keep opening restaurants
• 23:56 The restaurants that are still thriving
• 25:20 Why Americans keep eating out
• 27:33 The $100 psychological barrier for dinner
• 28:07 Why cocktails and wine cost so much
• 30:02 “You’re not paying for my lettuce”
• 30:33 How restaurants think about tables, desserts and revenue
• 33:43 Why a full restaurant can still lose money
• 35:55 Restaurants, landlords and the changing economics of commercial real estate
• 41:59 Adam Platt’s five-year forecast for restaurants
• 44:13 Why opening a new restaurant is so expensive
• 46:32 Why these are the worst of times for restaurants